SYDNEY, AUSTRALIA — Perhaps more than anywhere on earth, Australia is having to face up to the realities of climate change. Volatile weather patterns always have been a familiar challenge, but now the country’s grain and oilseeds producers are dealing with, on average, more difficult growing conditions and reduced incomes. They’re coping as changes to technology and management have helped to limit the damage. Even so, every part of the agrifood supply chain is expected to be affected.
In a report, “Climate Change Impacts and Adaptation on Australian Farms,” published on July 29, 2021, Neal Hughes and Peter Gooday of the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) explained that “in recent decades, Australia has seen a shift towards higher temperatures and lower winter rainfall, which has had significant effects on many farmers.”
They also noted that “there remains much uncertainty over the long-run effects of climate change on farm businesses. Australia’s climate has warmed on average by 1.4°C since 1910, with most of this occurring since 1950,” the authors said. “There has also been a decline in winter season (April to October) rainfall in southwestern Australia (20% since 1970) and southeastern Australia.”
Citing ABARES’ latest modeling, Hughes and Gooday said “changes in seasonal conditions over the period 2001 to 2020 (relative to 1950 to 2000) have reduced annual average farm profits by 23%, or around A$29,200 (US$20,100) per farm.”
“These impacts have been most pronounced in southwestern and southeastern Australia, with northern Australia and the coastal higher rainfall zones tending to be less affected,” Hughes and Gooday said. “Conditions during the post-2000 period have also contributed to increased risk in terms of more variable cash income and profits.”
From 2000 to 2020, the risk of very low farm returns (due to climate variability) essentially doubled (relative to the period 1950 to 2000), increasing from a one in 10 frequency to more than one in five, the report said.
Looking forward to 2050, using a series of models, Hughes and Gooday forecast that cropping farms in western Australia are more heavily impacted than other regions under most climate scenarios, due largely to the more substantial projected declines in winter rainfall and the resulting effects on crop yield.
“For these farms, declines in profit under the 2050 projection scenarios are … larger than those observed over the recent period,” they said. “The largest impacts are estimated for the northern edge of the Western Australian cropping zone, parts of western NSW and central Queensland.”
The results of ABARES simulations project increases in average Australian prices for major grain crops (wheat, barley and sorghum) ranging from 3% to 24%, the report said.
“This represents climate change increasing the frequency and severity of drought induced grain shortages and related price spikes, similar to those observed in Australia during the 2018–19 and 2019–20 droughts,” the authors said. “These higher grain prices help to limit the impacts of climate change on cropping farms, but pass additional costs onto grain consumers, including sectors not modeled here such as intensive livestock businesses (e.g., cattle feedlots, poultry and pig production) and food manufacturing.”
Since 2007–08, wheat yields under dry conditions have increased by 14%, more than double the gains in yield under normal conditions over the same period.
However, gains in productivity are helping to offset climate effects.
“There is already evidence of strong farm adaptation responses to the recent climate shifts with improvements in technology and management practices helping to increase farm productivity,” the ABARES experts said. “Wheat yield drought risk shows a strong improvement since 2007-08, as technology and management practice changes have helped farmers improve crop yields under dry conditions.
“Since 2007–08, wheat yields under dry conditions have increased by 14%, more than double the gains in yield under normal conditions over the same period. This trend is also partly due to changes in the location of cropping activity, including a shift towards increased cropping in higher rainfall areas relative to more marginal or drought-exposed parts of Australia.”
They also point out that the 2020 winter crop harvest in Western Australia, which was way above expectations in the conditions experienced, demonstrated the increased ability of producers to handle dry conditions.
“Despite these improvements, Australian farm profits have become more sensitive to drought impacts over time,” they said. “That is, while average farm productivity and profits have increased, the difference between profits in normal and drought years has widened.”
ABARES looks at “farm business profit drought risk,” defined as the percentage reduction in farm profits in a drought year relative to a normal year.
“Farm profit drought risk has increased consistently since 1989, due largely to structural changes in the agricultural sector, including a shift towards increased cropping activity (and away from livestock farming), which is subject to relatively higher drought risk,” the report explained. “The proportion of Australian farmland devoted to cropping has increased dramatically over the last 30 years.”
This trend has slowed, with signs of a decline in cropping activity in recent years, driven predominantly by declines in parts of New South Wales and South Australia, the report said.
“These trends reflect adjustment within and across farms in response to economic and climate drivers, as farmers manage trade-offs between risk and return,” according to the authors.
For example, the trend toward cropping occurred largely in response to declines in wool and sheep prices in the early 1990s, the report said.
The more recent reversal reflects a shift away from cropping in some more “marginal” parts of the Australian cropping zone, which likely reflects both the long-term shift in rainfall patterns and more recent increases in livestock prices.
Supply chain impact
In a document titled, “Climate is Everyone’s Business,” which laid out its 2022 policy priorities, the group Farmers for Climate Action noted that “Australian farmers are on the front lines of climate change, facing more severe and frequent drought, heatwaves, fires and floods. Extreme weather is making farming harder and more uncertain extreme weather affects the food supply chain at every stage. We are adapting, but there are limits to adaptation.”
The 7,000-member group added: “We need deep emissions reductions this decade to protect Australian farmers from extreme weather events caused by climate change, and ensure we are able to continue to produce food for Australia and the world. With the right policy support, Australian agriculture can be carbon neutral well before 2050. But emissions reductions are needed across all sectors of the economy. Other sectors need to play their part and rapidly reduce emissions.”
A separate report entitled “Fork in the Road,” looking at “Impacts of Climate Change on our Food Supply,” written by Stephen Bartos, CEO of Bartos Consulting Group, and published by Farmers for Climate Action in March 2022, warns that climate change is heightening the risk of food shortages following extreme weather events.
“Empty supermarket shelves, once rare, will become a more common experience for Australians as the impacts of climate change worsen,” it said. “Climate change is also increasing the price of food, reducing availability of some lines, and decreasing the nutritional value of basic food staples like rice and wheat.”
Some of the impacts are being felt already, Bartos said.
“During the first two months of 2022, much of central and northern Australia experienced food shortages due to the combined impact of flooding and the COVID-19 pandemic,” he said. “The problem was not lack of food — there was plenty available on farms or in warehouses — but disruption to the supply chain required for its distribution.
“We need to build resilience into our food supply system, but we also need to address the broader issue of climate change. Decisive action today will help moderate the worst impacts of climate change. On the other hand, a lack of action will make it virtually certain that in coming decades Australians will for the first time face the prospect of running out of food in our major towns and cities because supply chains fail.”
The report outlines adverse potential effects of climate change throughout the food supply chain, starting with higher input prices and a lack of water. Crops could be affected by heat stress, longer or shorter growing seasons, and a higher incidence of pests or diseases. Crops could be lost in extreme weather events and the cost of operating farms could rise.
Once crops come off the farm, extreme weather events and more expensive fuel could affect transport, while a lack of raw materials and lower quality produce, as well as a lack of staff, for example during an emergency, and the potential for higher fuel costs, could all affect processors. Shorter shelf lives for heat-sensitive products and pests in products like bulk grains could affect storage.
Retail and food service sectors face being hit by higher input costs and a less reliable supply of food. Again, staff shortages could be an issue.
Chris Lyddon is World Grain’s European correspondent. He may be contacted at: email@example.com.