Record temperatures are driving food prices higher. Here are some of the crops facing the biggest impacts

This article is brought to you in association with the European Commission.

• Over recent years food prices have been inflated by the pandemic and war in Ukraine – this summer’s extreme temperatures are exacerbating the problem.
• Soybeans, olive oil and rice are just three of the products being affected by shortages and price hikes.
• A World Economic Forum report calls on the financial sector to direct more resources into helping the food and agriculture sector to become more sustainable.

What’s in your regular shopping basket? What are the foods you can’t live without? And what are your occasional treats?

Whatever they are, it’s pretty likely you’ve noticed a change in their price over recent months – some more than others. Shortages and supply issues caused by events including the pandemic and war in Ukraine have been felt through food price inflation for some while now. But for some foods, a more recent event is making itself felt: record high temperatures.

It’s entirely usual for food prices to fluctuate alongside the seasons, but the exceptionally hot and dry summer being experienced from Europe, to the US, to Asia and beyond has caused poor harvests and many crops to fail.

The climate crisis is making extreme weather – from heatwaves and droughts to storms and floods – more common, and some crops are more susceptible to these changes than others.

Here are three examples of foods where we are already seeing an impact.

1. Olive oil

A long, hot, dry summer in much of the Mediterranean has damaged olive trees and caused a poor crop because reduced soil moisture has stunted plants and crops during their crucial growing season. As a result, prices of olive oil have soared to an all-time high. Stock piles are already significantly down on previous years and are likely to run very low before we reach the next harvest.

Between April 2022 and May 2023 average temperatures were up to 2.5°C – and sometimes 4°C – higher than average in countries including Spain, which is one of the world’s most significant producers of olive oil. This has combined with persistently low rainfall for more than a year to create severe drought. In Andalusia in southern Spain, water reservoirs are down to about 25% of their capacity.

Large parts of the Mediterranean are experiencing extreme drought. Image: European Commission

2. Rice

From Italy to India, rice farmers have been feeling the effects of climate change on their crops for some years. And the problem is multi-faceted – sometimes it’s drought, sometimes it’s flooding. And rising salinity from water intrusion is also affecting crops.

Italy grows about 50% of the EU’s rice, and is the world’s only grower of many varieties suitable for risotto. But the country has recently warned rice output is set to fall as the country faces a second year of drought. As a result, Italy is sowing its smallest rice crop in 23 years this year, according to Reuters.

Thailand, too, is looking at reducing its crop as low rainfall and a poor outlook is concerning authorities. The country is rolling out a contingency plan that will likely have an impact on global rice supplies – as well as those of sugar. In July, rice prices in Asia soared to their highest levels in more than two years on concerns the dry weather will damage crops.

In India, late and particularly heavy monsoon rains damaged the country’s rice crop causing it to halt exports of some categories of rice. Banning exports of non-basmati white and broken rice roughly halved shipments by the world’s largest exporter of the grain. Since the ban in July rice stocks in the country have surpassed targets, raising hopes the ban will be relaxed.

The Californian rice belt in the US was severely hit by drought last year, with rice growers only planting half as much rice as usual. The long-running drought was estimated to have cost the region $703 million in lost economic activity in 2022, as well as 5,300 lost rice-related jobs. The start to the 2023 season has been more typical, which has brought growers some respite, although the effects of the drought continues to be felt further down the supply chain including by millers, dryers, storage facilities and trucking operations.

3. Soybeans

It’s not just America’s west coast that has seen a shortage of rain. The Midwest has been experiencing its worst drought since 2012. As the country’s farming heartland, the conditions have corn and soybean growers worried about yields.

Soybean production is also significantly down in other places – Argentina for example expects 2023 yields to be 44% down on the average of the previous five years. South America is facing its third consecutive year of severe drought, and last year Argentina declared a state of emergency and agricultural disaster across many regions. As of January 2023, damage to various crops, including wheat, soybean and corn, have led to estimated losses of $10.4 billion in the country.

Although soy oil is used as an ingredient in a variety of products, the vast majority of the world’s soybean crop is used for livestock feed.

A shortage or poorer quality livestock feed can cause prices to spike, leading farmers to difficult decisions about reducing herd sizes or finding alternative food sources, for example. This in turn feeds into the price, availability and quality of meats or dairy products down the line.

A sign of things to come?

As the impacts of the climate crisis intensify, bringing with them more extreme weather, the concern is that the devastating impacts seen on crops this summer are only the start. A study by NASA suggests maize crop yields could be down 24% by 2030 as a result of climate change.

Much research time and money is being devoted to mitigating the effects of a changing climate on crops. This includes more resilient and better adapted crops, better and more efficient water use, and more effective and targeted fertilizers, for example.

It also is important to note that the agricultural sector itself is a significant contributor to greenhouse gas emissions – food systems account for around a third of global emissions. However, comparatively little finance is being directed towards solving this. Just under 4% of climate finance is allocated to agriculture and food, according to The World Economic Forum’s paper Green Returns: Unleashing the Power of Finance for Sustainable Food Systems.

The paper calls on the finance community to reshape its strategies and highlights five pivotal financial vehicles that could be used to bring about equitable and sustainable change.