As humans add more carbon dioxide to the atmosphere and global temperatures rise due to the greenhouse effect, corn prices will change rapidly and unpredictably, said Noah Diffenbaugh, assistant professor of environmental earth system sciences at Stanford University.
Diffenbaugh—who participated in the Nicholas School of the Environment’s Center on Global Change seminar series—presented his research on climate change and corn price volatility to a room of professors and graduate students Monday. He said the principal influence on future volatility in the price of the crop is climate change, not market forces or legislative policy.
His models of future conditions in the Corn Belt—the major corn-growing area in the Midwest—showed that future average summer conditions will resemble what are currently considered extreme, hot and dry events. Additionally, skies will be clearer, allowing for more sun exposure, and soil will dry out, both of which will put heat stress on the crops.
“[Corn is] an important crop for the United States, both for food and energy, and we know that it has important sensitivities to climate,” Diffenbaugh explained. “[The data] was a potential indicator of climate change impacts.”
During hot, arid years, corn farmers will produce a smaller yield, causing a supply shock that will drive prices up, he added. The price result will be volatile because, though the general temperature trend is upward, not every year will predictably follow this trend.
High corn prices will drive away everyday consumers of the crop, Diffenbaugh noted. But due to U.S. biofuel mandates, part of the consumer base of the crop is corporations involved in the ethanol industry, which he said causes the demand for corn to be highly price-inelastic. Additionally, when there is high demand for oil and petroleum, the ethanol demand increases accordingly, further allowing for the price of corn to remain high.
Diffenbaugh’s team’s research proved that climate change increases price volatility more than other influences, contrary to what he believed before conducting this research.
“Climate change is the dominant factor in our analysis, to my surprise,” Diffenbaugh said. “I expected it not to be, but it was.”
Due to the future issues facing the corn industry, it is important to consider how to adapt the industry to warmer climates, said Holly Davis, a graduate student in the Nicholas School of the Environment, who attended the seminar.
“His paper points out a new way of thinking about questions related to growing corn,” Davis said. “How do you adapt to a warmer climate? Do you genetically modify the corn or do you consider growing in different areas, like further north?”
Although research on global warming is not groundbreaking, Diffenbaugh said his research on the importance of climate change in the corn market is new information.
“This is new work, and it’s important for college students to be engaged in understanding what’s established knowledge and what’s emerging knowledge,” Diffenbaugh said.
Get The Chronicle straight to your inbox
Signup for our weekly newsletter. Cancel at any time.