Food prices worldwide have gone up over the last 8 or 9 months.
Some have tried to blame it on the use of corn for ethanol in the U.S., and by extension, on efforts to curb global warming. This is total bull, and in my opinion, one of the most despicable tactics yet employed by those who deny the reality of global warming. Ethanol-from-corn started well before the sharp increase in food prices, but there is a unique trigger to the price increase which is ridiculously easy to identify. It’s even been in the news. And it’s the one the denialists don’t want you to think about.
In fact it might just be the single thing that denialists most want to conceal.
Let’s take a look at the food price index:
It’s even broken down by the type of food commodity:
This graph might give the impression that much (if not most) of the latest price rise is due to an increase in the price of sugar. But that’s not so, because the food price index isn’t just a simple average of the commodities prices. Sugar is only a small contributor to the food price index, in fact it’s the smallest contributor among all these commodities. The food price index is computed according to:
If we want a breakdown of the contribution of each commodity to overall food prices, we should graph their contributions to the food price index. And here they are:
Let’s take a closeup view of the most recent 6 years or so:
Now it’s plain to see. The 2010-2011 rise in food prices was triggered by a rise in cereals prices. It started in July of 2010, and still hasn’t relented. Sure, there are other factors too — and as usually happens, an increase in cereals prices can cause a “ripple effect,” leading to increased prices in other commodities. But the root cause is something that happened to cereals prices in July of 2010.
And what on earth could that be?
“Cereals” includes wheat. What if one of the world’s largest wheat producers had devastating crop losses, reducing their production by a third? What if they were one of the world’s biggest wheat exporters, but production was so reduced that their exports dropped to zero? That’s exactly what happened in Russia. And the trouble started in July of 2010.
Why did the Russian wheat harvest suffer so? Because of the record-breaking heat wave and drought which plagued a massive region, at just the wrong time for Russian agriculture. And one of the contributing factors is: global warming.
That’s the ugly, deadly dangerous secret the denialists don’t want you to think about. That’s why they sank so low as to try to blame inflation of food prices on attempts to fight global warming, when it’s really due to: global warming.
Here’s the much uglier, much more dangerous truth: this is just the beginning. It’s gonna get worse. A lot worse. Be afraid. Be very afraid.
But for the sake of this, and the next few, generations, don’t just be afraid. Get off your ass and do something. Make our politicians get off their asses and do something.
Open Mind 
Thanks for yet another insightful analysis, Tamino.
Cause and effect: whodathunkit?
(Methinks BPL’s being a little too conservative with his 2056 prediction)
The Yooper
And the previous jump in cereal prices, in 2008, was due to fuel prices … right? And the denialists are still trying to keep the world chained to oil … right?
They’re despicable … right? Usually I just say they’re wrong, but that’s not enough. Time to do something. Thanks for the reminder.
“this is just the beginning. It’s gonna get worse. A lot worse. Be afraid. Be very afraid.”
Yep, I’ve been saying as much to anyone and everyone for a while now.
The response: usually a blank, uncomprehending stare.
It’s not just Russian wheat, but also Chinese wheat, and rice in Pakistan, and virtually every crop in eastern Australia. All in the same 12 month period.
And it is indeed just the beginning.
Whereas, as I understood it at the time, the 2008 spike in cereal prices did have something to do with biofuels. Maize ethanol is obviously a stupid idea, but not as stupid as ignoring global warming.
In 2008 a friend of mine who farms multiple sections in Kansas called me and told me he had just paid over $700 to fill his tractor with diesel fuel. I do oil, and he was just letting me know from where my money was coming. Most of his corn went to ethanol, but he was also getting the residue back and feeding it to his cattle. It has to be supplemented, but he seemed to think that system was working very well.
One misconception people have, none of his corn ever went directly for human consumption. It went to feedlots to finish cattle/hog operations. If all that land in the high prairie were used for cereal production, I suspect the farmers would be broke in no time. There’s not much money in feeding the world’s poor.
The well is poisoned: those who reject global warming are now so firmly committed to rejecting any source that contradicts their convictions that trying to change their minds is about as uphill as any public communications effort could ever get. Even catastrophes like crop failures, floods and massive droughts may not be enough. I am very afraid indeed.
I believe that the Meme du Jour is still trying to resurrect ‘hide the decline’ as an issue. On a different board, I’m having an argument with someone on this issue who claims to have published in Nature and thinks it’s the most serious thing ever. Also uses Climate Audit as a reference for this.
Yes, really.
As far as crops go, the problem is this: Changes to the hydrological cycle as a result of global warming may be neutral on a 100-year timescale, as far as crop yields are concerned. Indeed, they may be positive if the land made available to farm exceeds the land lost. Unfortunately, farming does quite rely on this year being the same as last year; whilst change is ongoing, crop failures should be more common. This last point being lost on the denialati, unsurprisingly.
I honestly don’t know what is to be done. I remember estimating once that fixing CO2 emissions (as in >95% reduction) using a nuclear+synthetic fuels+moderate home efficiency improvements approach would cost between 30 and 60 percent of (1-year) GDP, spread over 20 years. I.e. about 1 banking sector bailout. It’s not as if it can’t be done or would cause massive hardship.
Hmmm. Must write a book on the subject. To much for random blog comments..
I highly doubt arable land lost will be equaled or exceeded by new arable land. I think that outcome is impossible.
And Yale economists are apparently clueless as to the true value of a bread basket. Kansas is worth way way way way more than Connecticut.
JCH –
Well, that is the secondary problem; what are now the most productive temperate zones have had an awful lot of glacial dust shoved on them, meaning excellent soils often in places that would presumably have had poor quality red continental soils otherwise. And moving the temperate zone North will mean we’ll be trying to farm on the soils remaining in the glaciated areas where that soil came from.
As far as Economics goes.. from what I can tell of the recent direction of the discipline it is more of an exercise in justifying tax breaks and marketisiation for rich entities than a serious and objective field of study. If that sounds harsh then I refer you to the journals…
Andrew – thanks for the thoughtful reply. As a kid I grew up round farms and ranches as my dad was an agricultural professional who worked mostly on farms and ranches, and we did a little farming ourselves. Our first home was on the side of the Pony Hills in South Dakota. Those hills were formed by the Western edge of a glacier. East of the hills the land is flat and very fertile. West of the hills it’s mostly rolling pasture and hay land. It was all dry-land farming, so I have a sense of how fragile a thing a crop can be. I’ve seen miles and miles of crops die. I’ve seen ranchers sell off vast numbers of cattle due to drought. Still, the area produces a great deal of food. The process of losing it, or moving it, and the like sounds fraught with extreme difficulties to me. Americans moved West and found vast areas of very productive land. It was a lucky thing. Places like the Dakotas generally get just barely enough rain. They have tremendous problems when they get too much rain. The land came so cheap, and I sincerely doubt economists have a clue just how valuable it actually is, or how lucky for this country it was that it was there. A society takes its arable land for granted at great risk.
May be an understatement.
A paper on the 2007-2008 spike:
Headey, D and Fan, S. (2010) Reflections on the Global Food Crisis. How Did It Happen? How Has It Hurt? And How Can We Prevent the Next One? International Food Policy Research Institute. Research Monograph 165.
Here’s a press release about the paper by the European Comission:
“Causes of the 2007-2008 global food crisis identified
A number of interacting factors, including increasing oil prices, greater demand for biofuels and trade decisions, such as export restrictions, all affected world cereal prices.”
So what are the best actions, and what is the best resource outlining what to do? Obvious steps:
-Minimize personal impacts
-Contact Senators and Representatives
-Buy renewable energy if possible
-Explain the problem to others
-?
On explaining the problem, sites like this and Skeptical Science are great for those interested enough to spend a little time, but there’s still what I think of as “the drunk guy at the bar problem”. Basically, most people won’t think about it for more than 20 seconds and they need it really simple.
[Response: I don’t know the best actions. But there’s at least one I do know, and which is simple and easy to understand: politicians who deny the reality, human causation, and danger of global warming should be voted out of office.]
Hope you’re wrong, mate…
[Response: I hope so too.]
Pelke gives an accidental acknowledgment to the rise in wheat prices by virtue of including it in a cut and paste of a sentence he uses to support the ‘pin it all on corn” argument. Here it is from the FAO website and his site:
“The increase in February mostly reflected further gains in international maize prices, driven by strong demand amid tightening supplies, while prices rose marginally in the case of wheat and fell slightly in the case of rice.”
Wheat rose marginally. I guess, but relative to what? If you check the increase over 2011 year it is quite large. A graph of wheat export prices is provided at of all places, the FAO website. Maybe Pielke missed it. Or maybe wheat just doesn’t interest him:
http://www.fao.org/economic/est/commodity-markets-monitoring-and-outlook/grains/en/
A better graph that includes the data is found at Index Mundi. The yearly increase from Feb 10 to Feb 11: 78.96%. According to index Mundi corn grew 81.53% over the same period, so how can he put it all on corn with the rate of increases so close for the two?
http://www.indexmundi.com/commodities/?commodity=wheat&months=12
The Business Week article at the bottom of the Index Mundi page discusses stockpiles and prices and mentions the complications caused by the Russian drought. The role played by the Russian summer heat wave in the grain price rise is undeniable but to Pielke its like it dosen’t exist.
The world seems to be a very simple place when viewed through the eyes of Pielke, Goddard, Tisdale, Watts and the like.
Yes, the main impetus for ethanol-from-corn was never AGW mitigation, something I’ve been trying to make clear to sundry folks for a long time now.
Unfortunately the Brazilian ethanol-from-sugarcane model gets tarred with the same brush; it seems to work a good deal better from an economic and mitigation POV.
Exactly, and I try often to remind people that the impetus behind the US effort to turn corn in ethanol had nothing to do with global warming, and very little to do with environmental concerns at all.
Rather, it was a collaboration of politicians and ag industries in the leading corn states selling the rest of Congress on the idea that ethanol would decrease US dependence on foreign oil.
IOW, by using the oil shortage fear factor, big ag was able to steer billions of dollars into the corn business.
Senator Grassley, arguably the most powerful politician in this regard, still pushes corn ethanol as a means to “energy independence.”
Ditto. . . sigh.
As a U.S. farmer, I hear the corn-ethanol complaint a lot. I’ll be the first to admit that the scheme makes no sense and that without a subsidy to blenders it would have collapsed years ago. But it is worth noting that the major byproduct of ethanol production is fed to cattle, so only the starches are lost to the human food supply.
People in China, India, and several other developing nations are finally seeing a rise in their incomes and they spending much of it on food, especially meat. This understandable but does take a lot of grain off the market. Stocks are very tight and a bad crop in an exporting country has a dramatic global effect.
dko – I mentioned the return of of residue for cattle feed above. Do you sense that many people actually think the “ethanol” corn used to be fed directly to humans? None of our corn ever saw a lunch counter. We ate corn all the time, but honestly, I have no idea from where it came. It came from the grocery store! We never ate anything grown on our land. We produced food for animals to eat. In the area where I grew up, it is true that much of the “ethanol” corn used to be wheat.
JCH — The marketplace is a force to be reckoned with. When demand for corn ethanol rose, so did corn prices, as did the acres diverted to corn production. (Input costs also rose, BTW; this has not been a windfall to farmers.) Even though nearly 40% of U.S. corn production goes to ethanol, we are now growing so many more bushels of it that the same amount is still entering the human food supply line.
But…that means fewer acres of something else (wheat in your area), which means less production of that, and higher prices, etc. It’s all connected.
For those with sufficient income, higher food prices are an annoyance; for the world’s poor, it is a disaster. Another “once-in-a-thousand-years” drought in a major exporting country this year would send food prices skyrocketing. Unfortunately, as global temperatures rise along with consumer demand, this sort of thing will become more common.
One billion more people every 13 th year also have a heavy impact on foodprices
Global sinking ground waterlevels aswell, erosion, soildepletation and so on vorsen things even more
The 2010 food price run up came from extreme weather triggering a series of low yield harvests, and fear in the markets regarding the Chinese trying to grow wheat with fossil water. Irrigation with surface water is technically feasible, but not economically.
Many of the areas where China has been growing wheat for the last 20 years, were traditionally millet and sorghum growing areas. Both are much more tolerant of drought and heat stress than wheat.
I would cheerfully bet that 2010 will turn out to have fewer extreme weather events than most of the years in the 2010-2019 decade. To the extent that extreme weather diminishes crop harvest, 2010 is likely as good a wheat harvest as we can expect in the next decade.
As the rest of the Arctic Ice melts, the jet stream/storm track is going to do things we have not considered possible in our life time. The result will be “extreme” weather, and the NOAA attribution team will be kept busy.
Tamino, thank you, very enlightening.
I agree; it is just the beginning, rather, we are way past the beginning; we are in the midst of a meltdown, not only in reference to Fukushima but long past many peaks with no solutions to any of the obvious problems.
caw
All of the above, plus the fact that commodity food is now an actively traded market. Johann Hari wrote a superb polemic on the subject last year. Bottom line: as climate change bites into food supplies, it’ll be Goldman Sachs getting rich while the poor starve.
Heavily criticized in recent months were the institutional investors & pension funds for participating in market speculation and driving up prices… it’s not all shortages that did this!
We learned that the Russian heatwave dried out the soils up to 3 meters deep, so many are worried about the winter wheats… will they come up?
Following is from “Speculation And The Frenzy in Food Markets
The fight over financial regulation affects global food prices” (February 16, 2011) (The Real News)
Hi,
Similar things seem to have happened in the oil markets – there was a price collapse in 1999 that appears to have had little to do with fundamentals, and the 2008 price spike seemed a bit outlandish as well.
The problem is that the amount of money now available to speculate on things now seems to dominate the real-world volumes of the same things (if that makes the slightest sense). At best it means that market signals get exaggerated; at worst it means that supply and demand cease to matter.
The fundamental mistake that the members of the “reality-based community” are making is to ”believe that solutions emerge from …judicious study of discernible reality.”
But, as a senior adviser to Bush once wisely informed us:
Hold on, isn’t bioethanol still a longer term problem?
Sure, the 2010 spike was probably driven by Russia, but there is a lot less ‘slack’ in the system on the supply side thanks to this. In the short run I expect farmers will plant based on expectations for the next year or so, which is what should dominate the annual spikes, but won’t long term increases in demand above normal lead to a long term price creep?
Kind of like a ‘global warming’ signal, but in food prices rather than temperature.
Russia still haven’t lifted their export ban and have cut their forecast for crop production this year.
http://seattletimes.nwsource.com/html/businesstechnology/2014534886_apuscommoditiesreview.html?syndication=rss
As I noted a couple of weeks ago ( http://littlegreenfootballs.com/pages/freetoken ) some people will look upon rising food prices not with horror but rather with the view that it will help American farmers, at least for those who grow grain.
Those with livestock will however view the situation differently if the market can’t afford more expensive meat.
And here we get to one of the hard nuts of this problem – changing peoples’ behaviors, in this case meat consumption.
Long before the highly anomalous weather patterns we saw in Russia disrupt even more of the world’s food production, issues with petroleum, fertilizers, fossil water depletion, soil exhaustion, and increased population will bring large pressures on the price of food.
Climate change is the icing on the cake.
Ethanol from Corn production has never been a green policy. It has been a policy of a number of left/right wing governments, but not a green policy.
The reason being that the energy ratio for corn ethanol (output/input) is marginal. The gain is only really through co-products (gluten meal, gluten feed and corn oil), ethanol on it’s own gives no real energy gain (a ratio of 1.01 to 1.08).
The main reason for producing it in the US has been to create an additional market for corn and hence support American farmers and corn prices.
The issue is even worse for ethanol from wheat, which results in a fractional ratio, that is you get less out than you put in.
The US Department of Agriculture research shows how bad the energy gain is, from corn ethanol.
For more info read up:
AER721 – Estimating the Net Energy Balance of Corn Ethanol. By Hosein Shapouri, James A. Duffield, and Michael S. Graboski. U.S. Department of Agriculture, Economic Research Service, Office of Energy. Agricultural Economic Report No. 721.
And
aer814 – The energy balance of corn ethanol update by By Hosein Shapouri, James A. Duffield and Michael Wang.
Slight grammar mistake in my post above!
That should have read:
“(a ratio of between 1.01 and 1.08).”
A semantic error, surely? I did think you were saying that the ratio was 1.01:1.08, not that it was in the range 1.01 to 1.08. :)
USA has cornohol subsidies & gas-content mandate because Archer-Daniels-Midlands & their ilk own bought enough congressmonkeys, and because Iowa has out-sized influence on presidential elections.
Is that short enough for a noisy bar?
One thing you have to keep in mind, along with climate change, is the rapid growing population rate and limited natural resources. The earth is at its’ limits in the carrying capacity it can sustain. This puts more stress on the natural resources we consume and overuse. I agree with ethanol use is not necessarily driving the price up, but, is being consumed for another fuel source.
Wheat Prices, per metric ton in dollars, June each year
year nominal inflation adjusted (4%/yr)
1960 63 448
1965 47 275
1970 45 216
1975 107 422
1980 136 441
1985 114 304
1990 113 248
1995 141 254
2000 92 136
2005 119 145
2010 153
http://www.ers.usda.gov/Data/Wheat/Yearbook/WheatYearbookTable20-Full.htm
$30.oo in 1913 had the same buying power as $79.39 in 2010.
$63.00 in 1960 had the same buying power as $464.11 in 2010.
$113.00 in 1990 had the same buying power as $188.53 in 2010.
I don’t think a nominal 4% inflation adjustment is of much use.
http://146.142.4.24/cgi-bin/cpicalc.pl
Tamino,
You usually debunk posts such as this. Drought and heat waves have devestated crops since man has been farming. The science indicates the Russian drought was not caused by global warming:
http://green.blogs.nytimes.com/2011/03/09/natural-causes-drove-russian-heat-wave-study-finds/
Sure, global warming has the potential to reduce crop output, but the information posted here has nothing to do with global warming.
[Response: Lung cancer has killed people since long before man has been farming — but that doesn’t mean smoking isn’t a contributing factor.
The study by Dole et al. is mistaken. Although the cause of the Russian heat wave was a “blocking event” (not unusual for that region), this was certainly not “just another blocking event.” Dole et al.’s rejection of any global warming connection regarding the severity of this heat wave is based on naive analysis. I’ll be posting about it very soon.]
farming does quite rely on this year being the same as last year
This can’t be emphasized too much. Farmers have options about what to plant, but they can’t be wrong too many times over the course of a few years and keep their operations going. A farmer doesn’t simply pit himself against Nature. He’s also up against every other farm in his region. A farm has to make money just like any other business and a successful crop isn’t a guarantee of a profit. Gluts look good on paper as long as it isn’t your paper.
While it certainly doesn’t help at the macro-level, my wife and I got serious a couple years ago about converting our tiny yard from lawn to vegetables, using raised beds of scrap lumber and free leaf compost from the city landfill. We raise mostly tomatoes, pole beans, greens and some peppers, since fresh produce is horrendously expensive, and we freeze what we don’t eat immediately. So now we eat a lot better, more nutritiously certainly, and save quite a bit of money. It’s a little thing on the big scheme of things; but it does help.
I have been told that
Have I been informed correctly?
What’s the biological barrier to feeding only one person for every two hectares of land, when 50 may be possible?
Let’s run the numbers….
Land area 148,940,000 sq kilometers
Population 6.9 billion people
2.15855 hectares per person.
But treating one square kilometre at the top of a mountain like one that’s currently a wheatfield is just ridiculous.
Net* potential arable area (FAO) 38,488,090 sq kilometers
0.557798 hectares per person.
Plenty. But not so naive as the 2 per person figure.
Of course, mere space isn’t the only limiting factor, and Liebig applies very much in terms of calculating carrying capacity.
* Excludes protecting land. Includes land that *should* be protected.
Geoff,
Have you tried feeding your family on a hectare? The problem with intensive agriculture is that it is not sustainable. Eventually, soil and aquifers become depleted, and they are not renewable resources. What is more, you simply are not going to support 50 people on a hectare of the Atacama or Sahara deserts.
Ultimately, the question of what is possible is less relevant than the question of what is sustainable.
It’s certainly a challenge, Ray.
I’m cultivating less than 200 sq. metres – up from ~120 the last two years as I’ve taken on another plot, and am very conscious as to the absolute need to bring in a balance of nutrients as well as taking food from the land. Living in a rural area not far from the sea with a high average rainfall helps. But seaweed, crushed seashells, wood ash, mixed manure from various farms, even the fortnightly grass-cuttings from the beer garden at my local – all play their part. I’ve worked out that access to a couple of gallons of diesel a year would make moving all of that stuff possible. No mains water but an extensive rainwater-catching system helps. Sustainable? Time will tell. But becoming self-sufficient in veg is the aim: so far that has been achieved with onions, shallots, potatoes and runner beans, so there’s some way to go!
Guess the main principle is “only take out what you put back in”….
Cheers – John
Geoff Beacon wrote:
The world has about one person per two hectares of land.
Yup. Global population divided into global land surface area means each person has about 2.1 hectares (a square of land 145 meters on a side) to supply their every need… and that “every need” is the problem with this idea which puts forward the possibility that we could all feed ourselves happily on our personal patch. In your two hectares you have to have your share of everything else as well.
Some of it will be heat desert, some ice desert, some mountainous and some will have to be forest to put the 61 trees that is our personal share. There will have to be space for all the wildlife and ecosystems that keep planetary life support systems ticking over. Obviously, we would have to squeeze in space for our share of the factories, mining operations etc, that extract and fabricate the goods that we consume and the energy we use. There would have to be space for all the waste and pollution substances (that we are responsible for) to be sequestered.
Penultimately, there would have to be an area to grow the fodder for the animals that are so in demand for meat. Finally, what is left could grow food for one person.
Now imagine all that then go to a large field and pace out 145 metres so you can visualise the size of your personal bit of Earth.
We’re seriously cramped.
Plus the land that is covered by cities, parking lots, highways, airports and other forms of land use that make it unavailable for agriculture.
Applying the usual rigorous standards of logic practiced by climate sceptics I got to the conclusion that Tamino got this the wrong way around. It is not the heat wave that was the major contributor to the recent rise in food prices; it is the price hike that caused the heat wave!
This conclusion may be counter-intuitive, in defiance of common sense and lacking any plausible physical mechanism but it must be considered seriously since the opposite conclusion is unpalatable and therefore must be false by definition.
Douglas,
Started doing the same in 2009. It takes surprisingly little effort once the initial bed construction is completed, and veg straight from the garden are unbeatable!
It is hard to predict where food prices will be by the end of 2011. I think the unrest in the Middle East and the knock-ons in the price of crude oil may well be a prime driver as they were in 2008 – and that is regardless of what climate destabilisation may throw at us. Up, more likely than not, in other words, I’m afraid.
Cheers – John
I don’t believe the main point of this post is correct. In a post at my blog I estimate the total tonnage of cereal feedstock used to make the global biofuel supply, and compare that to the fluctuations in the Russian wheat supply. It’s notable that the latter are more than an order of magnitude smaller than the former.
Also, 2010 is not particularly anomalous in the history of Russian wheat production which has been highly volatile for a long time. For example, it’s fallen by a third year-on-year on two other occasions in the last two decades (1998 and 2003). Those didn’t result in massive global food price spikes.
Higher temperatures = more ozone. That’s the equation fossil fuel companies really don’t want the public to understand.
Inexorably rising levels of background tropospheric ozone result from the VOC emissions created when burning fuel, reacting to UV radiation. Ozone is highly toxic to people, causing cancer, emphysema, asthma, allergies, and is recently linked to diabetes and autism – all of these ailments have reached epidemic proportions.
Worse still, ozone is even more poisonous to vegetation. NASA and the Dept. of Ag. estimate crop yield losses annually in the US alone in the billions of dollars. In addition to stunting growth and causing a decrease in quality and in nutritive value, exposure to ozone increases the vulnerability of plants to insects, disease, fungus, drought and wind.
The real kicker is that long-lived species like trees and shrubs that are exposed to ozone season after season are dying off at a rapidly accelerating rate. This is happening around the globe as ozone precursors travel across oceans and continents. Imaging the implications of a world with trees. The entire ecosystem of species that depend upon trees for food and habitat, shade and soil retention, will expire with them. That includes, ultimately, humans. We also happen to rely on forests for oxygen to breathe, along with life in the sea, which is also doomed from ocean acidification.
We should convert to clean energy on an emergency basis before we starve and suffocate, if it isn’t too late already. Or rather, even if it is already too late – we should do it anyway.
I’m not making this up, by the way. The effects of ozone are well documented in scientific research – links here: http://witsendnj.blogspot.com/p/basic-premise.html
Ozone is one problem among many.
Have you fixed your website yet?
Mioux!
http://witsendnj.blogspot.com/2011/03/snow.html
Stuart Staniford,
Thanks for your blog post. I’d noticed the same thing. However the timing of the price spike really seems to me to support the suggestion that this reduction in Russian harvest was the initiator for this particular price rise. The issue is complicated in that maize is used for biofuels and animal feeds more than wheat, so the different products are not directly comparable.
From the tables at the end of this post it’s clear that while a 1/3 reduction in Russian wheat could have a substantial direct price impact on wheat, that is not the case with maize (which is around 0.5% of world production). However both wheat and maize showed price increases from July 2010:
http://www.fao.org/economic/est/commodity-markets-monitoring-and-outlook/grains/en/
I suspect that there are deeper market mechanisms afoot in the increase in cereal prices. Such mechanisms are discussed in the paper “Reflections on the Global Food Crisis” as linked to by Jesús R earlier in the thread (Thanks Jesús – good paper). Which, while about the situation in 2008, is very informative and has information relevant to Tamino’s post (primarily in section 2 which is excellent – I just skimmed the rest of the paper).
I first read Tamino’s post thinking he’d probably called this one wrong. I’ve been unable however to dismiss the crucial fact: Whatever the detailed mechanisms behind the rise, cereal prices started to rise as news of the Russian drought broke. If an alternate explanation is available it’s going to have to be damned good for me to concede coincidence in this case.
FAO Definition of cereals:
http://www.fao.org/es/faodef/fdef01e.htm#1.01
To use these tables cut and paste into Excel and use Data>Text to Columns.
Maize
,Russian Federation,World
2000,1530290,592475220,0.26%,,,
2001,847220,615510314,0.14%,,,
2002,1562890,604842771,0.26%,,,
2003,2121900,645111399,0.33%,,,
2004,3515690,728806531,0.48%,,,
2005,3210770,713433404,0.45%,,,
2006,3510351,706698044,0.50%,,,
2007,3798020,789480893,0.48%,,,
2008,6682300,826224247,0.81%,,,
2009,3963430,817110509,0.49%,,,
Wheat
,Russian Federation,World
2000,34455488,585690968,5.88%,,,
2001,46982120,589823411,7.97%,,,
2002,50609100,574745780,8.81%,,,
2003,34104288,560128009,6.09%,,,
2004,45412712,632670103,7.18%,,,
2005,47697520,626844991,7.61%,,,
2006,44926880,602887177,7.45%,,,
2007,49367973,612606833,8.06%,,,
2008,63765140,683406527,9.33%,,,
2009,61739750,681915838,9.05%,,,
Chris, something similar could be observed when the unrest in the Middle East started. Not a problem in sight in terms of oil supply, and yet prices immediately went up. Concerns over supply does that.
Note that you could also wonder whether as much wheat and maize would be produced if it weren’t for biofuels. They can be grown on poor soils that would prevent use in food production.
Food prices are in a bubble, just as was the case in 2008. We are headed for a collapse in the food (and energy) prices – but that will NOT make the food more available. Biofuels and Russian heatwave definitely contributed to the run up in the prices — but the main reason is probably the speculative capital that flooded the market after the QE1 and QE2. Speculative bubbles always pop-up on an underlying increasing trend…
World Bank Policy Research Working Paper 5371 http://elibrary.worldbank.org/deliver/5371.pdf;jsessionid=4lq64vqhsre54.z-wb-live-01?itemId=/content/workingpaper/10.1596/1813-9450-5371
“The paper also argues that the effect of biofuels on food prices has not been as large as originally thought, but that the use of commodities by financial investors (the so-called ”financialization of commodities”) may have been partly responsible for the 2007/08 spike.”
“Between 2003 and 2008, nominal prices of energy and metals increased by 230 percent, those of food and precious metals doubled, and those of fertilizers increased fourfold. The boom reached its zenith in July 2008, when crude oil prices averaged US$ 133/barrel, up 94 percent from a year earlier. Rice prices doubled within just five months of 2008, from US$ 375/ton in January to $757/ton”
“Fiscal expansion in many countries and lax monetary policy created an environment that favored high commodity prices.”
“Finally, it unfolded simultaneously with the development of two other booms—in real estate and in equity markets—whose end led most developed countries to their most severe post‐WWII recession.”
“worldwide, biofuels account for only about 1.5 percent of the area under grains/oilseeds”
And yet and yet and yet… The Heartland Institute’s James Taylor uses his Forbes column to claim that Global Warming Is Creating Perfect Crop Conditions:
Words fail me…
“Human-Generated Ozone Will Damage Crops, Reduce Production… MIT, 2007 …A novel MIT study concludes that increasing levels of ozone due to the growing use of fossil fuels will damage global vegetation, resulting in serious costs to the world’s economy. The analysis, reported in the November issue of Energy Policy, focused on how three environmental changes (increases in temperature, carbon dioxide and ozone) associated with human activity will affect crops, pastures and forests. The research shows that increases in temperature and in carbon dioxide may actually benefit vegetation, especially in northern temperate regions. However, those benefits may be more than offset by the detrimental effects of increases in ozone, notably on crops. Ozone is a form of oxygen that is an atmospheric pollutant at ground level.”
http://witsendnj.blogspot.com/2011/03/snow.html
[Response: You’ve had plenty of opportunity to push your ozone agenda. Enough.]
Are you kidding me? I have an “ozone agenda”? Oh, like, I LOVE ozone? Or what?
I have a “survival” agenda. Like, I would like my beloved daughters to live to a nice ripe old age, and they aren’t going to be able to do that, because guess what??
The air is so polluted that all the plants and trees are dying! YEAH. That is what is happening, in the real world, and if you GUYS want to ignore pollution and fuss over atmospheric physics ad nauseum, go right ahead.
Meanwhile, we will just all die, together.
[Response: The problem is that after having stated your thesis, repeatedly, you continue to do so without letting up. That’s fine for your own blog, but not for this one (or RC, where you did the same thing). And you don’t seem to have the peer-reviewed science to back up your claims.
You’ve had your say. If you want to keep talking about the ozone issue, you’ve got your own blog. My agenda is global warming, which is what this blog is about.]
Chris R:
I’m not disputing that the Russian drought had some role in prices. My point is that it’s in error to give it the primary role, when a) the biofuel contribution is quantitatively much larger, and b) previous equally large declines in Russian wheat production had produced no such price spike. I would argue that biofuels have removed all the slack from the system, such that now any otherwise normal harvest problem around the world can trigger a price spike. In this case, Russian wheat harvest failure played a role, next time it may be something else. And while summer 2010 in Russia may have been highly anomalous in the temperature signal, it was not particularly anomalous in the wheat harvest signal.
As for the wheat/corn thing – there are strong arbitrage linkages between the prices since there is quite a lot of cropland that can potentially be used for either, and if the prices get too out of whack, farmers will switch. Since futures traders know this, shortages of one crop can cause almost immediate changes in prices of others.
Stuart,
“My point is that it’s in error to give it the primary role, when a) the biofuel contribution is quantitatively much larger, and b) previous equally large declines in Russian wheat production had produced no such price spike. “
A couple of question pertaining to this. Did the Russian government institute an export ban on wheat in the years they experienced equally large declines in production? If not, wouldn’t that make 2010 a highly anomalous event since none of the wheat produced is available to the rest of the world?
The export ban is still in effect I believe.
Also I believe you were looking for this data (Russian Wheat Production 2010):
http://www.indexmundi.com/agriculture/?country=ru&commodity=wheat&graph=production
I wouldn’t imagine the export ban would too radically change the picture over and above the harvest downtown. What the export ban essentially does is mean that Russian consumers face lower prices than they otherwise would, and thus will conserve less, meaning that consumers elsewhere must face somewhat higher prices, and thus conserve more than they otherwise would. But since the population of Russia is only 2 1/2 % of world population, and given that food demand is inelastic anyway, I wouldn’t imagine that the failure to conserve by that tiny slice, would make a very big impact on the conservation required by the 97 1/2%.
I have some scatterplots illustrating the relationship between wheat/corn/soybean prices here.
How many people will die as a result of this speculative bubble? Wouldn’t their survivors be justified in taking revenge on the speculators?
In Japan even the water prices will now go through the roof! Your readers might be interested in how to treat their radioactively contaminated drinking water:
A Japanese translation seems underway, see comment by Takuya there. Maybe someone wants to help with other languages?
Reverse osmosis would seem to be the best method to me, a system to treat 50-100 gallons/day costs ~$300 and it’s not specific for a particular solute.
Stuart Staniford,
Having had another look, taking into account your comments…
I now agree.
Whilst the Russian drought did precipitate this instance of price rise, it happened against a background of market stressing caused by demand (with biofuels a major component of that demand).
I think Tamino’s post is erroneous by emission.
Marco,
Interesting that you should bring up Oil and the current N.Africa / Mid East situation. The cereal market is made volatile by supply restrictions due to biofuels which are themselves being introduced due to increasing prices an volatility thereof in the oil market. I’ve been of the opinion for some time that in terms of human affairs: Peak Oil (which is now) will be the major issue for the first quarter of this century, with climate change being a slow-burner that will really hit us in the second quarter.
Kind of like being kicked in the nuts then kneed in the face. But in this case humanity is an idiot kicking itself in the nuts, and kneeing itself in the face. ;)
Tamino’s action suggestion,
“politicians who deny the reality, human causation, and danger of global warming should be voted out of office”
should be written on every wall and as a ceterum censeo added after every speech.
Some may believe that Gail has an ozone agenda, but what her agenda is is that people should be paying more attention to ground level ozone. There is plenty of research coming out of the University of Illinois that under increasing temperatures ground level ozone rises and reduces crop yields. Well, it is not only bad for maize.
Ground-level nitrous oxide apparently also increases. Also very bad for crops and trees.
Far too little attention is being given to these gases at the ground level.
Your posting today is about food.
We should remember the National Crop Loss Assessment Agency was established to determine why significant losses to agriculture. Their studies that showed significant crop loss due to tropospheric ozone emissions.
Crop losses typically from 10 to 18%
Click to access Kopp85.pdf
http://www.asl-associates.com/kriging.htm
Click to access 322.pdf
And NASA is in on the issue too http://earthobservatory.nasa.gov/Features/OzoneWeBreathe/ozone_we_breathe3.php
Ozone relates strongly to energy policy, crop loss, health and more. And should be factored in any systems approach to AGW. For one reason – with more heat, and more UV radiation, the atmospheric chemical reactions will generate far more dangerous chemicals – Ozone is a particularly nasty one.
The Crop Loss Assessment Agency was shut down by the Bush Jr Administration. Their reports and conclusions still apply.
From the Journal of Economic Surveys:
http://onlinelibrary.wiley.com/doi/10.1111/1467-6419.00023/abstract
“Agricultural crop production is highly dependent upon environmental conditions among which air quality plays a central role. Various air pollutants have been identified as a potential influence on commercial crops including SO2, NOx, O3 and CO2. In particular, ozone in the lower atmosphere has been identified as a serious cause of crop loss in the United States and seems likely to be creating similar losses in Europe. In this paper the methods which can be applied to assess the economic damages from air pollution are critically reviewed. This requires measuring pollutant concentrations, relating these to physical crop damages, and estimating the reactions of the agricultural sector and consumers to give welfare changes in terms of consumers’ surplus and producers’ quasi-rents. The approach of the European open-top chamber programme (EOTCP) is shown to have neglected lessons learnt by the National Crop Loss Assessment Network (NCLAN) in the US”
While you may have a valid point, to imply that the current price increase is due to CO2 remains just a hypothesis.
A more realistic hypothesis is that the Fed’s devaluing of the dollar is kicking in with gusto. If CO2 is truly the cause, the the effect should be traceable for the last couple decades. It’s not, according to the charts you provide.
Here’s an article that talks about the impacts of the Fed’s policy:
http://online.wsj.com/article/SB10001424052748703899704576204594093772576.html
[Response: The proximate cause of the rise in food prices was the Russian heat wave. That event can be timed precisely to July 2010 — exactly when the food price increase begin. Your talk about “the the effect should be traceable for the last couple decades” shows that you’re not thinking clearly.
And these are world food prices, not just the U.S. Despite rampant Americentrism, the U.S. does not control the world.]
[Response: The proximate cause of the rise in food prices was the Russian heat wave. That event can be timed precisely to July 2010 — exactly when the food price increase begin. Your talk about “the the effect should be traceable for the last couple decades” shows that you’re not thinking clearly.
And these are world food prices, not just the U.S. Despite rampant Americentrism, the U.S. does not control the world.]
This is pure supposition on your part. From the NYT article on the wheat market at the time of the Russian wheat embargo:
“But there is an important difference between the current situation and that last price spike: the Russian drought and ban on wheat exports, in contrast to the global shock in 2008 that drove wheat prices up to nearly $13 a bushel and created tensions in Indonesia and Pakistan, are occurring when global wheat production is plentiful and stocks in the United States are at a 23-year high, analysts said.
“This is still going to be the third-largest wheat crop in world history, even with the Russian shortfall,” said Daniel W. Basse, president of AgResource, an agricultural consultant firm in Chicago. “The question becomes, Will the drought persist, and will there be problems elsewhere, in other big producers like Argentina or Australia?” ”
To say that AGW is the cause of this wreaks of ideological blindness. Is it one part? Possibly, but so is the cost of transportation due to the BP oil spill. And so is the cost due to the economic policies of the US (which have a dramatic impact on the world, regardless of what you believe).
[Response: None of which alters the fact that the proximate cause was the Russian heat wave. If that provided an excuse for capitalists to exploit market conditions, it’s still the cause. And your idiotic remark about how it should have shown the signs of steady rise in CO2 still reveals that you’re not thinking clearly.
And: when multiple climate-change-related crop failures cause genuine hunger … it will be a lot worse.]
From the same NYT article
“Maximo Torero, at the International Food Policy Research Institute, said the market reaction was overdone. Russia represents only 11 percent of the world’s wheat exports, he said, and any shortfall could be met by major wheat exporters like the United States, Australia or Canada. ”
Sure sounds like economic/political manipulation had a bigger part in this run up of prices than anything weather-related.
Dean, keep in mind that when we talk about a natural disaster or crisis, we also have to consider how the nation affected responds. In this case, Russia responded by cutting off exports of whatever crop remained. Other nations followed suit. Prices rose. Markets responded, and speculators descended like vultures.
Whether it is the Japanese Earthquake, the Russian heatwave or Katrina, humans compound problems that arise because they tend to think tactically rather than strategically.
Ok, so you’re talking about what precipitated rather than what caused the event. Fine. But the underlying cause is not AGW, it was nothing more than an excuse that people used to manipulate the system.
If the heat wave had not happened, they would have found something else to “justify” their playing their little game.
Like Wikileaks…
http://wsws.org/articles/2011/jan2011/pers-j19.shtml
http://www.guardian.co.uk/media/2011/feb/02/wikileaks-exclusive-book-extract
Talking about excuses, you seem to be ready to grab at any excuse, no matter how desperate, to deny that AGW can have any bad effect at all.
You sad, pathetic little man.
Re-reading your link to the Times article, Dean, I really don’t follow your conclusion. The article is replete with concern expressed about the Russian decision to ban wheat exports and the possibility that other nations might follow suit–and that is clearly linked to the weather. The article describes a condition in which concern about potential future price rises (which actually have since occurred, btw, as Tamino’s graph shows!) were driving large corporations and governments to hedge, driving futures prices up.
Moreover, something else happened. Remember the bit you quoted in the first comment you made: The question becomes, Will the drought persist, and will there be problems elsewhere, in other big producers like Argentina or Australia?”
Surprise, surprise–Australian rains, and, later, actual flooding, reduced Australian exports of milling wheat very considerably at the end of 2010 and the beginning of 2011. And wheat prices did rise quite dramatically.
http://www.bloomberg.com/news/2010-12-06/australian-milling-wheat-exports-may-drop-to-3-year-low-on-rain-drought.html
http://www.businessweek.com/news/2011-02-08/demand-for-australian-wheat-strong-as-price-near-two-year-high.html
And while neither Russian heatwave nor Australian flood can be conclusively attributed to AGW, these sorts of events are exactly what we will see more of as warming (and precipitation change) continue. So Tamino’s point, I think, stands.
Dean P., I think you are missing the point. Climate change very likely did contribute to the severity of the heatwave, which exacerbated both the severity of the crop failure and peoples’ anxiety over it. This made it expedient for the Russian government to over-react, and speculators descended in to enjoy the chaos.
Climate change will create lots of disruptions, lots of panic, lots of chaos and lots of opportunity for those who thrive on such conditions. Unfortunately, this does not tend to include those who value civilization.
Ray,
I think you miss my point: There is evidence that there was no real disruption in supply and that the run up in price was not based off of true demand but instead off of political and economic manipulation of the system. While the Russian export blockade did distort the demand, the overall wheat yield for the year was quite high, compared to historic averages and therefore any major changes in the price were not due to supply but instead due to manipulation.
Dean, you’re confusing global and regional supply. If Russia cuts off all its exports, the supply for the rest of the world is decreased, even if the total counting Russia is increased.
Dean, what you are missing is the how–or rather the conditions that made manipulation possible. The disruption of supply from Russia forced a scramble, and that made it possible to manipulate the market. It is the same sort of thing you see in stocks when short sellers run for cover at the end of a quarter.
Since you quite rightly pointed out that I have my own blog to “push my agenda” – and have declined to publish my response to that here – anyone interested in the pernicious effects of ozone on crop yields and food prices can find more information here:
http://witsendnj.blogspot.com/2011/03/squabbling-over-scraps-at-taminos.html
where it won’t interfere with your agenda of climate science.
Greatly appreciated, Gail.
Michael T. Klare, writing in the 2011 Mar 28 issue of The Nation:
Whenever oil prices rise above $50 per barrel, the World Bak has determined, a 1 percent increase in the price of oil results in a 0.9 percent increase in the price of maize, “because every dollar increase in the price of oil increases the profitability of ethanol and hence biofuel demand for maize.”
And why does he think it has nothing to do with increasing cost of fertilizer production, transportation, biocides, diesel for tractors and irrigation pumps, and other fossil fuel dependent inputs to growing corn? Do you really think that if we banned conversion of corn to ethanol that an increase in the price of oil would have zero effect on the price of maize?
Brian Dodge | March 29, 2011 at 10:39 pm — He is reporting what a World Bank study claims. It is the case that the FAO food price index appears correlated with a crude petroleum index; there is a recent study indicating this on TheOilDrum.
When it comes to food discussions: Economics and Science is like wishes and fishes. It is difficult to separate economic discussions from the science. But we should.
Climate science can build prediction models and scenarios that we should carefully regard as we consider economics. Jumping into economics without valid and strong climate science is politics and pandering.
The climate change denyin’ is bad enough, but how much longer can humanity afford Econo-lyin’ ?
Maybe Nancy Griffith knows (she wrote a song about it)
I wonder if someone could explain a paper that seems to be circulating in the blogs
Sea-Level Acceleration Based on U.S. Tide Gauges and Extensions of Previous Global-Gauge Analyses
J. R. Houston† and R. G. Dean‡
The Abstract (http://www.jcronline.org/doi/abs/10.2112/JCOASTRES-D-10-00157.1)
and the full paper
http://www.jcronline.org/doi/pdf/10.2112/JCOASTRES-D-10-00157.1
They are finding that
Without sea-level acceleration, the 20th-century sea-level trend of 1.7 mm/y would produce a rise of only approximately 0.15 m from 2010 to 2100; therefore, sea-level acceleration is a critical component of projected sea-level rise.
their reported results indicate that sea levels have actually been decreasing
from the paper’s conclusions–
“The decelerations that we obtain
are opposite in sign and one to two orders of magnitude less
than the +0.07 to +0.28 mm/y2 accelerations that are required to
reach sea levels predicted for 2100 by Vermeer and Rahmsdorf
(2009), Jevrejeva, Moore, and Grinsted (2010), and Grinsted,
Moore, and Jevrejeva (2010). Bindoff et al. (2007) note an
increase in worldwide temperature from 1906 to 2005 of 0.74uC.
It is essential that investigations continue to address why this
worldwide-temperature increase has not produced acceleration
of global sea level over the past 100 years, and indeed why
global sea level has possibly decelerated for at least the last
80 years.”
Thanks!
Michael,
Could you find the part in the paper where they justify why they decided to do 1930-2010, rather than say 1940-2010, or 1920-2010?
Also, the deceleration is not statistically significant even for the interval they chose, and the main “conclusion” (deceleration rate and +/- error) is not in the abstract. 0.0014 +/- 0.0161 mm/y^2
Look at figure 2. Can you tell which areas have rise, and which have fallen? They use the same color for both! Try to look for the data, they refer to Willis (2010) which is a web page that no longer exists!
This is just based on a cursory inspection, perhaps I found the only parts that even a graduate student could do better.
They just” happened” to pick the the only start date that would give a decline. See Gavin’s comment over at RC:
http://www.realclimate.org/index.php/archives/2011/03/unforced-variations-mar-2011/comment-page-4/#comment-204058
About a year ago there was an article about where sea level would rise and where is would lower. The outcomes were very surprising. SLR along the Texas coastline was not that drastic. Other places were predicted to get a very large rise. Some areas were predicted to get a big drop.
Did this paper take properly all of that in account? It’s not a prediction that the bathtub ring is going to go up 5 inches everywhere. The SLR prediction is very uneven. Islands and continents buoying upward as glaciers melt. Gravitational pull. Stuff beyond me.
I wonder how deep-ocean warming actually manifests itself in terms of surface height?
Thanks all for your comments. I’ll keep an eye on RC for Gavin’s analysis.
I think this was covered by Media Matters, of all places.
> I wonder how deep-ocean warming actually manifests itself in terms of
> surface height?
JCH, you happen to have asked a question with a simple answer: because sea water expansion doesn’t actually change the mass of the water at any geographic location, the Earth’s gravity field, and the geoid, don’t change, and neither does the loading of the solid Earth by the water. So, this will produce the same, uniform sea level rise (sea surface relative to coastal rock, what tide gauges see) everywhere on Earth. Just divide the volume change by the total ocean surface area, 360 million square km.
Deech56, no, that was a different issue: stupidity squared, even too much for these authors. What they write in the paper is not stupid, but it’s not right either… get some popcorn ;-)
Got the popcorn, GP–when’s showtime?
Thank you, GP – it’s hard to keep up with all the these earth-shattering results. ;-)
Connected:
“By 2015, the report predicts, roughly 375 million people will be affected by climate-related disasters every year, well above the 263 million believed to have been directly impacted by natural disasters in 2010.”
(The “Ashdown Report” on UK foreign aid.)
Should have said the report is not primarily about climate change. But it’s notable that it asserts many of the concerns expressed on this forum recently, taking them as partial basis for its analysis of the direction that UK aid efforts should take.
The report can be read here:
http://www.dfid.gov.uk/Documents/publications1/HERR.pdf?epslanguage=en
global ocean surface temperature deviations looking quite weird currently here @ http://bulletin.mercator-ocean.fr/html/produits/bestproduct/welcome_en.jsp?nom=bestproduct_20110323_22361&zone=glo
Yes; a rather different pattern from NCDC:
http://www.ncdc.noaa.gov/oa/climate/research/sst/ani-weekly.html
I don’t think they look all that different; where do you see something?
(click the third button at the bottom on the mercator-ocean.fr page to display ‘deviations’ and watch the date to match the NCDC page; color scheme is different but the patterns look pretty similar to me)
Oh, consider the seasonal norm against which the anomaly is compared — if I’m reading it right, the French site is comparing against 2005 “Seasonal norm” and the NOAA site against a 1971-2000 baseline.
“That the price of oil and food rose in tandem at this time is hardly surprising, the World Bank concluded in 2009, as “agricultural production is fairly energy intensive.” Rising oil prices “raised the price of fuels to power machinery and irrigation systems; it also raised the price of fertilizer and other chemicals that are energy intensive to produce.” Michael T. Klare, writing in the 2011 Mar 28 issue of The Nation – http://www.thenation.com/article/159165/oil-food-price-shock
It’s hard to attribute prices to just one factor – http://simondonner.blogspot.com/2011/03/food-prices-and-ongoing-biofuel-debate.html.
JCH
This might be the paper you were thinking of;
http://harvardmagazine.com/2010/05/gravity-of-glacial-melt
Sea levels will not change equally everywhere because mass will be redistributed as large ice bodies melt. This will change the gravity field, the geoid and the sea level. There could even be local sea-level falls in some cases.
“Here’s the much uglier, much more dangerous truth: this is just the beginning. It’s gonna get worse. A lot worse. Be afraid. Be very afraid.”
Yé, only the beginning… Now, it is the USA that suffer from a drought worse than the Dust Bowl in some places. The food price Index is already very high, and if the harvests from USA are badly affected, it can go higher and higher. 2013, hellish heat wave for Western Europe (France and Germany are also big producers of cereals) ; and 2014 all together ? It is exagerated of course, but in the context of economic crisis, the supplementary tension induced by food prices worsen the things. And so, the accumulation of difficulties from all the horizons is not good news.