In April 1998, a Foresight workshop was convened which focused on
seasonal weather forecasting as a tool for better understanding the
risks to the global agricultural supply chain. This event was
represented by attendees from academia, agro/chemical companies,
retailers, growers/manufacturers, and the government, and the focus was
on developing a better understanding of how long and short range
weather forecasts could be applied as an operational tool for the
various participating sectors. A 1999 paper was published describing
the objectives and outcomes from the workshop. While the workshop
conclusions supported the notion that long range forecasting can
provide a very useful strategic and competitive advantage, the ensuing
11 years since the workshop have not produced very much in the way as
actionable follow up.

This article provides a high level view on the background information
related to what will soon be a new addition to the Weather Trends
International (WTI) series of applied weather/climate white papers. It
should be stressed that the food supply problems have a component which
extends well beyond the commercial financial and consumer goods
sectors. In the forthcoming paper, we attempt apply components of our
global weather and climate research to one of the most pressing global
social and environmental problems facing society today – agricultural
production, and more importantly, global food security. According to a
recent Food and Agricultural Organization (FAO) briefing, one sixth of
the Earth’s population suffers from hunger and/or malnourishment. There
is no other single factor that is more important to building a more
equitable global society than ensuring an adequate daily supply of food
and nutrition to every mouth. While weather is usually pointed to as
the cause of such events, this crisis is as much an economic problem as
it is an environmental one. The incestuous cycle of poverty and hunger
is predicated upon a myriad of fundamental factors which are so
interconnected that it is becoming increasingly difficult for marginal
populations to escape this trap once they are placed below a financial
threshold that can be seen to provide an adequate standard of living.
What is even more alarming is that according the US Census Bureau,
global population is estimated to have increased from 6.71 billion in
2008 to 6.78 billion in 2009, which is roughly a 1 % change; during
that same time, the FAO estimate of hungry people went from 902 million
to 1.02 billion – an increase of 13%.

The physical side of this equation will be addressed in the paper, but
here we first look at the macroeconomic drivers underlying the
situation. Global food supplies, focusing primarily on commercial
stocks of grains, oilseeds and rice, have been steadily increasing
since the 1970s. We should note, however, that while weather variables
certainly affect production and ultimately the amount of raw material
which makes up physical supply to the market, food shortages are
largely problems rooted in economics, geography and infrastructure. In
any given year, supplies (production + stocks) of staples are in
sufficient quantities to feed the planet, while the weather’s effects
on crops, price, or both, become secondary factors. However, it is
precisely these secondary factors that prevent many of the world’s poor
from feeding their families. When a weather event triggers a supply
curtailment or a price reaction, the economic ramifications then serve
to feed back on the system, essentially reinforcing the primary
problem, which boils down to the fact that food is not afforded by
these populations. The global fiscal events witnessed over the last
year included some very dramatic swings in the futures and domestic
market prices associated with many staple commercial crops, including
corn, soybeans, wheat and rice. What we saw after the rapid rise in
prices, was that even after a retreat from the peaks seen in 2008,
relative prices are still high when compared to the price levels that
were common before the price spike. So while the risks associated with
the 2008 financial turmoil amplified the situation, pushing more people
to the brink of starvation in the process, we are now in late 2009 and
real prices continue to be the primary barrier in preventing both the
economic and environmental stability needed for a sustainable global
agricultural production model.

The FAO has released a number of briefings and technical papers
addressing the impact of the events of 2008 on the economies located in
many of the world’s agricultural origins. In many of these
communications, they have highlighted three points why the recent
economic crisis is unprecedented. Their first point is that the global
food security crisis was the result of rapid rise in food prices
between 2006 and 2008. Secondly, they note that the crisis affected
large parts of the world at the same time. And finally, they highlight
the precarious role that the financial exposure of the developing
countries played in these events. Upon closer analysis, however, we see
that the details associated with high food costs are not unique to the
events of 2006-2008. The paper then will also attempt to take a look
back at previous food supply events which culminated in high prices,
and put the most recent two years in context.

This gets to the role of seasonal weather forecasting as a tool for
averting some of the negative ramifications (financial and biophysical)
of the last year. While no crises can ever be predicted in absolute
terms, our research into weather and food security highlights the
question: what can the role of long range weather outlooks play in
averting such disasters in the future? We can turn to the role that
proactive weather risk management can play in (a) identifying potential
physical production problems well in advance of an event, (b) promoting
measures that extend from financial hedging to farm level risk
management to reduce potential negative impacts, and (c) develop
scenarios to quickly and effectively respond to such crises, in this
case food supply shortfalls, before the event is confirmed and most of
the response is reactionary. The current year’s rainfall deficit
associated with the weaker Indian monsoon, where a healthy seasonal
rainfall distribution is a prerequisite for a strong Indian economy,
underscores this point; the potential food production disruptions that
may accompany a 2009/10 El Nino event (both discussed elsewhere in WTI
content) make a long view on the year ahead equally important.

As stated at the beginning of this article, global food supply, or lack
thereof, is not the primary cause of the hunger problem. Prices will
always react to the perceived effects of weather on supply and demand,
and these events are what can be prepared for. Whenever there is a
weather ‘event’ in a commercial origin, this can be either a short term
disruption or a prolonged pattern. In either case, the market finds a
way to react to the event, and price reactions, in either direction,
typically hurt the poor growers first. Future posts and related WTI
papers will start to explore these and related issues in more detail.

(this article was originally published through Weather Trends International in September 2009)