Why the weather matters

Articles
October 12, 2008

Why the weather matters

With all the attention on the failings of Wall Street over the past couple of weeks, few people gave notice to what in my mind is even a more severe long term problem. Yes, there were a few reporters who left the Republican Convention in Minneapolis to cover the weather (for at least a day) but the reality is that the storms and hurricanes of the past few years are creating a real problem for agriculture, and adding much pressure to the rising costs of producing food. The headlines told us that Hurricane Ike was the ninth storm to hit the U.S. so far this year; which followed closely on the heels of the devastation of Gustav. Louisiana first, and then Galveston. Reports as of this writing is that there are still tens of thousands of homes without power. Some estimates are that the damage in Louisiana in many cases is worse than from Katrina or Rita. But this column is not about the human sufferings, which countless others have written about far better than I could ever do. This column is about the story that needs to be told about the weather and our food world. The “buzz” in the boardroom these days is certainly about sustainability. Over the past twelve or so months, there have been dozens of conferences focused on the subject; no doubt attended by those who now have the ‘sustainability’ phrase as part of their title and printed on their business cards. And while you could argue that weather conditions and climate change are integral to any discussion on sustainability, I do not see or hear that happening. Which is why we have to bring weather to the discussion.

With all the attention on the failings of Wall Street over the past couple of weeks, few people gave notice to what in my mind is even a more severe long term problem. Yes, there were a few reporters who left the Republican Convention in Minneapolis to cover the weather (for at least a day) but the reality is that the storms and hurricanes of the past few years are creating a real problem for agriculture, and adding much pressure to the rising costs of producing food.

The headlines told us that Hurricane Ike was the ninth storm to hit the U.S. so far this year; which followed closely on the heels of the devastation of Gustav. Louisiana first, and then Galveston. Reports as of this writing is that there are still tens of thousands of homes without power. Some estimates are that the damage in Louisiana in many cases is worse than from Katrina or Rita. But this column is not about the human sufferings, which countless others have written about far better than I could ever do. This column is about the story that needs to be told about the weather and our food world.

The “buzz” in the boardroom these days is certainly about sustainability. Over the past twelve or so months, there have been dozens of conferences focused on the subject; no doubt attended by those who now have the ‘sustainability’ phrase as part of their title and printed on their business cards.

And while you could argue that weather conditions and climate change are integral to any discussion on sustainability, I do not see or hear that happening. Which is why we have to bring weather to the discussion.

The reality is that by the year 2050, we will need to produce almost twice as much food as we do today based on current population trends which predicts a global population of over 11 billion mouths to feed; and be able to produce it on a shrinking land mass.
It is the impact of this year’s storms on the agricultural, fishing and seafood industries which the rest of the nation will feel the effects of for years to follow. As examples, the Texas alfalfa crops that have been decimated will surely increase the costs for cattle feed, and the price of beef at retail. Sugarcane producers in southern Louisiana have been faced with salt-water intrusion by both storms. And for our agricultural production to even have a chance for success means that farmers of all sizes must be able to make a profit.

The USDA has released its September corn yield projection as 152.3 bushels per acre – a drop of 2-percent from its August prediction of 155 bushels. The Storm Exchange estimate is 6 percent below the prediction. As a result, USDA also increased its price estimates for corn and soybeans, an increase of ten-cents per bushel for both commodities in just one month.
And that’s just the beginning!

Hurricanes Ike and Gustav curtailed oil production in the Gulf area, further driving up prices for jet fuel, diesel and heating oil based on the decline in output.

California’s severe frost caused a decline of 30 percent in wine grapes production, and the State’s heat wave in September caused different varieties of grapes to ripen all at the same time.

USDA estimates that nearly one-third of the corn crop is now being used for the production of ethanol; but the combination of weather-damage from the Midwest floods in June, a decline from 4.1 billion bushels to 3.8 billion for ethanol signals even higher corn prices to come. As a result of the flooding, this years crops were planted late – historically that means less yield and smaller ears with fewer kernels. In fact, the USDA estimates that just 66 percent of the U.S. corn crop is rated as excellent or good. Farmers in the corn belt reported strong winds and rain from the two latest hurricanes knocked down a lot of corn plants.

Food prices are not coming down. As our shoppers struggle to make ends meet, a new re-evaluation of how we spend is emerging. The latest price increases expands the anxiety – well beyond the lower and middle income shoppers – to the upper-middle and even, upper income customer. The domino effect of our weather and financial crisis are sure to create even more questions. It’s time for our industry to underscore our commitment to our shoppers, sustainability is much more than just being eco-friendly. It’s about guaranteeing that our future generations will have food to eat.