The impact of climate change on price
instability of agricultural products and food
security
Term Paper
November 2010
Begzod Djalilov (ZEFc)
Christine Ladenburger (ZEFb)
José Luis Viveros Añorve (ZEFb)
1
Contents
1. Introduction ........................................................................................................ 3
2. Conceptual Framework ..................................................................................... 5
2.1.
2.2.
2.3.
Climate Change ..................................................................................................... 5
Food Security ........................................................................................................ 6
Vulnerability........................................................................................................... 7
3. Climate Change and Food Security .................................................................. 8
3.1. Availability of food ................................................................................................ 8
3.1.1. Background ...................................................................................................... 8
3.1.2. Example 1: Climate change impacts on rice production in Asia ........................ 9
3.1.3. Example 2: Global warming and global wheat production ...............................11
3.1.4. Example 3: Global warming and maize in Africa..............................................13
3.2. Access to food .....................................................................................................14
3.2.1. Background .....................................................................................................14
3.2.2. Growing biofuel production and high oil prices ................................................16
3.2.3. Income growth and changing preferences .......................................................17
3.2.4. Speculation .....................................................................................................17
3.2.5. Population Growth and Urbanization ...............................................................18
3.3. Use & utilization of food ......................................................................................19
3.4. Stability of food systems .....................................................................................20
4. Conclusion ....................................................................................................... 21
Literature ................................................................................................................. 22
List of Figures
Figure 1: Mechanism of climate change impact on food production, price and security......................... 3
Figure 2: Major Rice Producing Countries (2008) ................................................................................... 9
Figure 3: World food production (MT) ................................................................................................... 11
Figure 4: Main wheat producers and their market shares in exports of the world (2007-2008) ........... 12
Figure 5: Major wheat importer countries (2007) .................................................................................. 12
Figure 6: Maize production (MT) in Africa ............................................................................................. 13
Figure 7: Energy-Agriculture linkages within a broader conceptual framework .................................... 16
Figure 8: International Cereal Prices (benchmark monthly averages; US $/tonne) .............................. 18
List of Boxes
Box 1: Impacts of climate change in Asia .............................................................................................. 10
Box 2: Africa – the continent most vulnerable to climate change.......................................................... 14
Box 3: Entitlements ................................................................................................................................ 15
List of Tables
Table 1: Impact of global warming and CO2 on rice output and price in some countries of Asia ......... 10
Table 2: Impact of global warming on maize output in selected countries of Africa ............................. 13
2
1. Introduction
The present paper attempts to review and analyze the impact of climate change on food
security. This will be conducted by exploring the impacts of climate change such as global
warming and increased CO2 levels in the atmosphere on food production and international
food prices, use and utilization of food as well as on the stability of food systems.
Due to the time constraint, the analysis will focus on agriculturally produced food, excluding
forestry and fisheries, having in mind that they play an important role for food security, too.
Climate change may affect all dimensions of food security, namely food availability (i.e.,
production and trade), access to food, use and utilization of food, and stability of food supply
(FAO, 2003a). The relation between food security and climate change is multidimensional
and complex, it includes many different aspects such as bio-physical changes, losses and
gains of arable land, and water issues on the one hand, and socio-economic aspects like
global governance, technological innovations, legal and institutional structures, high oil prices
and increased biofuel production, income growth and changes of consumption preferences,
speculation, population growth, and urbanization on the other hand.
Figure 1 describes the complexity of mechanism of the climate change impact on food
security dimensions:
Figure 1: Mechanism of climate change impact on food production, price and security
•
•
•
•
Production Factors
Climate Change
•
Demand:
•
•
•
•
•
Oil Prices
Biofuels
Speculation
Dysfunctional Global
Markets
…
Income Growth
Changing Preferences
Population Growth
Urbanization
…
Stability of the food system
Political and Economic
Factors:
Food Prices
Access
Food Production
Food Security
Availability
Use and Utilization
State Governance
Source: own graph
3
The paper will focus on the food security dimensions of food availability and access to food.
For reasons of time and space, use and utilization as well as the stability of the food system
will be discussed only very shortly.
In the context of food availability, the impacts of climate change on food are explored by
presenting regional cases with a focus on developing countries. The case of rice production
in Asia provides general insights in possible impacts of global warming and CO2 emissions
on rice availability. Since rice is one of the most important dietary components for the
majority of population in Asia this case is suitable to illustrate how climate change may affect
a considerable share of the global population by altering the production of only one good.
The second example, wheat production and its performance under global warming, shows
the possible scenarios of climate change’s influence on the wheat availability in Eurasia. The
last example analyzes maize availability in Africa under climate change, which is highly
relevant given the importance of maize as an essential food product for Sub-Sahara African
households.
Food accessibility is the second dimension of food security analyzed in more detail in this
paper. Access to food is mainly determined by the entitlements a person has and their
comparison to food prices. Food output is one determinant of international food prices,
according to the basic rule of prices determined by supply and demand. However, there are
additional factors that cause price instability of agricultural products. The drastic growth of
biofuel production and upward trend of oil prices, recent changes in income and preferences
in some developing countries, the speculative activities on global commodity markets, and
demographic dynamics such as urbanization and population growth are considered as key
additional factors influencing the international market prices of agricultural commodities.
As the third pillar of food security, use and utilization of food are shortly discussed. Climate
change is expected to have a considerable impact on human health, e.g. through
contributing to an increase of diarrheal diseases, which may prevent people from absorbing
sufficient nutrients from their food.
Finally, the stability of food systems is threatened by climate change due to increased
frequency of extreme weather events. Especially for countries already vulnerable to climate
change, securing the stability of food systems becomes a challenge.
This paper is structured as follows. The next chapter explains the conceptual framework of
the paper. Section 3.1 provides three examples of how climate change may affect food
production. Section 3.2 discusses food prices and the most important factors influencing
them. Section 3.3 shortly goes into the issue of use and utilization of food, and the last
4
section of chapter 3 deals with the impacts of climate change on the stability of food systems.
In the last chapter, we summarize the main findings and draw conclusions.
2. Conceptual Framework
2.1. Climate Change
There is no internationally agreed definition of the term “climate change”. It can refer to (i)
long-term changes in average weather conditions (World Meteorological Organization
(WMO) usage); (ii) all changes in the climate system, including the drivers of change, the
changes themselves and their effects (Global Climate Observing System (GCOS) usage); or
(iii) only human-induced changes in the climate system (UNFCCC usage) (FAO 2008, p.8).
Climate change variables influence biophysical factors, such as plant and animal growth,
water cycles, biodiversity and nutrient cycling, and the ways in which these are managed
through agricultural practices and land use for food production. At the same time, these
variables have an impact on physical and human capital, such as roads, storage, and
marketing infrastructure, houses, productive assets, electricity grids, and human health.
Therewith they influence the economic and socio-political factors that govern food access
and utilization and are responsible for the stability of food systems (FAO 2008, p.12).
According to the UN Food and Agriculture Organization (FAO), the most important climate
change variables are:
•
the CO2 fertilization effect of higher greenhouse gas concentrations in the
atmosphere;
•
increasing mean, maximum, and minimum temperatures;
•
gradual changes in precipitation:
•
increase in the frequency, duration, and intensity of dry spells and droughts;
•
changes in the timing, duration, intensity, and geographic location of rain and
snowfall;
•
increase in the frequency and intensity of storms and floods;
•
greater seasonal weather variability and changes in start or end of growing seasons
(FAO 2008).
Generally one can differentiate between immediate and less immediate impacts of climate
change. The latter are expected to result mainly from gradual changes in mean temperatures
and rainfall. Examples for these less immediate changes are changing suitability of land for
different types of crops and pasture, decreasing health and productivity of forests, changes in
5
the distribution and composition of marine resources, and lower availability of good-quality
water for crop, livestock, and inland fish production (IPCC 2007).
Many quantitative assessments show that the first decades of the 21st century are expected
to see low impacts of climate change. More severe biophysical impacts but also improved
abilities to cope with them are expected for the second half of the century. However, how
strong the impacts of climate change will be felt over all decades will crucially depend on the
future policy environment for the poor (Schmidhuber & Tubiello 2007) who are expected to
suffer most due to detrimental initial conditions and lacking coping capacities.
Discussing the time horizon of climate change impacts, it should be mentioned that more
frequent and more intense extreme weather events, rising sea levels and increasing
irregularities in seasonal rainfall are already influencing not only food production, but also
food distribution infrastructure, incidence of food emergencies, livelihood assets, and human
health (FAO 2008).
2.2. Food Security
The FAO defines food security as achieved when “all people, at all times, have physical,
social, and economic access to sufficient, safe, and nutritious food that meets their dietary
needs and food preferences for an active and healthy life’’. This definition comprises four key
dimensions of food supplies: availability, stability, access, and utilization (FAO 2002).
Food systems “encompass (i) activities related to the production, processing, distribution,
preparation and consumption of food; and (ii) the outcomes of these activities contributing to
food security […] The outcomes also contribute to environmental and other securities (e.g.
income)” (GECAFS online; cited from FAO 2008, p.4).
Climate change is particularly visible at the farm end of the food system, affecting the
quantities and types of food produced and the adequacy of production-related income.
However, extreme weather events can also damage or destroy transport and distribution
infrastructure and affect other non-agricultural parts of the food system adversely (FAO 2008,
p.5). Food systems and food security are strongly interrelated. If climate change hits
vulnerable parts of the food system food insecurity is likely to be the result.
Of course, other driving, such as demographic developments, changes in economic systems
and trade flows, science and technology developments or shifts in cultural practices also
have a strong influence on food systems and food security (FAO 2008; Easterling &
Aggarwal 2007; Gregory et al. 2005; IPCC 2007).
6
Another concern is that food security usually involves trade-offs with expenditure on health
and education. This again reduces the ability to improve longer-term living conditions or
resilience to stress and shock (Boudreau 1998). However, these factors will not be
considered in detail in this paper.
2.3. Vulnerability
Climate change presents a challenge to future livelihoods. Those social groups which are
already vulnerable are expected to suffer most since relatively modest adverse changes in
resources or economies imply critical shifts in food security for these communities. Therefore
the analysis of impacts of global warming should begin with a consideration of contemporary
vulnerability to hunger and famine (Bohle et al. 1994, p.37).
Robert Chambers defines vulnerability as “the exposure to contingencies and stress, and
difficulty coping with them. Vulnerability has thus two sides: an external side of risks, shocks
and stress to which an individual or household is subject; and an internal side which is
defencelessness, meaning a lack of means to cope without damaging loss.” (Chambers
2006, p.33)
This definition suggests three basic coordinates of vulnerability:
•
The risk of exposure to crises, stress, and shocks,
•
The risk of inadequate capacities to cope with stress and crises, and
•
The risk of severe consequences of, and the attendant risk of slow or limited recovery
from, crises, risk, and shocks (Bohle et al. 1994, p.38).
Global Environmental Change and Food Systems (GECAFS) differentiates between
environmental vulnerability and social vulnerability. The first refers to stresses originating
from drought, storms, landslides, and other such phenomena, whereas the latter captures
the capacity of communities to cope with and recover from environmental stresses (Gregory
et al. 2005).
The FAO defines vulnerability of the food system as a situation in which “one or more of the
four components of food security – food availability, food accessibility, food utilization and
food system stability – is uncertain and insecure” (FAO 2008, p.20). According to GECAFS,
the vulnerability of food systems is the combination of the nature and magnitude of
environmental stress and the societal capacity to cope with, and/or recover from
environmental change, coupled with the degree of exposure to stress (Gregory et al. 2005,
p.2143).
7
Regions and groups within regions as well as parts of food systems differ in their vulnerability
to environmental changes because their exposure to stress, as well as their capacity to cope
and to adapt differs. Therefore, it is important to have in mind that the exposure to changes
as well as the kind of change and the ability to cope with it are the critical factors determining
the food security impacts of climate change for a certain group.
Climate change and environmental vulnerability will be explained with the help of three
examples in chapter 3.1. Social vulnerability to the impacts of climate change on food
security will be addressed throughout the whole paper.
In the following, the four dimensions of food security and the possible influence of climate
change on them will be discussed.
3. Climate Change and Food Security
3.1. Availability of food
3.1.1. Background
Food availability is determined by the physical quantities of food that are produced, stored,
processed, distributed, and exchanged. Food availability is the net amount remaining after
production, stocks, and imports have been summed and exports deducted for each item.
Adequacy is assessed through comparison of availability with the estimated consumption
requirement for each food item (FAO 2008).
Climate change affects agriculture in complex ways. Food production is directly affected
through changes in agro-ecological conditions. Furthermore, processing, storage, and
transportation of food will face new challenges due to higher temperature, increased
humidity, and other climate-related changes (Schmidhuber & Tubiello 2007, p.19703).
Direct effects of climate change on food production are, for example, more severe and more
frequent extreme weather events, such as storms, droughts, and floods that are likely to
cause short-term fluctuations in food production in semiarid and sub-humid areas
(Schmidhuber & Tubiello 2007, p.19704).
Due to rising water temperatures local food supplies are projected to be negatively affected
by decreasing fishery resources in large lakes and rivers. However, this may be exacerbated
by continued overfishing (IPCC 2007).
The so-called “greenhouse fertilization effect” will have beneficial effects primarily in
temperate zones, with yields expected to increase by 10 to 25 percent for crops with a lower
rate of photosynthesis efficiency, and by 0 to 10 percent for those with a higher rate of
8
photosynthesis efficiency. However, these effects are not likely to influence projections of
world food supply (Tubiello & Fischer 2007, p.21).
Crop productivity is projected to increase slightly at mid- to high latitudes for local mean
temperature increases of up to 1-3°C, and then decrease with higher temperatures (IPCC
2007, p.11). At lower latitudes, especially in seasonally dry and tropical regions, crop
productivity is projected to decrease for even small local temperature increases (1-2°C)
(Easterling & Aggarwal 2007, p.11; IPCC 2007). Since these are the regions where already
most of the world’s poor live, these changes are likely to hit vulnerable parts of population
and food systems and thus increase the risk of hunger.
An evaluation of various scenarios conducted by Parry et al. (2005) concludes that world
cereal production is estimated to decrease between 1 and more than 7 percent depending on
the climate scenario. The largest negative changes occur in developing countries, averaging
11 percent by 2060. By contrast, in developed countries production is estimated to increase
under most scenarios. Thus, existing disparities in crop production between the developed
and developing countries are estimated to grow (Parry et al. 2005, p.2128).
In the following, three examples will show the impact climate change has on the production
of some important food crops.
3.1.2. Example 1: Climate change impacts on rice production in Asia
Rice is one of the most important staples in the world. Especially in Asia it is a basic food
Figure 2: Major Rice Producing Countries (2008)
item. China and India are the main rice
producers and represent the bulk of
population in this region. But also many
other Asian countries depend on rice for
feeding their residents.
Thus,
analyzing
the
rice
production
scenarios in the context of changes in
temperature and emission of CO2 in
China,
India,
the
Philippines,
and
Malaysia may provide a good example for
Source: FAOSTAT (http://faostat.fao.org/)
the possible effects of climate change on
the output and prices of essential food
products.
The increases in temperature and CO2 levels affect the rice yield through (i) water availability
for irrigation, and (ii) photosynthesis process (Matthews 1995, p.254). The increase of
9
temperature may lead to increased water demand. At the same time, a decrease of available
freshwater is expected due to higher temperatures, which may cause water scarcity for
irrigation systems. In addition, the increased temperature speeds up the rice crop maturity
phase. These effects are expected to be detrimental for rice yields. However, higher levels of
CO2 allow for increased photosynthesis processes, which benefits plant growth and yield
(Matthews 1995).
Box 1: Impacts of climate change in Asia
Problems of climate change in Asia are often related to freshwater availability. Particularly in large
river basins, water availability is projected to decrease due to climate change. Along with
population growth and increasing demand arising from higher standards of living, this could
adversely affect more than a billion people by the 2050s.
Coastal areas, especially heavily-populated mega delta regions in South, East and South-East
Asia, will be at greatest risk due to increased flooding from the sea and, in some mega deltas,
flooding from the rivers.
Additionally due to projected changes in the hydrological cycle, endemic morbidity and mortality
due to diarrheal disease associated with floods and droughts are expected to rise in East, South
and South-East Asia. Increases in coastal water temperature would exacerbate the abundance
and/or toxicity of cholera in South Asia (IPCC 2007, p.13).
In general, rice production in Asia may benefit from climate change (Huang & Khanna 2010,
p.26). Table 1 shows the effects of climate change on major rice producer countries in Asia.
Table 1: Impact of global warming and CO2 on rice output and price in some countries of Asia
Country
Overall
impact on
output
Production
and
processing
costs
Price of
rice
Food (rice
security)
in Asia
+
+
+
Rice yield variability
(seasonal
and
geographical
fluctuation
of
harvest)
+
+
+
India
China
the
Philippines
Malaysia
+
+
+
+
+
+
-
+
+
+
+
-
Source: own compilation; data from Huang & Khanna (2010)
Note: + positive effect, - negative effect
The most significant aspects of the data presented in Table 1 are the relationships among
overall output increase, rice yield variability, production and processing costs, price behavior
of rice, and rice security. On average, all listed countries may experience increases in rice
10
production due to higher temperatures and increased CO2 levels. On the other hand, higher
production fluctuations are expected due to extreme weather events and possible water
scarcity. This may lead to increased price instability, which may affect the food security
status of various countries. However, other factors influencing food prices and the impact of
prices on food security will be analyzed in the next chapter.
Another concern is that global warming and higher CO2 levels may cause an increase in
production and processing costs. The rice producers may need to adopt their seasonal
operations, i.e. they may shift certain types of rice crop from the second to the main season
due to faster maturity of crops. These shifts require more investments in production and
processing
Figure 3: World food production (MT)
Storage
and milling facilities need to have
2000000000,00
more
1500000000,00
capacity
to
process
the
increased yield of rice during the
1000000000,00
500000000,00
Production (MT)
main
season.
Furthermore,
Sugar cane
Maize
Rice, paddy
Wheat
Cow milk,…
Potatoes
Vegetables…
Cassava
Soybeans
Tomatoes
0,00
infrastructure.
investments in logistics, roads and
Source: FAOSTAT
addition, new cultivars of rice to meet
vehicles to carry rice to the points of
consumption will be necessary. In
the
high
temperature
conditions,
constructing more efficient water storage facilities, changing the cropping systems and
management practices in order to efficiently utilize the water resources require certain costs
and capacity building activities (FAO 2008). The influence of food prices on food security will
be discussed in more detail in chapter 3.2.
3.1.3. Example 2: Global warming and global wheat production
As a second example, the impacts of global warming on wheat production are discussed.
Wheat is together with maize and rice the most produced staple in the world in quantitative
terms (see Figure 3).
However, there are only relatively few wheat exporter countries (see Figure 4).There are
serious concerns about negative impacts of global warming on wheat production. In general,
high temperature accelerates the development process of the crop and simultaneously
shortens the grain-filling period. As a result, the producers may experience severe reductions
in grain yields. For example, 10C temperature rise shortens the period of grain-filling by 5
percent and proportionally decreases the grain yield (Hodson & White 2009, p.53).
11
Of course, this may have serious consequences for the major wheat importers, too. The
expected reduction of wheat yields may trigger the price for wheat to increase substantially.
Figure 4: Main wheat producers and their market shares in
exports of the world (2007-2008)
Others; 9%
Argentina;
5%
Major wheat importer countries
such as Egypt, Brazil, Algeria,
Indonesia, Mexico, and Nigeria
USA; 22%
are likely to suffer from these
Australia;
10%
price increases.
Additionally, global warming may
CIS (Russia,
Kazakhstan,
Ukraine);
23%
Canada;
16%
require the producers to change
sowing
irrigation
EU; 15%
dates
as
geographically
Source: Own graph; data from
www.ers.usda.gov/briefing/wheat/trade.htm#world
and
increase
well
as
shift
to
production
areas because high temperature
may lead to soil degradation and
decreased water availability. Further pressure on fertile land may be the result.
What can be the consequence of high temperature or consecutive drought seasons with
water deficits could be seen in the recent high temperature season in Northern Kazakhstan
and South Russia where extreme heat has caused a drought in wheat production areas. As a
response to such alarming weather conditions, the governments of Kazakhstan and Russia
limited their wheat exports. The forest fire caused by the high temperature around Moscow
served as an additional reason for such restrictive regulation on the export of wheat that had
already been affected by the consecutive series of dry seasons in the region. Economic
consequences of such harsh restrictions on the world wheat price are elaborated in chapter
3.2. However, the social impact of wheat export restrictions of both countries in the regional
states that have neither grain independence nor diversified economic structure such as
Tajikistan was more severe than for the wheat producers themselves. Since the consumption
Figure 5: Major wheat importer countries (2007)
Quantity (tonnes)
Italy
Japan
Egypt
Brazil
Algeria
Indonesia
Netherlands
Morocco
Spain
Belgium
Mexico
Republic…
Nigeria
Iraq
India
Philippines
Germany
Tunisia
Turkey
Yemen
7000000
6000000
5000000
4000000
3000000
2000000
1000000
0
Source: FAOSTAT (http://www.fao.org/corp/statistics/en/)
12
Value (1000 $)
pattern of low income households in Central Asia is mainly composed of bread and wheatbased food products and food producers in the region faced high wheat costs they sold their
products such as bread and noodles with inflated prices.
3.1.4. Example 3: Global warming and maize in Africa
The third example deals with maize production in Africa. Many people in the tropical and
subtropical areas of Africa depend on maize production for their livelihoods. Maize is used as
a staple and as fodder for livestock. Since approximately 130 million individuals in the region
are small-holders of livestock and even more are subsistence farmers producing maize, this
staple is of great importance in Africa (Jones & Thornton 2003, p.52). An interruption or
decrease in its production
Figure 6: Maize production (MT) in Africa
may threaten their food
security due to shortages
of food, milk, meat, edible
oil, income, and other
factors of livelihood.
Despite
maize’s
significant
high
tolerance
temperature,
following
reductions
Source: FAO Agro-Maps
http://www.fao.org/landandwater/agll/agromaps/interactive/page.jspx
to
the
possible
in
maize
output of some selected
countries due to global warming depicts the scarcity of maize that may occur in some regions
(FAO 2010):
Table 2: Impact of global warming on maize output in selected countries of Africa
Country
Maize Area Yield (kg/ha) Possible
(ha) 2000
2000
2055
yield
with
in Decrease
global yield (%)
warming
Ethiopia
1,450,000
1,793
1,596
11
Sudan
76,000
697
606
13
Angola
672,941
636
541
15
Source: own compilation; data from FAOSTAT
13
in
On average, Africa may experience a 10 percent decline in maize yield in the next 50 years,
having a chain effect on the agricultural system of the region. Similar to the case of rice
production discussed in section 3.1.2, changes in precipitation are expected to cause
increased yield variability. Due to the variations in supply the market price of maize is likely to
fluctuate.
Box 2: Africa – the continent most vulnerable to climate change
The strongest impact of climate change on the economic output of agriculture is expected for subSaharan Africa, which means that the poorest and already most food-insecure region is also
expected to experience the largest contraction of production and thus agricultural incomes
(Schmidhuber & Tubiello 2007). However, that the risk of hunger will increase particularly in
southern Asia and Africa is also the result of the projected increase in number of poor people in
these regions, and not only due to the regional pattern of climate change (Parry et al. 2005, p.2137;
Schmidhuber & Tubiello 2007; Gregory et al. 2005).
It is also evident that the potential for adaptation is greater in more developed economies and that
this, together, with the generally more favorable effects of climate change on yield potential in
higher rather than lower latitude regions, is likely to bring more positive effects to the North and
more negative effects to the South (Parry et al. 2005, p.2137).
Thus, Africa is one of the most vulnerable continents to climate variability and change because of
multiple stresses and low adaptive capacity (IPCC 2007, p.13).
As a consequence of the impact of climate change on these three main agricultural products,
food security in developing countries remains exposed to instability since climate chance hits
vulnerable food systems. Less availability of important staples will threaten food security in
many developing countries because these countries do not have the capacity to cope with
these impacts.
3.2. Access to food
3.2.1. Background
As discussed in the previous chapter, the output from agriculture over and above
subsistence food production will be an important contributor to food security. But for
achieving food security, access to food has to be ensured. Access to food is determined by
the ability of a person to secure entitlements, i.e. the set of resources that an individual
requires to obtain access to food (Sen 1982).
14
Thus, income-generating capacity, the amount of remuneration received for products and
goods sold or labor and services rendered, and the ratio of the cost of a minimum daily food
basket to the average daily income decide on the affordability of food (FAO 2008, p.24).
Box 3: Entitlements
In his seminal book “Poverty and Famines” Amartya Sen analyzed the causation of starvation,
especially during famines (Sen 1982), i.e. the most extreme case or result of not properly working
food systems. For Sen the acquirement problem, i.e. the problem of establishing command over
commodities, in this case food, “is really central to questions of hunger and starvation in the
modern world.” (Sen 1985, p.5) This, of course, still holds true for food crises situations caused by
climate change.
That famines can occur even without any decline in food output or availability per head makes clear
that the metric of food output per head alone, i.e. the availability-dimension of food security, is
deceptive (Sen 1985, p.10). Even, as was observed in the Wollo famine in 1973 and the
Bangladesh famine of 1984, and in the Irish famines of the 1840s, food often moves out of the
famine-regions to elsewhere (Sen 1985, p.24). Therefore, food availability alone cannot solve the
problem of food insecurity. The expansion of food production is as important for generating
entitlements as for generating more supply. The second dimension of food security – access – will
therefore get special consideration in this paper.
International commodity prices have significantly increased since the year 2000, reaching the
highest level since mid-1970´s between 2007 and 2008 (J. Von Braun 2008b; PREM et al.
2008; Benson et al. 2009).
Prices of agricultural products are the result of many different factors, which are interrelated
with each other in complex ways. One main influencing factor is the sheer availability of food,
which is directly affected by climate change. As has been discussed, recent unprecedented
floods in southern states of Mexico and the worst droughts in many years in Russia, for
example, destroyed a significant number of hectares of maize and wheat, respectively. In the
case of Russia, one of the largest suppliers of wheat in the world, the government executed
an export veto. As a result of this measure, the global supply of wheat suffered a contraction
causing a severe rise of prices (Hernandez et al. 2010).
Another set of factors influencing food prices are political and economic factors such as
investment flows, speculation or the promotion of biofuels (von Braun 2007; Robles et al.
2009).
The main of objective of this section is to analyze the behavior of commodity prices between
years 2000 and 2010, the determinants and dimensions that have played a significant role in
the international price setting of agricultural products, and the main impacts and potential
15
consequences of the evolution of such prices. As will be shown, non-natural factors have
played a significant role in the price setting of agricultural products. Some of these factors will
be discussed in more detail in the next subsections.
3.2.2. Growing biofuel production and high oil prices
Due to increasing national energy security concerns, high oil prices, and climate change
biofuels (ethanol, bio-diesel and bio-gas) have emerged as an attractive alternative source of
energy especially for developed countries. Thus, biofuel production has been significantly
encouraged in the last years. One important consequence is that fertile land is now used for
the production of biofuels instead of food (World Bank 2007). This trade-off is discussed
extensively for example in the World Development Report 2008 and will not be elaborated
here in more detail. However, a major implication of the changes in the energy strategies of
various countries towards bio-based sources is the increased demand for raw materials such
Figure 7: Energy-Agriculture linkages within a broader
conceptual framework
as maize, wheat, and soy contributing
to the increase in food prices. Between
2000 and 2007 maize prices went up
by 39 percent, wheat followed the
same trend by rising 22 percent in the
same period (J. Von Braun 2008b,
p.5).
With the increased biofuel production
and
rising
food
prices
a
strong
correlation has emerged between the
energy and agricultural sector. As
illustrated in Figure 7, this correlation
may have an impact on the socioSource: Von Braun 2008, p.3
political, economic, and environmental
spheres
at
global,
country,
and
household level through different channels, such as the price-mechanism, markets,
innovations, technologies, regulations, public policies, and private sector investments (J. Von
Braun 2008b).
A major driving force for the promotion of biofuels and rising food prices are historically high
oil prices. Between 2000 and 2008, oil prices went up from US $18.7 per barrel to US $135
per barrel. This exponential growth has been mainly caused by three factors: expansionary
monetary policy carried out by the Federal Reserve of the United States (US), hedge fund
speculation, and the weakness of the US dollar
16
Besides boosting biofuel production, this upward trend of oil prices has also contributed to
increase the chemical inputs prices, i.e. fertilizers and pesticides, the mechanical-based crop
production technologies, and transportation costs of agricultural products, again contributing
to higher international food prices.
It is important to note that while biofuel production has been stimulated by higher public
investment and subsidies, the agricultural sector in developing countries faces severe
difficulties due to low public and private spending (IAASTD 2008, p.78).
3.2.3. Income growth and changing preferences
Another relevant determinant of rising food prices is income growth. In recent years the world
economy has been mainly driven by Asian countries such as China and India, which grew at
an average rate of 9 percent annually between 2004 and 2006. In addition to the same
pattern, Africa and industrialized countries grew at an annual rate of 6 percent and 2 percent,
respectively (IMF, 2007).
The income growth related to the overall economic growth has induced changes in
consumption patterns by modifying preference towards higher-value products such as milk
and meat (Joachim von Braun 2007, p.9). Higher demand of milk and meat will increase the
demand for fodder, pushing grain prices up.
3.2.4. Speculation
Another determinant of the upward-trend of international food prices observed from 2000 to
2008/9 is speculation1. With the financial liberalization process2 of the late 80’s and early 90’s
speculation emerged as a worldwide financial phenomenon. It is conceived as an action that
does not promise safety of the initial investment along with the return on the principal sum,
and it includes the buying, holding, selling, and short-selling of stocks, bonds, commodities,
currencies, and any valuable financial instrument from fluctuations in its price, independently
of its intrinsic value (Graham & Dodd 1996; Robles et al. 2009). Commodity markets have
been exposed to short-term speculative investors who have been mainly seeking for quick
profits taking advantage of the lack of institutional arrangements to prevent speculation. This
has contributed to increased uncertainty as well as high price fluctuations. Figure 7 shows
the instability of international cereal prices. A drastic upward trend in prices occurred
1
Three types of speculation have been identified: 1) Governments, farmers, households and small traders; 2)
Commercial traders; 3) Noncommercial traders seeking profits (von Braun, 2008, p. 5). This document is focused
on seeking-profit traders.
2
The financial liberalization process is one of the policy prescriptions introduced by the Washington Consensus
developed by John Williamson with the aim of booting economic development (Williamson 1990).
17
between 2007 and the first quarter of 2008, however, due to the global financial crisis a slight
decline has been observed since mid-2008. Nonetheless, international prices remain higher
Figure 8: International Cereal Prices (benchmark monthly
averages; US $/tonne)
than pre-crisis levels.
Recent
studies
sound
evidence
have
provided
about
the
influence of speculation on trading
activities in the commodity futures
markets. The results proof how
the
profit-seeking
behavior
of
short-term investors has distorted
markets, created uncertainty, and
price-bubbles, and led to higher
international prices, especially of
rice, maize, and wheat (Robles et
Food prices remain below their peak in 2008, but are still
higher than pre-crisis levels in many developing countries.
al. 2009, pp.4-7).
Source: State of World Food Insecurity 2010 FAO, p. 10
3.2.5. Population Growth and Urbanization
Population growth and urbanization also have a considerable influence on food prices. The
growing global population has increased the demand of different kinds of goods.
Urbanization is the result of global change and increasing mobility, as well as other factors
such as population growth and climate change. Floods, droughts, and pestilences have
severely affected farmers pushing them to migrate from rural to urban areas. Moreover,
socio-economic obstacles such as lack of education, health services, and lack of alternative
sources of employment along with the deterioration of income due to deteriorating ecological
conditions have contributed to rising mobility and urbanization patterns. Larger urban areas
under lack of supply of food have created more pressures on international prices.
Furthermore, it is expected that the loss of fertile lands due to land degradation will further
trigger urbanization (Scherr & Yadav 1996).
Urbanization is often associated with rapid growth of supermarkets, attracting foreign
investment by global retail chains, which causes important changes in the food production
and marketing chains. Trade and domestic market liberalization have contributed to the
removal of import controls and the deregulation of prices, which had significant impacts on
food systems (Gregory et al. 2005, p.2142).
18
In sum, food prices are the result of many different factors, some of them related to climate
change, other independent of natural phenomena. Both groups of factors have contributed to
a significant rise of global food prices in the last years, which had severe negative impacts on
poverty and undernutrition. First data on the poverty impacts of the food price crisis is
indicating that the number of undernourished people increased significantly between 2006
and 2009 (FAO 2010) since many people could not afford adequate food any more.
3.3. Use & utilization of food
The third dimension of food security is the use and utilization of food. This aspect will be
discussed only shortly.
Food utilization refers to the use of food and how a person is able to secure essential
nutrients from the food consumed. “It encompasses the nutritional value of the diet, including
its composition and methods of preparation; the social values of foods, which dictate what
kinds of food should be served and eaten at different times of the year and on different
occasions; and the quality and safety of the food supply, which can cause loss of nutrients in
the food and the spread of food-borne diseases if not of a sufficient standard” (FAO 2008,
p.21).
A great concern about climate change and food security is that changing climatic conditions
can initiate a vicious circle where infectious disease causes or compounds hunger, which, in
turn, makes the affected populations more susceptible to infectious disease (Schmidhuber &
Tubiello 2007; IPCC 2007). Projected climate change-related exposures are likely to affect
the health status of people, especially those with low adaptive capacity, through:
•
increases in malnutrition and consequent disorders;
•
increased deaths, disease and injury due to heat waves, floods, storms, fires and
droughts;
•
the increased burden of diarrheal disease;
•
the increased frequency of cardio-respiratory diseases due to higher concentrations
of ground-level ozone related to climate change; and,
•
the altered spatial distribution of some infectious disease vectors (Schmidhuber &
Tubiello 2007; IPCC 2007; Easterling & Aggarwal 2007).
Furthermore, climate change is expected to have some mixed effects on the range and
transmission potential of malaria in Africa. The balance of positive effects, such as fewer
deaths from cold exposure, and negative health impacts will vary from one location to
another (IPCC 2007, p.12).
19
Increases in daily temperatures will also raise the frequency of food poisoning, particularly in
temperate regions. Warmer seas may contribute to increased cases of human shellfish and
reef-fish poisoning in tropical regions and a poleward expansion of the disease
(Schmidhuber & Tubiello 2007; IPCC 2007).
3.4. Stability of food systems
Stability of the three dimensions of food security is the last aspect that shall be mentioned
here.
Climate variability is an important cause of unstable access. E.g. landless agricultural
laborers, who almost wholly depend on agricultural wages in a region of erratic rainfall and
have few savings, are at high risk of losing their access to food (Schmidhuber & Tubiello
2007, p.19703). Global food markets may exhibit greater price volatility, jeopardizing the
stability of returns to farmers and the access to purchased food of both farming and nonfarming poor people.
Also the stability of supply is concerned. Many crops have annual cycles, and yields fluctuate
with climate variability, particularly rainfall and temperature. Droughts and floods are a
particular threat to food stability and can bring about both chronic and transitory food
insecurity. Both are expected to become more frequent, less predictable and more intense as
a consequence of climate change (FAO 2008, p.26).
20
4. Conclusion
The main objective of the present analysis is the analysis of the relationship between climate
change and food security. This has been done by scrutinizing the impacts of climate change
on availability and prices of food as well as on use and utilization of food and food system
stability.
The review of the climate change impact on the food availability reveals that the most
vulnerable countries are located in Africa and Asia where the majority of low income
households are. These households depend on basic agricultural commodities such as rice,
wheat, and maize. The regional examples of rice production under the global warming and
CO2 emission provided evidence that although the overall output may increase, the yield
variability becomes larger, which in turn may lead to increased fluctuation of rice supply on
the market. In addition, the adaptation towards seasonal changes of yields may result in
higher production and processing costs of rice. The combination of these costs and the
supply fluctuations are likely to cause a rise of the price of rice.
As another essential staple, the case of wheat has been explored. The impact of climate
change, particularly the rise of temperature and extreme weather events, on wheat
production of major world producer countries, namely Russia and Kazakhstan, trigger a
drastic increase of prices for wheat. As a result, the stability of wheat security in the region
has been threatened, negatively influencing low income households.
Similar impacts are expected for the maize output, another important agricultural product that
plays a major role in ensuring food security in Africa.
Similar to the supply dynamics described above, the external factors such as the increased
biofuel production and high oil prices, income growth and changing preferences, speculation,
population growth, and urbanization play a fundamental role in setting international market
prices of agricultural commodities. As a result, it has been derived that there is a
dysfunctionality of global markets, which is caused by political and economic factors.
Food security is threatened by impacts of climate change on food availability, access to food
(food prices), and on the use and utilization of food. Furthermore, increased frequency of
extreme weather events and higher yield variability are threatening the stability of food
systems. These effects will be most severe in developing countries since they are the most
vulnerable: bio-physical impacts of climate change are most detrimental in lower latitudes
and the capacity to cope is lowest there. The same applies for the national level: poorest
households will be the most negatively affected due to bad initial conditions and the lack of
coping capacity.
21
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