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Risky Business: More Volatile Weather Ahead

May 9, 2011

Last month brought killer tornadoes across the southern United States. Drought hung over virtually all of Texas and stretched into neighboring states. Soggy, cool fields in most of the Corn Belt were too wet to farm and too cold to germinate seed at normal planting time.

What a change from a year ago. By this time in 2010, Corn Belt farmers had planted fast and early during the warm spring. Texas reported no drought. Damage from numerous tornadoes in Alabama and Georgia was light compared with this year's carnage. 

“We are seeing a little more variability than there used to be,” says Anthony Lupo, atmospheric scientist at the University of Missouri.

 

Weather was fairly stable in the latter part of the 20th century, but that stability likely was unusual.

“In the last five years, we've gone through more wild swings from warm to cold,” says Lupo. “Climatologists think that's the way the weather behaves more typically.”

 
For crop growers, more variability means more weather risk to their business, and many have already made crop insurance part of their long-term risk management.
 
“Crop insurance is still the number one tool farmers use to deal with weather events,” says William Edwards, farm management specialist at Iowa State University. “We've always dealt with extreme weather,” he says.
 
In Iowa, close to 90% of corn and soybean acreage has been under crop insurance coverage for a number of years, says Edwards, and about 90% of that coverage now is revenue insurance rather than yield insurance.
 
“I think that it's clearly due to the fact that we've had more price volatility than yield problems in the past decade,” says Williams. “Despite all the unfavorable weather we see, it seems like the Corn Belt still manages to raise a crop.”
 
Many producers also turn to other tools to manage risks: They diversify their crops or livestock businesses, or they develop off-farm employment or investments. Many integrate their operations or grow crops under contracts, increase their cash or stored commodities to generate cash on short notice, or hedge with futures or options.
 
If the climate is changing, longer-term strategies can help growers manage risks—and in many cases to boost their return on investment.
 
Harwood Schaffer, economist at the University of Tennessee Agricultural Policy Analysis Center, approaches the subject of climate change carefully. In early February, he and Darryll Ray, director of the center, issued a commentary on how farmers can help to reduce the causes of climate change. In an April commentary on meeting global crop demand, they noted: “As the result of a recent column on climate change we have become abundantly aware of the fact that this is a contentious issue for some and a matter of fact for others. That being said, as academics looking 40 years down the road, as one of our scenarios, we would be irresponsible if we did not look at the potential impact of climate change on agriculture.”
 
Schaffer says managing a farm to reduce long-range risks resulting from weather variability can make good economic sense for the short term too.
 
He says many climate experts expect greater variation in weather, not necessarily within one year but over the course of several years: more frequent and more severe storms, dryer dry spells, and wetter wet spells.
 
“There are some things we can do at relatively minimal cost that may slow down the advent of climate change,” says Schaffer. He notes that in recent decades, farmers moved away from moldboard plowing to no-till practices to preserve moisture, reduce erosion, and reduce fuel and labor costs. In the process, they kept carbon in the soil. Now, says Schaffer, “There are farmers getting paid for carbon credits in the soil.”
 
He thinks farmers and their suppliers will come up with more, innovative ways to grow their crops and to reduce their risks of increasing variability in weather.
 
Climatologists expect that bigger swings in weather conditions will be a worldwide phenomenon. The underlying factors that lead to higher variability in weather are global, says Lupo.
 
“The climate to a great degree is driven by oceans,” he says. “We live on land, but this is basically a water planet,” and climate changes tend to correspond to changes in the Pacific Ocean. Lupo says a new pattern won't be fully evident until it has been place for several years, and he suspects that a cycle of higher variability in weather will continue for several decades.
 
Schaffer notes that in sub-Saharan Africa, agricultural leaders are working on building soil quality and developing conservation practices to reduce erosion, increase water absorption, and extend benefits of rain into the dry season. They are changing long-established practices. “My guess is that there are comparable things that can be done in the United States as well,” says Schaffer.
 

 

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RELATED TOPICS: Weather, Crops

 
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