How climate change could affect food prices

Climate change and the more frequent occurrence of extreme weather events such as periods of heat and drought or heavy rain will also impact shopping in the supermarket. This is suggested by a study carried out by the Potsdam Institute for Climate Impact Research and the European Central Bank. According to their calculations, rising temperatures could drive food inflation by up to 3.2 percent each year until 2035. According to estimates, the hot and dry summer of 2022 increased food inflation in Europe by around 0.6 percentage points.

The Austrian National Bank (OeNB) also looked into the topic at the beginning of the year: It found, for example, that the inflation rate for beer increases after unusually hot summers or after a warm or rainy spring. The price increase cannot be explained precisely; it could be related to both demand and a shortage of supply due to crop failures. The effect of weather events on prices cannot therefore be clearly predicted.

Alpine region particularly affected

Franz Sinabell, agricultural economist at the economic research institute Wifo, is also cautious when it comes to concrete assessments. “We live in climate change, so it is difficult to clearly assign specific weather events.” It is undisputed that climate change is changing agriculture – this will be particularly noticeable in the Alpine region. Warmer temperatures would make the living conditions of some pests easier.

According to forecasts, the production of agricultural goods will increase by three to five percent by 2040, says Sinabell. “The extent to which food prices will then rise is another question.” The prices also include the costs for energy, labor or rent. In general, it can be observed that Austria’s population is growing, but the agricultural area is decreasing, says Sinabell. Yields can no longer be increased significantly, and Austria will therefore be more dependent on imports from abroad in the future.

Consequences for farmers

Patrick Falkensteiner, a consultant at the Upper Austrian Chamber of Agriculture, is concerned with the effects of climate change on agriculture. The capricious weather can clearly be felt, he says. In recent years, some cultivation has shifted from spring to autumn, with so-called wintering making better use of moisture.

In order to secure yourself, long-term soil management is required, which takes a lot of time and resources. “It is common practice to use cover crops and vegetation. They cover the ground and the plant residues protect against erosion,” says Falkensteiner. In response to the increased risk of crop failures, farmers would have to diversify and, in addition to farming, also grow vegetables or fruit or keep animals.

As a result of the investments, food prices would also rise, says Falkensteiner. The “crucial question” is whether consumers are then willing to pay the higher price for local products. “We need to better convey to consumers the value of local agriculture – which is much better positioned than others when it comes to climate,” says Falkensteiner.

New plant species

The warmer temperatures and changed growing seasons have meant that new plants can be grown in Austria. For example, sweet potatoes, which are native to Central and South America, or melons, which originally come from tropical West Africa. Rice is also grown in Styria, says Franz Sinabell.

Breeds that can deal better with drought would be more important. One example is wheat varieties, says Patrick Falkensteiner. In addition to soybeans – “a success story in Upper Austria” – new crops include millet and buckwheat. The changes also represent an opportunity for wine growing in the state – there are currently 100 hectares of vineyards. However, spring frost remains a major risk.