Agricultural and Applied Economics—Without Apology
If you are interested in food prices — more specifically, in the impacts of the current drought on food prices — I will be on CCTV America, the American channel of Chinese Central Television (the main state television broadcaster in China), between 9 and 10 PM tonight.
I will be on a panel with Steven Bowen, a senior scientist at Aon Benfield Impact Forecasting. Going by the CCTV America website, it looks as though I will be on a program called Biz Asia America.
It is not often that a stroke of a pen can quickly undo the ravages of nature, but federal regulators now have an opportunity to do just that. Americans’ food budgets will be hit hard by the ongoing Midwestern drought, the worst since 1956. Food bills will rise and many farmers will go bust.
An act of God, right? Well, the drought itself may be, but a human remedy for some of the fallout is at hand — if only the federal authorities would act. By suspending renewable-fuel standards that were unwise from the start, the Environmental Protection Agency could divert vast amounts of corn from inefficient ethanol production back into the food chain, where market forces and common sense dictate it should go.
From an excellent New York Times op-ed by Colin Carter, from the Department of Agricultural and Resource Economics at the UC Davis, and Henry Miller, a senior fellow at Stanford’s Hoover Institution.
Here is a telling series of numbers from the same op-ed:
I wish I’d had a chance to write on this topic earlier, but travel to the West Coast for work last week and working on my research this week prevented me from taking the necessary time to read everything I could find on food prices, digest it all, and write something worth reading on the topic.
The crop season started out nicely this spring, with corn producers setting out to cultivate almost 100 million of acres of corn, the largest cultivated area in 75 years. At the beginning of summer, however, things took a turn for the worst, with many areas experiencing both drought and extreme temperature.
Before anything else, I’d like to make one thing clear: Rather than drought, it looks as though it is extreme temperature that is the problem.
Indeed, according to my colleague Mike Roberts at NC State, drought is a poor predictor of crop yields, whereas extreme temperature — defined as the number of days for which temperature exceeds 84.2 degrees Fahrenheit — does a much better job of predicting crop yields.
The impact of temperature on crop yields looks like this (see the original research article here):
In other words, though there is a roughly linear relationship between temperature and corn yields from about 10 to about 29 degrees Celsius (i.e., from about 50 to about 84.2 degrees Fahrenheit), at which point corn yields drop sharply.