Originally published in Crikey, 05 September 2012
A report released by the World Bank in late August showed that global food prices rose by 10% in July. The price hike has been largely due to the massive heatwaves and droughts that have swept across the United States and eastern Europe over the past few months, causing havoc for farmers, destroying crops across the continents.
The Food Price Watch report is released by the World Bank each month and tracks global food prices for several staple items. The July report found that maize and wheat prices rose 25% and soybeans by 17%. Only rice saw a drop in prices, by 4%.
The price increases have been felt hardest by those in the Third World. For example, maize prices increased by 113% in July in some markets in Mozambique. In South Sudan, sorghum prices rose by 220%, while they rose by 180% in Sudan.
Australia has in no way been immune to the drought shock. In August Australia’s biggest bread maker Goodman Fielder said that bread prices were set to rise over the coming months. The price increases are due to the collapse in the corn harvests in the US. These harvests are forecast to drop by 100 million tonnes this year, in turn pushing wheat prices in Australia from $214 a tonne to $310 a tonne.
The shock in grain was also predicted to have an impact in chicken prices, with chicken feed accounting for about 65-70% of the cost of producing a chicken. In July, some retailers predicted prices were set to double almost immediately because of the drought.
This is not the first time extreme weather have been directly linked with food price hikes in Australia. For example, during the 2002-03 drought, food prices rose by 4.4%, nearly twice the rise of 2.7% in the consumer price index. Over 2005-07, drought prices rose by 12%, again double the CPI increase of 6%. The Queensland floods of 2010-2011 saw significant increases in food prices, although these increases were temporary.
These price increases are now seen by scientists as a direct result not only of global warming, but also in increasing climate variability, which is causing more droughts, floods and extreme weather events.
The World Watch Institute, a global sustainability research institute, blames increased prices directly on the climate variability that comes with climate change. As it states:
“Climate change has been attributed to greater inconsistencies in agricultural conditions, ranging from more-erratic flood and drought cycles to longer growing seasons in typically colder climates. While the increase in Earth’s temperature is making some places wetter, it is also drying out already arid farming regions close to the equator.”
New research coming from NASA scientist James Hansen earlier this year said that we can comfortably predict that not only are these sorts of events more likely to occur, but that we can also link current extreme weather events such as the US drought with climate change, meaning we can directly link climate change to significant increases in food prices. Even if the July price increases are temporary, with increasing climate variability, we should be prepared for increased prices and more shocks.