“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

Fluid Management Systems

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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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“Drought’s Grip Is Wide, Deep”- Wall Street Journal, 4 Sept 2012

Though Hurricane Isaac brought relief to one of our driest summers, the drought still has the capability of slowing our economy.

Farms have faced the brunt of repercussions, severely effecting corn and soybean crops, and increasing prices of feed for chickens, hogs and cattle. Many cattle ranchers and dairy farmers have found it cheaper to slaughter their livestock, which, in turn, affects food companies’ profit margins. According to the Department of Agriculture, food prices could climb 3% to 4% from 2012-13. Food prices rose from 2.5% to 3.5% in 2011-12.

Among other price increases is the growing cost of gasoline. Ethanol, a corn-based fuel that is mixed with gasoline, is a likely source of mounting gas prices. Gasoline prices are now around $3.78, having risen over 40 cents since July.

Regardless of the drought, farm incomes will grow 3.7% this year, to $122.2 billion. This is partly due to elevated prices of corn, soybeans and land, which are compensating for any losses. This, however, hasn’t widely stirred economic growth.

Recent rains cannot undo damages incurred, but may be able to facilitate next year’s soybean crop. Our current economic situation could worsen if moisture isn’t restored for next year’s growing season.

The question to answer: Will inflated food prices cause consumers to spend less on big ticket items, such as flat screen TVs and computers?

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

October 10th, 2012

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“How to Live High on the Hog During a Drought” – Wall Street Journal, 4 Sept 2012

Droughts can severely affect the lives of farm animals; livestock are often slaughtered if their living costs increase too rapidly. Farmers look at the situation economically, and sometimes selling an entire outfit makes more sense than continuing to run the show.

According to the National Climatic Data Center, 2012 has been the hottest year on record. Our summer was unfailingly warm; since June, corn prices have grown 41%, while soybean prices have grown 33%. On the same note, prices for hogs and cattle have dropped 19% and 8%.

There is a rise in the slaughter rate – the rate for hogs has shot up to 16%, when, at this time of year, the rate is usually 4-6%. The drought has raised livestock feed prices, persuading farmers to liquidate their assets.

In late 2007 and mid-2008, grain doubled in price, which pushed farmers into thinning their herds. The monthly average of slaughtered hogs increased to 10 million, from a steady rate of 8-9 million. However, the price of hogs recuperated in 2010-11.

The question to answer: how will our hand in climate change continue to affect the cost of food?

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

October 10th, 2012

Fluid Management Systems

Copyright 2012   All rights Reserved by Fluid Management Systems, Inc.

www.fluidmanagementsystem.com     subodh@fluidmanagementsystem.com

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