“Climate Change Seen Posing Risk to Food Supplies” – New York Times, 1 November 2013

According to a UN report by the Intergovernmental Panel on Climate Change, the effects of climate change are now expected to reach the global food supply: during each decade, our supply is anticipated to decline by 2%, while food prices increase. This comes at a time when food demand is also expected to skyrocket — 14% each decade.

The panel’s 2013 report is far harsher than its previous report, from 2007; the 2013 report includes recent research on how vulnerable crops are to heat waves and droughts, as well as more warnings of the necessity to lower global GHG emissions. However, the panel found that carbon dioxide emissions have the added affect of boosting food production — the gas apparently performs as a type of plant fertilizer.

The panel found that the effects of climate change and global warming will hit tropical regions’ food supplies the worst, due to greater poverty rates and tremendous heat waves. Not being able to satisfy global food demand might force us to cultivate more farm land for production purposes — i.e., deforestation, which would speed up the effects of climate change by releasing significant quantities of carbon dioxide into the atmosphere.

Sweeping climate policy reforms, like the Obama Administration’s, though helpful, come a little late: the report finds that such actions might not be drastic enough to slow down the effects of climate change; advantages from steps, like curbing emissions, will generally be seen late in the 21st century.

November 20, 2013

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“Biofuel producers diversify away from crops” – St. Louis Business Journal, 14 June 2013

There are three key industries that rely on corn: biofuel/ethanol, pork and fructose corn syrup. However, erratic corn prices are forcing biofuel and ethanol producers to diversify, and most are moving to lower-cost non-food and food feedstocks, such as waste vegetable oil, tallow, algae, waste sugar, corn cobs, wood waste and swtichgrass.

This means that some production plants have underwent modifications in order to use these other feedstocks, and while that can be pricey, it has certainly paid off. The biofuel manufacturer FutureFuel has seen considerable gains since introducing alternative feedstocks: in 2011, the company’s biofuel revenue was $141.6 million; in 2012, the company increased this revenue by 35% to $191.4 million.

Last year’s drought yielded a low corn harvest and was detrimental to ethanol manufacturers, who had to downsize production for the first time in 16 years. This year’s harvest is looking to be better, but ethanol and biofuel companies might opt for cheaper feedstocks instead.

This shift is bound to have a significant impact on the corn industry, and we are likely to see an supply of corn that the pork and fructose corn syrup industries can’t cover. We will probably also see noticeably decreased prices, which will, in turn, put more pressure on corn farmers to increase prices to make up for last year and future losses.

This a a true example of classic economic theory at play, where “supply and demand”, along with substitution in competing markets, affects commodity prices in a somewhat unpredictable manner.

Conceived, Developed and Written by Dr. Subodh Das and Tara Mahadevan

June 18, 2013

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“Traders Sow Bets on Higher Wheat” – Wall Street Journal, 15 January 2013

Like our previous post on rising milk prices, wheat prices, too, are on the rise; and this past summer’s drought is to blame.

Pricing on corn and soybean skyrocketed to new records after this past summer, as the drought devastated massive amounts of both crops. Due to continued low rain- and snow-fall, many traders are betting that major increases on wheat prices will, again, occur during the next wheat harvest.

Last week, the NOAA confirmed that 2012 was indeed the hottest year on record. Kansas, the largest producer of wheat, and the southern area of the US called The Great Plains, are still plagued with drought conditions; since summer, soil moisture has greatly diminished, which is a necessity for healthy wheat-crop growth. And recent weather forecasts are not raising hopes.

Wheat prices have increased by 5.1% since the USDA reported that quantities of wheat are less than expected. Traders trust that wheat prices have reached the bottom of the well; however, a continued poor harvest for the US, the largest manufacturer of wheat in the world, could further constrict supplies. A recent survey by the USDA shows that 26% of this year’s wheat crops are “poor” or “very poor”, suggesting that much cannot be reaped from these crops.

The drought has been disheartening for farmers, causing some to plant less wheat this past fall. Additionally, due to low supplies of corn, a main ingredient in animal feed, farmers are going to use more wheat in their animal feed this year. Both of these issues could very well cause a further tightening on an already dwindling wheat supply.

Russia and Australia, two main producers of wheat, have also been undergoing harsh droughts and yielding damaged crops. If record-high springtime temperatures continue, then rain will be a large necessity come March. Major wheat-producing countries are in dire need of some favorable weather this harvest season.

Nobody can control weather and drought, but we can influence factors which affect  weather and climate, especially if they are effected by human actions. It takes a long time to influence climate; therefore, we need to start now on meaningful climate change policy initiatives. It’s not about ideology, it’s about dollars, cents and wheat prices.

Conceived, Developed and Written by Dr. Subodh Das and Tara Mahadevan

January 17, 2013

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www.fluidmanagementsystem.com     subodh@fluidmanagementsystem.com

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NOAA: 2012 Hottest Year On Record For Lower 48 States

The National Oceanic and Atmospheric Administration (NOAA) confirms that 2012 was the hottest year on record for the lower 48 states. Not only did the continental US experience an extremely severe drought, but it was also plagued by wildfires, hurricanes and storms. Tornado activity, however, was below average.

(source)

According to the NOAA and the National Climatic Data Center (NCDC), 2012′s average temperature was 55.3 degrees Fahrenheit, 3.2 degrees above the 20th century’s average and 1.5 degrees above the average in 2011. This year’s average temperature was only one degree above the average temperature of 1998. Though a one degree increase seems marginal, it is actually the opposite: annual temperature records are usually only broken by tenths of a degree. Average temperatures in earlier years had remained within a range of 4 degrees; thus, making 2012′s jump fairly grim.

The year 2012 contained the fourth-warmest winter, warmest spring, second-warmest summer and above-average temperatures in fall. This past July, 61% of the country experienced drought conditions, and was the hottest month for the contiguous 48 US with an average temperature of 3.6°F, exceeding typical July temperatures.

The drought spanning 2011-12 has had a relentless impact on farms, and caused $35 million loss in crops alone. The drought was provoked by low snow cover and warm temperatures during winter 2011, and continuing exacerbation by record warmth during spring 2011. Though a warmer spring allowed for the growing season to begin early, soil moisture was exhausted sooner than expected. A March heatwave kicked the drought up a notch, expediting the growth en masse, particularly across the Plains and Midwest.

Perhaps the NOAA’s findings will push Congress and the White House to target greenhouse gas emissions, which surely have had a hand in the world’s ever-growing climate change. The White House is gearing towards putting a cap on greenhouse gas emissions for power plants, a major source of emissions. US emissions are still high — and though they have been reduced this year through the use of natural gases, renewable energy for electricity, and fuel-efficient cars — there’s still more to be done.

Dr. Das recently tweeted a letter to President Obama by the MIT Technology Review called, “Dear Mr. President: Time to Deal with Climate Change.” In this letter, the editors argue that addressing climate change must take top priority in the next four years.

However, the political reality in Obama’s second term is that lawmakers are divided and polarized in both Washington and state capitals, and other pressing issues will direct the nation’s attention, such as the economy — jobs, fiscal cliff, revenue, taxes, deficit and debt — immigration, and gun violence. Once again, the energy and environmental policies, and climate change debate will unfortunately take a backseat until the mid-term election in 2014. It’s anybody’s guess as to what will happen in 2015.

Conceived, Developed and Written by Dr. Subodh Das and Tara Mahadevan

January 10, 2013

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www.fluidmanagementsystem.com     subodh@fluidmanagementsystem.com

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