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Drought, Climate
Change and Food
Prices in Australia
John Quiggin
Australian Research Council Federation Fellow
School of Economics and School of Political Science and International Studies
University of ueensland
EMAIL j.quiggin@uq.edu.au
PHONE + 61 7 3346 9646
FAX +61 7 3365 7299
www.uq.edu.au/economics/johnquiggin
Drought, Climate Change anD FooD PriCes in australia2
Summary
Australia’s climate has always been variable and, in particular, prone to drought. Droughts
seriously aect agricultural yields and can contribute to spikes in retail food prices. e
current drought has been associated with particularly broad and sustained increases in
prices.
Over coming decades, the global frequency and severity of drought is likely to increase as a
result of climate change. Regional projections suggest that south-eastern Australia will be adversely
aected by changes in rainfall patterns, as well as by rising temperatures, which increase the severity
of drought. By 2070 there may be 40% more months of drought in eastern Australia, and conditions
will be worse in a high-emissions scenario.
e current drought may represent the beginning of this process. Higher average temperatures,
due in part to human-caused climate change, have certainly exacerbated its impact . Other changes,
such as increases in the severity of storms, will also have adverse eects. e result for Australian
consumers will be rises in average food prices and in the frequency and severity of price spikes. For
foods such as fresh fruit and vegetables that are supplied mainly by local producers, price shocks
similar to those being experienced by Australian consumers during the current severe drought may
start to occur every two to four years, rather than once a decade, unless strong action is taken to
reduce global emissions.
For internationally traded food products, the picture is little better. Increases in temperatures
beyond 2ºC, which can be avoided only by immediate action to mitigate global warming, would
reduce global agricultural production, particularly in developing countries. For instance, further
increases in global grain prices as a result of climate change would put pressure on consumer prices
for bread, cereals, meat, eggs and dairy products, all of which depend on grain as a major input.
Some practices that have been proposed as strategies to mitigate the impact of climate change
would also contribute to upward pressure on food prices. ese include the use of food products such
as corn and sugar for the production of biofuels and, to a lesser extent, the conversion of cropland to
plantation forests.
e policies that will do most to protect food supplies and hold food prices down are those that
avoid more than 2ºC of warming, beyond which the ability of agriculture to adapt would be severely
tested. Appropriate responses include national and global policies that cut greenhouse emissions by
promoting energy conservation, reducing demand for carbon-based fuels, setting medium and long-
term emissions-reduction targets, and pricing carbon to achieve those targets.
Drought, Climate Change anD FooD PriCes in australia 3
1 Drought, Climate Change and
Food Prices in Australia
Australia has always been subject to extremes of climate – ‘droughts and ooding rains’.
e costs of drought fall most directly on farmers and rural communities. However, all
Australian families are aected to some extent by higher food prices resulting from droughts
and other adverse climatic events, such as the destruction of the banana crop by Cyclone Larry in
2006.
e current drought in Australia has been associated with across-the-board increases in food
prices. In the two years from September 2005 to September 2007, food prices increased at twice the
rate of the Consumer Price Index. Fresh fruit and vegetables have been worst hit, with increases of
43% and 33% respectively.
e ANZ Bank (2007) identies the drought as a primary contributor to these soaring food
prices. However, Australia’s drought is occurring in a global context where numerous factors are
combining to drive prices upwards.
For grains, unfavourable seasonal conditions have not been limited to Australia, and have
also reduced yields across much of Europe, Canada, Ukraine and Russia. Demand-side pressures,
including competition from biofuels production and increased demand from major Asian markets,
are further contributors, as well as regulatory changes in Europe and Argentina and rising oil
prices. ese factors together have driven up global grain prices, which ripple throughout the food
industries. Products for which grain is a signicant price component not only include bread and
cereals but also meat, dairy and egg products, for which grain for animal feed is an important input.
In this sense, the current drought is a perfect storm for Australian consumer food prices. Many
commentators see no end in sight to the rising prices. e ANZ Bank projects that:
“In the short term, unfavourable weather conditions, coupled with high world prices for
commodities such as grains, will increase input costs for a wide range of fresh and processed foods. e
largest price rises are likely for fruit and vegetables and we can also expect signicant price increases
for products that rely on grains as an input (either directly or indirectly as a feedstock) such as bread,
cereals and snack foods, dairy, eggs and meat. For example, the Australian Egg Corporation has warned
that the price of eggs will rise by 50 to 60 cents a dozen (or at least 10%).”
e bank concludes that climate change, biofuels production and other factors will lead to a
permanent shi up in food prices.
Direct and indirect eects of climate change are a common factor associated with many of
the forces pushing food prices upwards. As climate change continues, these forces will intensify. In
particular, over coming decades, the global frequency and severity of drought are likely to increase as
a result of climate change. Regional projections suggest that south-eastern Australia will be adversely
aected by changes in rainfall patterns, as well as by rising temperatures, which increase the severity
of drought. By 2070, there may be 40% more months of drought in eastern Australia, and conditions
will be worse in a high-emissions scenario. (CSIRO 2007)
is paper assesses the likely impact of climate change on agricultural production in Australia
and globally, and some of the implications for food prices in Australia. e implications of alternative
policy responses to climate change are examined. e policies that will do most to protect food
supplies and hold food prices down are those that avoid more than 2ºC of warming, beyond which
the ability of agriculture to adapt would be severely tested. Appropriate responses include national
and global policies that cut greenhouse emissions by promoting energy conservation, reducing
demand for carbon-based fuels, setting medium and long-term emissions-reduction targets, and
pricing carbon to achieve those targets.
Drought, Climate Change anD FooD PriCes in australia4
2 Projections of climate change
In its Fourth Assessment Report, the IPCC (2007a,b,c) summarises a wide range of projections of
climate change, encompassing dierent climatic variables, time and spatial scales, models and
scenarios. Most attention is focused on projections of changes in global mean temperatures.
However, analysis of the impact of climate change on agriculture requires consideration of regionally
specic changes in a range of variables including temperature, rainfall and the eects of CO
concentrations on crop growth.
Because the global climate adjusts to changes in greenhouse gas concentrations with a lag, some
warming (about 0.6ºC by 2100 relative to 1980–90) is inevitable as a result of emissions that have
already taken place. Even with aggressive strategies to stabilise atmospheric CO concentrations
at levels between 400 and 500 parts per million (ppm), it seems likely that warming over the next
century will be about 2ºC relative to 1980–90 (with a standard deviation of about one degree).
So for the purposes of policy analysis, the relevant baseline is expected warming of 2±1ºC under
a stabilisation strategy. e outcome under stabilisation may be compared with ‘business as usual’
projections, in which there is no policy response to climate change, and with a variety of mitigation
strategies. e IPCC (2007a) presents a range of ‘business as usual’ projections, in which estimates
of warming over the period to 2100 range from 2ºC to 6.4ºC. us, under business as usual, both the
expected increase in temperature and the standard deviation of change are higher.
e rate of change of warming (conventionally expressed in degrees of change per decade) is
at least as important as the change in temperature levels at equilibrium or over a century. Recent
observed warming has been at a rate of about 0.2ºC per decade (Hansen et al 2006). Business-as-
usual projections imply an increase in the rate of warming over coming decades.
Australia has already experienced an increase in average temperatures similar to that for the
world as a whole. According to CSIRO (2007), the best estimate of annual warming over Australia
by 2030 relative to the climate of 1990 is about 1.0ºC. e range of uncertainty is about 0.6ºC to
1.5ºC in each season for most of Australia.
Much of this warming will reect the eect of emissions that have already taken place, and
the immediate scope to reduce emissions is limited. Moreover, average temperatures have already
increased by just under 1.0ºC since 1950. It follows that a warming of 2ºC, relative to the climate
of the mid-20th century, is virtually inevitable. Natural variability in decadal temperatures is small
relative to these projected warmings.
From 2030 onwards, the rate of warming depends critically on the way in which energy use
develops and on whether action is taken to mitigate emissions. Later in the century, the degree of
warming is more dependent upon the assumed emission scenario. By 2050, annual warming over
Australia ranges from about 0.8 to 1.8ºC (best estimate 1.2ºC) for the IPCC B1 (low-emissions)
scenario and 1.5 to 2.8ºC (best estimate 2.2ºC) for the IPCC A1FI (high-emissions) scenario. By
2070, the annual warming ranges from about 1.0 to 2.5ºC (best estimate 1.8ºC) for the B1 scenario
to 2.2 to 5.0ºC (best estimate 3.4ºC) for the A1FI scenario. Regional variation follows the pattern
seen for 2030, with less warming in the south and north-east and more inland. In 2070, the risk of
a warming of more than 4ºC in 2070 exceeds 30% over inland Australia under the A1FI scenario,
whereas under the B1 scenario the warming is likely to be less than 2.0ºC, except in the north-west.
Under the high-emissions A1F1 scenario, the implied rate of warming is between 0.3ºC and
1.0ºC per decade. Rates of increase signicantly greater than 0.2ºC per decade will create substantial
diculties in adjustment for agricultural activities. As a broad average, average temperatures
increase by about 1ºC for each move of 200 kilometres (or about two degrees of latitude) towards
the equator. For any given crop there is a typical range of temperatures suitable for its production.
An increase of 0.2ºC per decade implies that the zone of cultivation for a typical crop will move
southward by about 40km per decade, requiring continuous adjustment by farmers. An increase of
5ºC, even over 40 years, would be catastrophic, making the climate of the NSW wheat belt more like
that of North ueensland.
Drought, Climate Change anD FooD PriCes in australia 5
WATER
In addition to raising average global temperatures, climate change will aect the global water cycle.
Higher global temperatures imply higher rates of evaporation and higher atmospheric concentrations
of water vapor. Since water vapor is a greenhouse gas, this increase in concentration is an important
feedback eect, amplifying the initial impact on temperature of higher concentrations of CO.
Globally, mean precipitation (rainfall and snowfall) is expected to increase due to climate
change. However, this change will not be uniform. IPCC (2007b, p. 181):
“Current climate models tend to project increasing precipitation at high latitudes and in the
tropics (eg, the south-east monsoon region and over the tropical Pacic) and decreasing precipitation
in the sub-tropics.”
Finally, climate change is likely to increase the frequency of extreme weather events, including
cyclones and severe droughts.
In summary, climate change will increase average ows of water but the most important eect
will be to increase the variability of ows over both space and time. Areas that are already wet are
likely to become wetter, while those that are already dry will in many cases become drier. e increase
in average precipitation will be caused mainly by more frequent events involving very high rainfall,
such as monsoon rain associated with tropical cyclones. Meanwhile, droughts are also likely to
increase.
In Australia, inows to the Murray-Darling Basin, the location of most irrigated agriculture, are
projected to decline. Severe droughts, attributed in part to climate change, have already occurred
in recent years. On the other hand, areas in the wet tropics are expected to receive higher levels of
rainfall (Jones et al 2007).
Rainfall levels have already declined, and there is evidence that human activity may be
responsible, at least in part. Karoly (2003) concludes that recent pressure and rainfall changes in the
Southern Hemisphere are likely to result from a combination of both natural climate processes and
human inuences, including stratospheric ozone decreases and rising concentrations of greenhouse
gases. Marshall et al (2004) assert that rising greenhouse gas concentrations are an important cause of
the climatic changes, which cannot be due solely to ozone depletion.
3 Climate change and
agricultural production
Climate change may be expected to have a range of eects on crop yields and the productivity
of forest and pasture species. Some eects, such as increased evapotranspiration, will
generally be negative, while others, such as CO fertilisation, will generally be positive.
Changes in rainfall and temperature will be benecial in some locations and for some crops, and
harmful in other cases. In general, it appears that for modest increases in temperature and CO
concentrations (CO concentrations up to 550ppm and temperature changes of 1 to 2ºC) harmful
and benecial eects will roughly cancel out for the world as a whole, though some countries will
gain and some will lose.
However, since warming of at least 1ºC and probably 2ºC is virtually inevitable, comparisons
between a baseline of no change and an alternative of modest warming are of no practical value. A
more appropriate basis for analysis is a comparison between ‘business as usual’ and a stabilisation
option, in which policy responses ensure that the atmospheric concentration of greenhouse gases is
stabilised at a level consistent with moderate eventual climate change. Although the latter denition
is somewhat vague, a target of 550ppm of CO-equivalent gases has been proposed on a number of
occasions (Stern 2007). For typical estimates of climate sensitivity, this target implies temperature
change of about 0.2ºC per decade over the 50 years, with stabilisation at global temperatures about
Drought, Climate Change anD FooD PriCes in australia6
two degrees higher than in the mid-20th century. Even this modest degree of warming will have
adverse eects in some areas, probably including south-eastern and south-western Australia.
It is useful to consider three eects separately: the direct eects of higher temperatures, CO
fertilisation and eects on water availability. For Australia, the third of these eects is likely to be
most important.
e Intergovernmental Panel on Climate Change (2007) summarises a large number of studies
of the direct impact of higher temperatures on crop yields. For warming of more than 2ºC, the
marginal eects of additional warming are unambigously negative. Studies of wheat yields in mid-
to-high latitudes, summarised in Figure 5.2b(c) of IPCC (2007), show that the benets of warming
reach their maximum value for warming of 2ºC, while at lower latitudes, and for rice, the eects of
warming greater than 2ºC are clearly negative. For temperature increases of more than 3ºC, average
eects are stressful to all crops assessed and to all regions.
Increases in atmospheric concentrations of CO will, other things being equal, enhance plant
growth through a range of eects, including stomatal conductance and transpiration, improved
water-use eciency, higher rates of photosynthesis and increased light-use eciency (Drake,
Gonzalez-Meler, and Long 1997). However, the estimated relationships are curvilinear, implying that
only modest increases in yields can be expected from increases in CO beyond 550ppm. Moreover,
temperature and precipitation changes associated with climate change will modify, and oen limit,
direct CO eects on plants. Increased temperatures may also reduce CO eects indirectly, by
increasing water demand.
Water derived from natural precipitation, from irrigation or from groundwater is a crucial input
to agricultural production. IPCC (2007b, Chapter 3, p175) concludes, with high condence, that
the negative eects of climate change on freshwater systems outweigh its benets. is negative
nding arises from a number of features of projected climate change.
First, climate change is likely to exacerbate the spatial variation of precipitation, with average
precipitation increasing in high-rainfall areas such as the wet tropics and decreasing in most arid and
semi-arid areas (Milly, Dunne and Vecchia 2005).
Second, climate change is likely to increase the variability and uncertainty of precipitation
(Trenberth et al 2003). e frequency and geographical extent of severe droughts are likely to
increase by multiples ranging from two to 10, depending on the measure (Burke, Brown, and
Nikolaos 2006), and high-intensity rainfall events are likely to become more prevalent (IPCC
2007a). CSIRO projects that by 2070 there may be 40% more months of drought in eastern
Australia, and 80% more in south-western Australia. (CSIRO 2007)
ird, warmer temperatures will lead to higher rates of evaporation and evapotranspiration, and
therefore to more demand for water for given levels of crop production (Döll 2002). Water stress
(the ratio of irrigation withdrawals to renewable water resources) is likely to increase in many parts
of the world. Water stress may be reduced in some areas, but the benets of increased precipitation
will be oset by the fact that the increases in runo generally occur during high-ow (wet) seasons,
and may not alleviate dry-season problems if this extra water is not stored (Arnell 2004). ere are
many constraints limiting the feasibility and desirability of new large-scale water-storage projects,
including environmental imperatives, social dislocation and economic cost.
THE RATE OF ADJUSTMENT
While most analysis has focused on estimates of the long-term change in temperature and other
climatic variables associated with dierent projections, it is at least as important to consider the
rate at which climate changes. If climate changes more rapidly than natural ecosystems or human
agricultural systems can adapt, the results may be catastrophic.
As temperatures increase, climate in any given location becomes more like that previously
observed at a point closer to the equator. Conversely, biozones suitable for particular ecological
or agricultural systems tend to migrate away from the equator and towards the poles. Hansen et
al (2006) estimate that the average isotherm migration rate of 40km per decade in the Northern
Drought, Climate Change anD FooD PriCes in australia 7
Hemisphere for 1975–2005 exceeds known paleoclimate rates of change. By contrast, natural
biozones have moved towards the poles at an average rate of about 6.1km per decade in the last half
of the 20th century, a rate considerably less rapid than that required to match the change in climate
(Parmesan and Yohe 2003).
Human activities are more adaptable than natural ecosystems. Nevertheless, adjusting to a shi
of 40km per decade will involve substantial continuing costs. For example, uiggin and Horowitz
(1999) note that the optimal service radius for grain-handling facilities in Australia is about 25km.
So a facility initially located near the margin of grain production may be outside the zone of
production within a decade of construction.
4 Agriculture and mitigation
Agriculture is likely to play an important role in mitigating emissions of greenhouse gases.
Cole et al (1997) estimate that the agricultural sector accounts for between one-h and
one-third of anthropogenic climate change, and that changes in agricultural practices could
reduce anthropogenic impact by an amount equivalent to between 1.15 and 3.3 gigatonnes (Gt) of
carbon equivalents per year. Of the total potential reduction, about 32 per cent could result from
reduction in CO emissions, 42 per cent from carbon osets by biofuel production on 15 per cent
of existing croplands, 16 per cent from reduced methane emissions and 10 per cent from reduced
emissions of nitrous oxide.
Conversely, eorts to mitigate global warming by reducing emissions of CO and other
greenhouse gases, or through the expansion of osetting sinks, may have a substantial eect on
agricultural production
BIOFUELS
Policies aimed at reducing CO emissions are likely to encourage increased use of fuels derived from
agricultural sources, collectively referred to as biofuels, either through direct policy mandates (such
as that embodied in the US Energy Policy Act 2005) or through the market incentives associated
with carbon taxes or cap-and-trade systems of emissions permits. e most important single instance
is likely to be the use of ethanol, derived either from food crops or from energy crops such as
switchgrass, as a substitute for gasoline.
In 2004, about four billion gallons of ethanol (16 billion litres), mainly derived from corn
and sorghum, was produced in the US, accounting for about 11.3 per cent of US corn output and
11.7 per cent of sorghum output and replacing about three per cent of US gasoline consumption.
ese proportions are expected to grow steadily (Eidman 2006). Other possible biofuels include
biodiesel, derived from soybean oil, bagasse and other crop residues used as fuel in electricity
generation, and methane derived from manure (Gallagher 2006).
Assuming that biofuels are economically competitive with fuels derived from fossil sources,
the expansion projected by Eidman (2006) and others would imply the creation of a substantial
new source of demand for agricultural output, in addition to existing demands for food. If existing
processes were used to replace 20 per cent of fuel consumption, the input required would be equal to
more than 50 per cent of the current US output of corn and sorghum.
Expansion of the area of forested land is one of the most favoured methods of osetting
CO emissions (IPCC 2007c) and is likely to play an important role in the future. However, it is
important to note that forestry competes with agriculture for land, and that a substantial increase
in the area allocated to forestry will, other things being equal, increase the price of agricultural land.
ese eects must be considered in combination with the possible eects of increasing agricultural
production of biofuels.
Drought, Climate Change anD FooD PriCes in australia8
5 Impacts on consumers
Droughts in Australia are generally associated with increases in the prices of some
supermarket commodities, particularly fresh produce. In recent years, droughts in Australia
have combined with global climatic and market trends to result in major increases in
supermarket food prices across the board.
Fresh produce is generally hardest hit in times of drought. e markets for fresh fruit and
vegetables are largely domestic, which limits the ability to compensate for reduced production in
drought periods. In 2002-03, for instance, the real gross value of vegetable production in Australia
declined by 9% and took several years to recover. (ABARE 2007). is led directly to consumer
price increases, with the chief executive of AUSVEG ascribing a 13% increase in vegetable prices to
drought conditions and water restrictions (Sydney Morning Herald 2004).
Direct drought eects are not limited to fresh produce; honey is among the products that can
also be severely aected. In 2003 retail prices for honey as much as doubled over a 12-month period,
as domestic Australian production was sharply reduced by drought (Sun-Herald 2003).
While drought tends to have an immediate eect on produce, the dynamics for meat products
are more complex. Producers tend to respond to drought by destocking, which creates a short-term
increase in the supply of meat, which can lower prices during the initial period of the drought. Prices
then increase later as the process of rebuilding herds and ocks can take time and creates supply
constraints. For instance, during the 2002-03 drought, prices for produce began to rise from mid-
2002, but increases in meat prices did not appear until mid-2003. In some instances, consequent
food price increases can be dramatic. For instance, over the period 2001–04, lamb production fell
by 10%, which the Sheepmeat Council attributed entirely to drought conditions. Combined with
increasing international demand for lamb, this lower production led to retail price increases for lamb
meat of 50% (Australian Treasury 2004).
For grains, the situation is dierent again. Most grain commodities, as well as many meat and
dairy products, are now part of integrated global markets, so the main driver for supermarket prices
for foods made from those commodities is the global price, not local Australian conditions. e price
of bread may have just as much to do with demand in China and weather conditions in Canada as
it does with the local Australian wheat crop. at said, Australia is a major supplier of beef, grain
and milk powder globally, so droughts in Australia have the potential to aect global prices. In the
best case, droughts in Australia can be countered by supplies from other countries, leading to no
noticeable eect on retail prices for consumers. However, where a drought in Australia coincides
with other global pressures on agricultural prices, the net result can be a sharp rise in consumer food
prices – as is happening in the current drought.
e dierent dynamics for various commodities and interaction with global conditions make
it dicult to generalise about the behaviour of supermarket food prices during droughts. However,
the 2002-03 drought witnessed overall food price rises of 4.4%, nearly twice the increase of the
CPI during the same period (2.7%). e Australian Treasury (2004) attributed the increases to the
drought.
A similar pattern of price increases is occurring in the current Australian drought. According
to ABS measures of food prices, from September 2005 to September 2007 food prices increased by
12%, again double the overall CPI rate of 6%. During this period, consumer prices for bread and eggs
increased by 17%, vegetables by 33% and fruit by 43%.
If, as is projected, climate change exacerbates the frequency and severity of droughts and other
extreme weather events in Australia, the result will be an increase in average food prices and in the
frequency and severity of price spikes.
For foods such as fresh fruit and vegetables that are supplied mainly by local producers, price
shocks similar to those now being experienced by Australian consumers may start to occur every two
to four years, rather than once a decade, unless strong action is taken to reduce global emissions.
Drought, Climate Change anD FooD PriCes in australia 9
For internationally traded food products, the picture is little better. Increases in temperatures
beyond 2ºC, which can be avoided only by immediate action to mitigate global warming, would
reduce global agricultural production, particularly in developing countries. For instance, further
increases in global grain prices as a result of climate change would put pressure on consumer prices
for bread, cereals, meat, eggs and dairy products, all of which depend on grain as a major input.
e following table summarises the history of prices for selected food products during recent
droughts, and describes the climate change-related pressures on those food prices if temperature
increases exceed 2ºC.
6 Policy implications
A
‘business as usual’ approach to climate change will lead to severe damage to the environment
and to Australia’s agricultural production capacity, with an increase in the frequency and
severity of drought.
If this outcome is to be avoided, Australia must participate in a global eort to stabilise
atmospheric concentrations of CO and other greenhouse gases at a level consistent with warming
of no more than 0.2ºC per decade, implying an ultimate warming of no more than 2ºC. Some have
suggested stabilising atmospheric concentrations at about 550ppm CO-equivalent; however,
Food category Price effect of drought or other
severe weather events*
Effect of severe climate change
(more than 2ºC global warming)
Vegetables 2005–07: +33% Locally produced products such as these are
vulnerable to price spikes during local droughts.
Price shocks similar to those experienced in the
current drought may occur every two to four years,
instead of once per decade as has been the historical
norm. If some producers are unable to adjust to
severe changes, permanently elevated price levels
could result.
Fruit 2005–07: +43%
Bananas 2005-06: +300%
Honey 2002-03: +100%
Bread 2005–07: +17% Bread prices depend in part on global wheat
prices. Global wheat yields are likely to decline for
temperature increases of more than 3ºC (IPCC 2007).
This would increase global prices and is likely to
cause permanently elevated prices for bread.
Eggs 2005–07: +17% For eggs, dairy and many meat products, water and
grain for feed are important inputs. As with bread,
increases of more than 3ºC would continue to drive
up global grain prices, while climate change is likely
to decrease water supplies. Dairy that is dependent
on irrigated pasture is vulnerable to water scarcity,
while native pasture capacity will decline by up to
40% for temperature increases greater than 2ºC
(Preston & Jones 2006). Severe climate change is
likely to cause permanently elevated prices, with
further shocks during periods of drought.
Milk and dairy
products
2005–07: +11%
Meat and
seafood
2005–07: +4%
Lamb 2000–03: +59%
Beef 2000–03: +31%
All food
products
2005-07: +12%
2002-03: +4.4%
CPI 2005-07: +6%
2002-03: +2.7%
* Figures for 2002-03 based on comparison of June 2002 and June 2003 prices. Figures for 2005–07 based on
comparison of September 2005 and September 2007 prices. Lamb and beef 2000–03 based on comparison of
December 2000 and December 2003 prices. Source: ABS, 6401.0 Consumer Price Index, Australia, September 2007.
Drought, Climate Change anD FooD PriCes in australia10
many scientists, the European Commission and the most recent data from the IPCC suggest that
stabilisation at about 450ppm CO-equivalent is necessary to minimise the risk of exceeding 2ºC of
warming.
Such a target requires substantial reductions in CO emissions. Typical estimates suggest
that developed countries must reduce emissions by 60% to 80% relative to 1990 levels, and must
encourage developing countries to hold their own emissions well below the peak levels reached by
developed countries in the 20th century. is will entail a substantial mitigation eort.
However, all mitigation options are not equal with regard to food prices. Replacing fossil fuels
with biofuels derived from food crops will increase food prices, possibly quite substantially. Similarly,
diverting agricultural land to the production of biofuels or to plantation forestry will tend to raise
food prices, other things being equal.
e mitigation policies most conducive to lower food prices are those based on increasing the
eciency with which energy is used, and reducing wasteful uses of energy, along with alternative
energy sources, such as wind and solar energy, that do not rely on crop-based inputs.
Conclusions
Climate change will aect Australians in many dierent ways. Recent increases in grocery prices are
a direct illustration of the changes that will aect the entire planet if global warming is allowed to
continue unchecked. Immediate action to put Australia, and the world, on a sustainable path to the
future is essential.
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