Climate-Related Cost-of-Living Increases Are a Harbinger of Future Crises

Climate conditions are putting upward pressure on global food prices, as people around the world chafe under levels of inflation not seen in decades. A prolonged drought this autumn is parching the Mississippi River watershed, pushing up the cost of producing key crops in the U.S. agricultural heartland.

The lack of rain is not only hindering farm output, it’s also causing the Mississippi to slow to a trickle along parts of the massive waterway, which is burdening global supply chains by significantly slowing barge traffic critical to the global food system, a U.S. government report warned last week.

“River levels are typically lower in the fall, but this year they are even lower than normal, which is causing significant issues as [the] fall harvest is well underway,” noted the study from the National Integrated Drought Information System (NIDIS).

In recent years, the Mississippi River basin has been responsible for producing 92 percent of U.S. agricultural exports, including 60 percent of annual U.S. grain exports, which are shipped down the river through the Port of New Orleans. The river also typically ferries 78 percent of exports in livestock feed to global markets.

But the volume of goods currently being transported on the Mississippi is down 45 percent, the NIDIS report said. Barges face stricter limits on the amount of goods they can haul when water levels are low because they run a greater risk of running aground in shallow water when carrying more than a certain amount of weight.

As a result of increased farming and shipping costs, people around the world are being priced out of food they desperately need. Since the start of last year, countries in the Americas, Europe, Africa and Asia have been suffering from a cost-of-living crisis triggered by global supply chain problems that developed during the COVID-19 pandemic. In the U.S., for example, the rate of inflation was above 8 percent in May for the first time since 1981.

The crisis was exacerbated earlier this year by Russia’s invasion of Ukraine and the geopolitical fallout from the incursion. Grain markets were hit particularly hard, with both Russia and Ukraine serving as major wheat exporters in peacetime. U.S. farm goods were, therefore, in relatively high demand around the world before the Midwest and Great Plains were stricken by drought.

Certain data suggest that poor people living in countries governed by right-wing politicians will suffer most as a result, with global increases in the cost-of-living appearing to be driven by laissez-faire economic policies. Bolivia, for example, has been able to keep inflation low thanks to its socialist government’s management of the economy. State-run energy and retail operations keep consumer prices stable in the South American country by releasing supply reserves to the market when excess demand persists. Meanwhile, in countries run by governments that have embraced the neoliberal approach to deregulation in recent decades — countries such as the U.S., the U.K. and Canada — price levels have grown in concert with corporate profits, which are at record levels.

Profit incentivizes increased industry output only when markets are competitive, and monopoly power has been growing over the past two decades in higher-income countries. The corporations that dominate markets for food have been among the companies in the U.S. that have been able to pass on recent increases in costs to consumers while making a healthy profit for themselves, as a report published on November 1 by The New York Times detailed.

Whatever the cause, the trend of higher price growth is being exacerbated by a warming planet, which is creating the conditions for extreme weather events like the ongoing drought causing vegetation dependent on the Mississippi River basin to wilt. To make matters worse, the full extent of the Midwestern drought damage is unknown. AccuWeather predicted that rainfall won’t return river traffic to normal until January, and that logistical disruptions have already added $20 billion to commercial transportation costs. Low levels of precipitation over the coming months could also threaten crops that haven’t even been planted yet, NIDIS warned.

“If fall moisture is not replenished, the risk for drought continuing is increased for the next growing season, as improvements to soil moisture are limited over the winter, particularly to the north where soils are mostly frozen,” the agency said. Arid conditions have already hurt wheat, corn and soybean yields.

While the Mississippi River basin goes through regular drought cycles, scientists say climate change causes such cycles to be more frequent and intense. Warmer conditions are also stoking historic drought conditions around the world, including in the western U.S., which has been facing a two-decade-old ongoing “megadrought” that intensified since the start of 2020. Europe, China and India are also being plagued by record low levels of rainfall, which is contributing to lower supplies and higher prices for staples like rice on world markets.

“An index of grains and soybeans is trading almost 40% above the five-year average and the surge in crop prices has been a major contributor to global inflation,” Bloomberg warned in late August. “Already, food shortages helped lead to the downfall of Sri Lanka’s government earlier this year when the country ran out of hard currency needed to pay for imports.”

Recently published studies have added to the mounting pile of evidence showing that global warming looks set to make food production a challenge in the future. A study published in Nature on October 29 found that vegetable crops can be “highly sensitive to environmental change” and that temperatures higher than 30 degrees Celsius, or 86 degrees Fahrenheit (30°C / 86°F), are “detrimental to crop yield.” Another report published on October 19 by the Environmental Defense Fund found that days with “killing-degree” heat, temperatures that begin around 84°F, are set to increase significantly throughout the U.S. agricultural heartland in the coming decades.

In other words, people in the U.S. and around the world can expect more events that put upward pressure on food prices, like the ongoing Midwestern drought. The likelihood of their occurrence will only diminish if there’s a reduction in the carbon emissions causing climate change, and the harm done to people around the world will only be minimized if governments rein in corporate power.

“With each fraction of a degree of warming, tens of millions more people worldwide would be exposed to life-threatening heat waves, food and water scarcity, and coastal flooding while millions more mammals, insects, birds and plants would disappear,” The New York Times noted in its report on the U.N warning. The world is currently getting a preview of what some of this will look like all along the Mississippi River.