Researchers have found that climate change is likely to have far greater influence on the volatility of corn prices over the next three decades than factors that recently have been blamed for price swings – like oil prices, trade policies and government biofuel mandates.
The new study, published in the journal Nature Climate Change, suggests that unless farmers develop more heat-tolerant corn varieties or gradually move corn production from the United States into Canada, frequent heat waves will cause sharp price spikes.
Noah S Diffenbaugh, a climate scientist at Stanford and an author of the study, said he was surprised by the notable effect of climate change on price volatility for corn, the United States’ largest crop.
“I really thought climate would be a minor player before we did this analysis,” Professor Diffenbaugh said.
“We’re looking at a period over the next three decades or so of moderate global warming, after all.”
Instead, the analysis found that a moderate warming trend was likely to increase the number of days of severe heat in the growing season, thus doubling the volatility of corn yields.
Using economic, climatic and agricultural data, the study found that if climate change stayed within the internationally accepted range of two degrees Celsius over the next 20 years or so, temperature changes would make those heat waves more common. The study was financed by a grant from the Department of Energy. The researchers then sought to determine how the heat waves would in turn interact with other factors that affect corn prices.
“Energy policy increasingly is important for agriculture,” said Thomas W Hertel, another author of the study and a professor of agricultural economics at Purdue.
Referring to the Environmental Protection Agency and the United States Department of Agriculture, he added, “Ten or 20 years ago, what the EPA and the USDA did influenced corn prices. Today, what the Energy Department does also is important.”
The growing use of biofuels, particularly those derived from corn, has already distorted agricultural markets by encouraging farmers to plant corn instead of other crops, thus increasing the price of things like soybeans, which are being produced in lesser quantities.
The study found that federal mandates for biofuel production could amplify the effect of climate change on corn price volatility by hampering the market’s ability to adjust to changes in crop yields.
“If we let the market determine how corn gets allocated,” Hertel said, “in a year with less severe heat and higher corn yields, more corn can be sold into the energy market for ethanol, while in years of high heat and lower yields, more would end up in the food market.”
The mandates, however, require a certain amount of ethanol for biofuel regardless of yields, he added, “and that will greatly exacerbate the price spikes brought on by climate change.”
