Climate Change, Politics To Affect Future Production

Agricultural trade outcomes of the future will be affected by changes in production that result from climate change, government intervention and competitive conditions in international markets, said World Trade Organization economists at the Federal Reserve Bank of Kansas City’s Agricultural Symposium.

Eddy Bekkers, WTO research economist, and Lee Ann Jackson, WTO agriculture and commodities division counsellor and secretary to the Committee on Agriculture, presented a study saying expected temperature increases, variable water availability, limits to arable land and continued population growth will incite debates about how to ensure global food supply will meet future demand.

Changing climate conditions may alter the relative productivity of regional agricultural production and, thus, affect trading patterns, Bekkers and Jackson said.  Trade can play an important role in enabling products to move to areas of shortage, but the trading system also is affected by direct and indirect government policies.




The baseline projections the economists used in their projections of world trade show the US market share in agricultural trade rising slightly, while the market shares in manufacturing and services trade decrease slightly, their study said.

The destination of US exports also evolves over the baseline scenario, with developing Asian economies and Sub-Saharan Africa increasing their share of US crop exports in 2040.

Taking into consideration the possibility of productivity changes from climate change or economic effects from increased tariffs, the models highlight now outcomes may differ from the baseline, they said.  The climate-change scenario suggests the US’ share in global agricultural exports will increase moderately because of the more moderate climate in the US.

In contrast, the increased-tariffs scenario shows that for most agricultural commodities, the US share of global exports will fall below those projected in the baseline, Bekkers and Jackson said.




Complex global models are being used increasingly to understand how economic and agricultural systems interact, they said.  Purely biophysical models likely will underestimate the shifting between crops from farmer responses to changes in land and crop prices.  Yet models that ignore biophysical relationships and focus mainly on economic responses may overestimate the importance of price changes.

The analysis used by the presenting economists used an analysis based on a largely economic model that includes differentiated land uses, allowing some aspects of the biophysical constraints to be reflected in the results.  Their studies allowed for only limited possibilities to transform forest land into agricultural land and crop land into grazing land, and vice versa, with total land supply highly inelastic.

Their studies showed global crop prices without climate change or tariff changes to decline into about 2024 where they will begin a slow rise into 2040.

With tariffs, prices could fall next year then ease lower into 2025 before beginning a slow rise to 2040.

With climate change, prices could decline into 2024 before rising again.




No fed cattle sold last Wednesday on the Livestock Exchange Video Auction, compared with 280 that traded five weeks previous at $109.50 per cwt.

The USDA reports cattle sold this week in the five-area range at $111.50 to $112 per cwt on a live basis, up $1 to $1.50 from last week, and at $174 dressed, steady to up $1.

The USDA choice cutout Wednesday was down $0.47 per cwt at $204.42, while select was off $1.68 at $192.30.  The choice/select spread widened to $12.12 from $10.91 with 109 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Tuesday, was $157.84 per cwt, up $0.02.  This compares with Wednesday’s Oct settlement of $157.87, down $1.20.