The market price of cocoa fell back recently in further volatility after hitting all-time highs of almost $12,000 a tonne. Recent trading has been around $7,200 a tonne (at time of writing), quite a drop. The shortages that caused the price to rise were based on supply disruptions, heavy rains and disease. But we might have to get used to this in terms of agricultural products in a world of rapid climate change.
Looking at the basic economics, on the demand side, we will see greater demand for food as global population increases, at least until that growth comes to a halt in the second half of the century (according to expert projections). Within that, there will be more demand for certain agricultural products as global affluence increases e.g. more meat is consumed as countries get richer, replacing grains and vegetables in the diet.
On the supply side, a number of direct challenges driven by climate are going to face producers.
· Increased temperatures making a particular crop unsuitable for a region where it previously thrived.
· Water shortages caused by changed rainfall patterns (and greater evaporation in higher temperatures).
· Floods in other areas that reduce land available for crops or livestock.
· Complete loss of agricultural land if sea levels rise.
· Changing distribution of pests and diseases driven by climate change, and potential loss of pollinators for similar reasons.
There are then what we might call second-order issues. For instance, competition for land may increase as areas become unsuitable for production, and that could in extreme cases lead to disputes and war. And if we see large numbers of “climate refugees” and displaced people, there may be a shortage of agricultural labour in some areas.
On the positive side, the increase in temperature and carbon dioxide may result in higher yields of certain crops in some parts of the world. And global warming will make some regions suitable for agriculture or particular crops for the first time in many centuries. Countries such as Russia and Canada may see significant economic benefits from such changes.
But we have seen even in the UK this year the effect of different extreme weather events, and it is not just about higher temperatures. Farmers were not able to plant crops in the spring in parts of the UK because of floods, and this is going to affect availability (and price) of some products as we move through the year.
So what can be done to prepare and mitigate the risks? There is already a lot of work going on to understand the responses of plants to various stresses, and then identify the best strategies. An interesting article on the University of Reading website says, “Crop-level adaptation to climate change is expected to be key in minimising future yield losses and may involve: changing crop cultivars, sowing time, cultivation techniques, and/or irrigation practices”.
Some varieties will stand up to more heat, less water or whatever better than others. In recent decades we’ve generally seen a reduction in the number of different varieties grown globally of a particular crop. That may reverse as a more diverse range of options is seen to provide more resilience in the face of climate shocks. But we may need more co-ordinated international responses to food shortages and the associated price rises in order to avoid famines. The cocoa price rise did not cause mass starvation; for certain staple foods, a similar change might well do so.
So anyone involved in the agricultural supply chain will probably be aware of these issues – or certainly should be. There are other sustainability issues too of course, ranging from preservation of the quality of the land to human rights issues amongst agricultural workers in some regions. On the good news front, more farmers are becoming more aware of the wider environmental issues and some new methods can actually improve both crop yields and be positive in terms of biodiversity and the health of the soil. But overall, agriculture is going to be at the front line of our adaptation challenges and actions as we face up to a hotter planet.