April 28, 2012 — andyextance

Climate change is set to cause big swings in the price of corn grown in the US from year to year, researchers have said this week. That’s largely because temperatures above 29°C during certain points in the corn growing season reduce the amount produced, said economist Tom Hertel from Purdue University in West Lafayette, Indiana. But it will also be affected by how corn growers react and what the government does, he and his co-workers have found. “Corn prices have been fairly volatile in the last couple of decades,” Tom told Simple Climate. “That is nothing compared to what we would see under future climate, assuming that nothing else changed.”

In 2009, scientists showed that crops like corn were very sensitive to extreme heat, and that in a warmer world today’s plants would suffer. However, those studies didn’t show how smoothly or otherwise heat would change prices and output, or yield, of crops. Governments and farmers might like to know this to help their planning, but predicting warming’s impact on corn requires a very detailed picture of what future temperature might be like. “It’s not whether the temperature on average in a month or year was high, it’s whether you have a few hot days and whether those come at a time when they do significant damage,” Tom said. “If you talk to farmers they’ll certainly tell you, those really hot days coming at critical times can be very damaging.”

Zooming in on warming

The detailed data needed came thanks to Noah Diffenbaugh and his team at Stanford University. They have created a climate model that provides temperature measurements every six hours, spaced out 25 km from each other across the US. Tom, Noah and their colleagues first combined this information with rainfall and technology changes to try and explain swings, or volatility, in corn yields between 1980 and 2000. “It was surprising to us, and I think our reviewers and others who’ve read this paper, how good a job we could do explaining year-on-year national yield volatility in the US solely based on the climate variables,” Tom commented. “We believe that a lot of the year-on-year swings in yields are driven by climate.”

Stanford University’s Noah Diffenbaugh explains how climate change can cause swings in corn price. Credit: Woods Institute at Stanford



In a paper published in the scientific journal Nature Climate Change on Sunday, Tom then used these yield volatility numbers in his own recently-developed worldwide economic model to look at corn prices. As 39 per cent of the US corn crop is currently used to make ethanol, this model focuses on farming and energy and how they’re affected by government policies on this biofuel. Using this approach gave the scientists an accurate model of past corn price volatility.

Having shown that their models worked in the past, Noah, Tom and their colleagues then turned to the future. They modelled the climate created by greenhouse gas emissions through to 2040 suggested by the UN Intergovernmental Panel on Climate Change’s A1B scenario. That describes a future world of very rapid economic growth and global population that peaks in mid-century and declines after that. New and more efficient technologies are rapidly introduced, and energy consumption is balanced across all sources. In the economic model, the scientists also looked at how factors like oil price are linked to corn prices.

“When we put this future climate through the same framework, we get double the national level yield volatility,” Tom said. As well as climate’s driving role in price swings, government policies – or mandates – that force suppliers to include ethanol from corn in fuel would also play a role, he added. “In a year where you’ve got some extreme temperature events, yields are down, prices are up. If you’re requiring corn to be sold into the ethanol market, you’re forcing the adjustment on the remaining market and price volatility is much more severe. That’s one of the striking findings here.”

Cornfed buffer

Though corn price volatility has large effects on ethanol producers and livestock farmers, it is less important for food prices to the general public, Tom noted. “Most corn produced in the US passes through livestock, so that has a bit of a buffering effect,” he said. “If we were eating and spending a lot of money on corn directly, it would have a bigger effect on consumer prices.”

The team’s predictions relied on corn farming staying much as it is today, Tom noted. “These are really big effects, assuming that nothing else changed, but that’s not the way the world works,” Tom said. “Farmers adapt, they may change the crops they’re producing, the whole corn belt might move northward. Breeders are even now, as we speak, working on heat stress tolerant corn, which may moderate these effects.” But, to keep corn price volatility at current levels breeders would have to raise the limit where yields begin to fall from 29°C to 32.5°C, the scientists found.

Tom now wants to go on and look at how much corn producers can adapt, and whether linking corn and energy through markets rather than mandates can reduce price swings. He also underlined that looking at other crops would tell us more about how climate change will impact food prices for ordinary people. “Other agricultural commodities have temperature thresholds as well,” Tom said. “Some are lower, like wheat, and some are higher, like rye. If you begin thinking about the whole system, then the food price effect would be more important.”