Extreme weather, extreme prices: what will more erratic weather do to food prices?

Oxfam Climate Change Policy Adviser Tracy Carty summarizes her new paper, published todayTracy Carty mugshot With greenhouse gas emissions at an all time high, and the world lurching towards a third food price spike in four years following the worst US drought since the 1950s, there is an alarming gap in our knowledge – how will an increase in extreme weather caused by climate change affect future food prices? To date, research on food prices and climate change has looked almost exclusively at the averages: how gradually rising temperatures and changing rainfall patterns will affect long-run average prices. It points to a future of higher food prices: Oxfam-commissioned research last year suggested food prices could double in the next 20 years; with up to half the increase caused by climate change (see also research by IFPRI and Stanford University). Alarming, but only half the story. Climate change will also lead to an increase in extreme weather, such as droughts, floods and heatwaves. As today’s US drought lays bare, extreme weather can wipe out harvests and drive up prices precipitously in the short term. But current research does not account for how these extremes might affect future global food prices. (Though there has been some regional analysis). Oxfam felt it was time to have a go, so we commissioned some more research from the Institute of Development Studies. Published today, it uses CGE modelling to look at the impact of extreme weather scenarios on global food prices in 2030. CGE models have their flaws and are certainly not predictive instruments, but they do help us think through broad possible scenarios for whole systems. The research highlights some top line trends that can plausibly be expected in a world of more frequent and intense weather extremes. While average prices could double by 2030, the modelling suggests that one or more extreme events in a single year could bring about price spikes of comparable magnitude to two decades of projected long-run price increases. extreme weather fig 1The research suggests that in 2030 the world could be even more vulnerable to the kind of drought happening today in the US, as dependence on US exports of wheat and maize is predicted to rise, whilst climate change increases the likelihood of extreme droughts in North America. The US Department of Agriculture recently estimated that climate change could cost corn belt farmers between US$1.1 to $4 billion annually by 2030. Even based on a conservative scenario, the modelling shows a drought of similar magnitude to the US drought in 1988 could raise the price of maize by as much as 140 per cent in 2030 (see fig 2). The modelling also shows dramatic impacts in sub-Saharan Africa in 2030 – the consumer price of maize and other coarse grains in southern Africa could increase by as much as 120 per cent, on top of already higher average prices (see fig 3). Food security experts working on the next IPCC Assessment recently warned that governments should take more account of how weather extremes could affect food supplies. Because if the climate becomes increasingly erratic, food production and prices will too, with devastating consequences for the lives of livelihoods of people living in poverty.  extreme weather fig 2Governments ‘stress-tested’ the banks after the financial crisis.  Our global food system is also too big to fail, and needs stress-testing to fully assess and address its critical thresholds in relation to climate change. Stress testing would seek to understand feasible worst case scenarios and identify the levels, locations and likelihood of vulnerability that could occur.  This includes major crop producing regions most at risk; the impact of multiple harvest failures in the same year, as well as the cumulative impact of significant yield shocks becoming more common; impacts on food deficit low income countries; and interactions with other major threats to the food system, such as high oil prices. This research is just one more contribution to the overwhelming case for action. The necessary policy responses are well documented: reducing emissions, adapting to climate change, and building the resilience of markets and people in poverty (see here, here, here and here). The real unknown is how bad things have to get before we start to see concerted action. Tracy Carty is Climate Change Policy Adviser at Oxfam GB]]>

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4 Responses to “Extreme weather, extreme prices: what will more erratic weather do to food prices?”
  1. Ros Hirschowitz

    Interesting juxtapositions of climate change and food shortages. But I think that there are fundamental considerations left out of the current debate. This is the role that the international financial institutions such as the World Bank played in supporting the destruction of agriculture as it was practiced locally in developing countries. In Africa for example, subsistence and small-scale farming was actively discouraged in favour of commercial farming. In addition, producction for local needs was discouraged, while export-driven agriculture was in vogue. Local knowledge and farming methods that were survival strategies for centuries were deemed inappropriate for modernization. Coffee production for example replaced local crops. Surely these policies are at least to some extent to blame for the food shortages and climate change that we face today.

  2. Andrew Dorward

    Thanks for this post on a really important topic. It is good to see the Oxfam report going beyond discussion of ‘food price increases’ to discuss the specific impacts of food price rises on poor and food insecure people.
    However the common use of food price indices to look at food price changes is unfortunately very misleading. At the risk of being a wonk, these indices measure changes in food prices relative to changes in prices of other things that people buy, commonly the things that less poor people buy. What matters most to people, however, is how food prices change relative to incomes, and this is most important for the poor. We therefore need models, analysis and commentary on how food prices have changed and will change relative to people’s income. Food prices have not fallen much in the past 100 years for those who are poor. I fear that we will find that price rises in the future will be higher for the poor than suggested in the analysis reported here – but I would be very happy to be proved wrong.
    For more on this please see a couple of briefing papers at
    http://www.future-agricultures.org/publications/research-and-analysis/policy-briefs/doc_download/1550-agricultural-labour-productivity-and-food-prices-fundamental-development-impacts-and-indicators and http://www.future-agricultures.org/publications/research-and-analysis/policy-briefs/doc_download/1549-the-short-and-medium-term-impacts-of-rises-in-staple-food-prices

  3. Eamonn Casey

    The analysis also doesn’t bring out very clearly the role that commodity and food price speculation may play – unless this is implicit in the idea of ‘stress testing’ the global food system or ‘building the resilience of markets’. These markets, and the people behind the invisible hand of the markets, will surely create the possibility of massive profits for some from speculation, hoarding and ‘timely’ distribution or sale of global food stocks (as it does in national and regional contexts now) – and require regulation, not just resilience, of markets?

  4. “Climate change will also lead to an increase in extreme weather, such as droughts, floods and heatwaves. As today’s US drought lays bare, extreme weather can wipe out harvests and drive up prices precipitously in the short term.”
    Take a look at USDA graph: http://www.ers.usda.gov/media/521847/cornuse.jpg
    -Corn harvests have been steadily increasing over the years clearly establishing that warming augurs well for agriculture. viz. There is no negative impact of climate on agriculture.
    – If at all there is less supply for corn as food, it is only because they are increasingly diverted for bio-fuels that permit the West to drive “Green” cars.
    These NGOs advocacy programmes are based on lies, lies and more lies. Their “climate solutions” create food shortage and then they totally disingenuously spin these shortages as caused by climate changes.
    These NGOs benefit two ways. By creating hunger through “climate solutions” they get funds and for responding to hunger crisis, they get funding. This is intellectual corruption at its worse showing that they hardly have any compassion for the poor and the suffering. All they care is their careers, salaries & perks.