Climate Fueled Floods Cause Food, Energy Prices to Soar

January 22, 2011

Unsurprisingly, climate related disasters in the world’s top grain producing areas, starting with Russia last summer, and currently Australia and Argentina, will cause world grain prices to spike.

With each new incident of record monsoon floods, fires and earthquakes, more tremors shake the global economy.

The latest disaster is unfolding in Australia, where the northeastern state of Queensland has been inundated after a month of rain, and is proving every bit the catalyst for risingcommodity prices as the 2010 floods in Pakistan and the wildfires in Russia were. Flooding in Australia has roiled Asia-Pacific markets for coal, cotton, wheat and sugar.

If weather events are increasingly disastrous in the world’s bread baskets, global warming could result in a familiar and worsening pattern: periodic collisions between Asia’s seemingly limitless demand for goods and the world’s supply of basic agricultural and energy commodities. That could send average commodity prices significantly higher, limiting economic growth and, perhaps, affecting the appetite for burning coal.

IHS Global Insight predicted yesterday that the floods would trim at least two-tenths of a percent off of Australia’s projected 2011 gross domestic product. Queensland is the largest exporter of coal for making steel. Nearly all of the mines are closed, and seaborne coal prices are approaching record highs.

The article quotes Per Pinstrup-Andersen, a professor of food policy and economics at Cornell University, price volatility will stay with us “until we get a handle on climate change — if we ever do,…We have to somehow change our policies to deal with the risks involved in these dramatic fluctuations in food prices.”

Can we drop the “CO2 is Plant Food” Crock now?


5 Responses to “Climate Fueled Floods Cause Food, Energy Prices to Soar”

  1. coloradobob Says:

    The problem began late last fall, when unseasonal monsoon rains caused a fungus in Maharashtrastate, the country’s onion belt – and ruined the crop. The government’s agricultural board was anticipating a record harvest, and neither it nor farmers picked up on the problem until too late; stored onion stocks were sold cheaply and exported in the autumn.

    But there was no new harvest. The onion price quadrupled; the nation staggered.

  2. coloradobob Says:

    In Colombia, heavy rains in December left 300 people dead and 2 million homeless, injured or whose property was damaged. Hundreds of thousands of acres of farmland and coffee-growing lands were destroyed, causing millions of dollars in damage, and the excessive humidity caused the appearance of a fungus that attacks coffee plants.

    Coffee futures shot up 3.7% on Friday, ending at $2.404 a pound, just shy of last week’s 13½-year high. Cotton jumped 11% on the week, while cocoa rose 5.5%. Raw sugar futures were up 4.7%.

    The rain that has ravaged Colombia, the world’s top producer of mild arabica coffee beans, is expected to further derail hopes the country will recover from three consecutive below-forecast harvests.

    “At the end of the day, there still isn’t much of a crop,” said Jack Scoville, a vice president at Price Futures Group. The sentiment behind the coffee trade indicates that futures may breach $2.50 a pound.

  3. coloradobob Says:

    Can we drop the “CO2 is Plant Food” Crock now?

    I call this the ” Happy Plant Theory “.

  4. […] For First world nations, the idea of food shortages is an abstraction, and if they think about it at all, it is in terms of giving some money for relief organizations to throw an extra sack of surplus grain at struggling third world people.  What has changed in the last generation is that the stability of those third world nations is now a much higher stakes proposition. Across the middle east, governments are falling due to social unrest due, at least in part, to rising food prices. […]

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