Jan. 17 (Bloomberg) -- Volatile weather around the world is taking farmers on a wild ride.
Too much rain in northern China damaged crops in May, three years after too little rain turned the world’s second-biggest corn producer into a net importer of the grain. Dry weather in the U.S. will cut beef output from the world’s biggest producer to the lowest level since 1994, following 2013’s bumper corn crop, which pushed America’s inventory up 30 percent. U.K. farmers couldn’t plant in muddy fields after the second-wettest year on record in 2012 dented the nation’s wheat production.
“Extreme weather events are a massive risk to agriculture,” said Peter Kendall, president of the U.K. National Farmers Union, who raises 1,600 hectares (3,953 acres) of grain crops in Bedfordshire, England. “Farmers can adapt to gradual temperature increases, but extreme weather events have the potential to completely undermine production. It could be drought, it could be too much rain, it could be extreme heat at the wrong time. It’s the extreme that does the damage.”
Farm ministers from around the world are gathering in Berlin tomorrow to discuss climate change and food production at an annual agricultural forum, with a joint statement planned after the meeting.
Fast-changing weather patterns, such as the invasion of Arctic air that pushed the mercury in New York from an unseasonably warm 55 degrees Fahrenheit (13 Celsius) on Jan. 6 to a record low of 4 (minus 16) the next day, will only become more commonplace, according to the New York-based Insurance Information Institute. While the world produces enough to provide its 7 billion people with roughly 2,700 calories daily, and hunger across the globe is declining, one in eight people still don’t get enough to eat, some of which can be blamed on drought, the United Nations said.
“There’s no question, while there’s variability and volatility from year to year, the number and the cost of catastrophic weather events is on the rise, not just in the U.S., but on a global scale,” said Robert Hartwig, an economist and president of the insurance institute. “It’s all but certain that the size and the magnitude and the frequency of disaster losses in the future is going to be larger than what we see today.”
The number of weather events and earthquakes resulting in insured losses climbed last year to 880, 40 percent higher than the average of the last 30 years, according to Munich Re, the world’s largest reinsurer.
Research points to a culprit: an increase in greenhouse gases, generated by human activity, that are forcing global temperatures upward, said Thomas Peterson, principal scientist at the U.S. National Climatic Data Center in Asheville, North Carolina. The warmer the air the more water it can hold, he said.
“What we’re finding worldwide is that heavy precipitation is increasing,” Peterson said.
Flood waters in Passau, Germany, in May and June reached the highest level since 1501, Munich Re said. That was the year Michelangelo first put a chisel to the block of marble that would become his sculpture of David. High water did $15.2 billion in damage in parts of Central and Eastern Europe, according to Munich Re.
A July hailstorm in Reutlingen, Germany, led to $3.7 billion in insured losses, according to Munich Re. Hailstones the size of babies’ fists cracked the windshield of Marco Kaschuba’s Peugeot.
“Two minutes before the storm started you could already hear a very loud noise,” said Kaschuba, a 33-year-old photographer. “That was from hailstones hitting the ground in the distance and coming closer.”
In 2012, the U.K. had its second-highest rainfall going back to 1910, according to the U.K. Met Office. England and Wales had its third-wettest year since 1766.
December marked the worst blizzard since 1953 in Jerusalem, dumping 15 inches (38 centimeters) of snow on Israel’s capital, where more than 4,000 people were rescued from their vehicles, according to police.
“It was like a neutron bomb hit,” said Eilon Schwartz, 56, an environmental activist living in Tel Aviv who had taken his 11-year-old daughter to play in the snow with friends. “All these cars marooned in the snow and no people.”
December was also Norway’s wettest month in history, according to weather service YR.
Rainfall last year in the contiguous U.S. was 7 percent higher than the 20th century average, according to the National Oceanic and Atmospheric Administration. Yet it was difficult to draw broad conclusions because of regional variations. Michigan and North Dakota set records for wetness, while California set its own for lack of rain, NOAA said.
Other weather phenomena were similarly topsy-turvy. China shivered through its coldest winter in at least half a century in 2010. Three years later, Shanghai was suffocated by its hottest summer in 140 years, according to the city’s weather bureau.
Record flooding hit the Mississippi River in 2011. The next year, record-low water levels stranded barges, choking the flow of coal, chemicals and wheat.
Such fluctuations were reflected in food prices. In the past three years, orange juice, corn, wheat, soybean meal and sugar were five of the top eight most volatile commodities, according to data on 34 compiled by Bloomberg. Natural gas was No. 1.
While the percentage of the world’s people who go hungry has fallen to 12 percent last year from 19 percent in 1992, and food inflation is ebbing, farming is vulnerable to the extreme weather that comes with climate change, according to the UN.
Record harvests from India to Brazil to the U.S. expanded supply and sent corn, soybeans, wheat, sugar and coffee into markets where prices were falling. The Standard & Poor’s GSCI Agriculture Index of eight crops tumbled 22 percent last year, the biggest annual drop since 1981. The gauge is down 0.8 percent in 2014.
Yet higher food costs pushed 44 million people into poverty from June 2010 to February 2011, the World Bank estimated. The three years in the past two decades when global food costs were highest all occurred after 2007, according to the UN. Historic drought on four continents over the last five years is partly to blame.
“A drought is really all-consuming,” said northeast Texas rancher Phil Sadler. “It doesn’t necessarily have to be on your place to feel the impact.”
The record Texas dry spell in 2011 was followed the next year by the most severe drought in the U.S. Midwest since the Dust Bowl of the 1930s. Texas cattle herds dwindled, driving the price of beef to a record in the U.S., the world’s biggest producer. As of the beginning of last year, ranchers in Texas had reduced their herds to the smallest since 1967, according to the Agriculture Department. The U.S. herd has shrunk for six straight years and last year was at its smallest since 1952, government data show.
“We had to liquidate our herd in order to be able to take care of what we had left,” Sadler said.
Even as rain returned to Texas in 2012, the problems weren’t over for ranchers such as Sadler. The Midwest drought boosted prices of corn and soybeans, used for feed, to all-time highs. The 2011 drought caused a record $7.62 billion in farm losses in Texas, including $3.23 billion for livestock producers, according to Texas A&M University’s AgriLife Extension Service in College Station.
Russia suffered its worst dry period in at least 50 years in 2010 and two years later lost about 25 percent of its grain harvest in another dry spell, according to the country’s Grain Producers Union.
Authorities declared a drought in 2013 across the entire North Island of New Zealand, the world’s biggest dairy exporter, as some areas were the driest in as many as 70 years, according to the government. That pushed the price of whole-milk powder to a record in April last year at Fonterra Cooperative Group Ltd’s GlobalDairyTrade auction.
In 2012, Spain had its driest winter and second-driest summer since at least 1947, cutting olive oil and wine volumes to the lowest in at least a decade.
A temperature of 110 degrees in Melbourne halted tennis matches yesterday at the Australian Open.
The violent ups and downs of the weather in the last few years have vexed agricultural producers, said Ross Burnett, who farms cotton in the northeastern Australian state of Queensland. A drought there, in the country’s biggest sugar- and beef-producing region, follows flooding in 2010 and 2011 so bad it stopped the steady rise of sea levels around the world, according to the U.S. National Center for Atmospheric Research.
“The variability is the most difficult part of it,” Burnett said. “It’s difficult given it can change overnight.”
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