Recent commodity price increases due to crop failure induced by climate change

Understanding how climate change affects the prices of goods

Imagine a lithium miner in Western Australia stopping in the middle of his shift because the safety alarm goes off. "It's too hot to pump water," they say as they wipe the sweat off their foreheads in 38°C heat. This situation shows how changing weather patterns affect operations in both fields and factories all over the world.

When heat turns dangerous

There are three main risk levels for workers:
• A big risk is having more than 10 days a year when the temperature is above 26.3°C.
• High risk: Temperatures get up to 28.9°C
• Conditions of 32.2°C or higher are very dangerous.

In the areas where these limits are in place, outdoor workers are 15–30% less productive. Now, mining and farming schedules need to be changed, which costs a lot of money.

The ripple effect of water scarcity

Drought makes it hard for industries that need a lot of water to work. Making one tonne of lithium takes 2 million litres of water, which is equal to 800 backyard pools. As reservoirs dry up, processing plants have to wait longer for things to happen, which affects the whole supply chain.

By 2035, German analysts say that the price of basic goods like wheat will go up by 0.9% to 3.2% each year. In ten years, this could mean an extra $12 a week on groceries for Kiwi families. Every season, it becomes clearer how changes in the weather affect people's wallets.

Rising prices of goods cause climate change: market trends and analysis

Have you ever thought about why the cost of your electric car keeps going up? The answer is in mines that are drying up and crops that are wilting. Recent research shows that changing weather patterns are changing global markets faster than most people think.

Projections based on data

According to research by PwC, drought could affect 70% of cobalt mines by 2050. Cobalt is a mineral that is very important for smartphones and electric vehicles. Rice crops have even bigger problems. Extreme heat could put 90% of the world's rice production at risk in the next 25 years. These threats are not far away. Chile's lithium fields, which supply a quarter of the world's needs, are already running out of water, which slows down tech production.

Mineral needs vs. limits on the environment

From 2017 to 2022, the use of cobalt went up by 70% because of clean energy technologies. But the places where things are made are in areas that are likely to have droughts. A resources analyst in Sydney says, "We're racing against rising temperatures." Even the best climate forecasts say:
• Mineral extraction will be 15% slower by 2035.
• 20% more expensive to water staple crops
• Delays in the supply chain are raising prices for consumers by 4–8%.

Possible emissions compared
There are still problems with low-carbon pathways. In the year 2040:
• High emissions: 80% of copper mines have to close because of the heat
• Moderate emissions: The cost of making food goes up 12% every year.
• Low emissions: Lithium prices go up 6% every year.

These changes will affect Kiwi families through tech upgrades and trips to the grocery store every week. Knowing about these trends helps you get ready for what's coming, since the data shows it's already here.

Effects on food production and supply chains

A cocoa farmer in Ghana looks at pods that have shrivelled up in the hot sun. This happens over and over again in West Africa, where 54% of people depend on rain-fed farming. A manager at a Kumasi cooperative says, "We plant when clouds gather, but storms come instead." This kind of unpredictability spreads through the global networks that keep Kiwi supermarket shelves stocked.

When mines and harvests go wrong

Recent studies show clear patterns in areas affected by climate change:
• All rural Ghanaians have less access to food.
• 26% have serious shortages when it's dry
• Pests now hurt 40% more crops than they did ten years ago.

Mining isn't safe either. People who work in areas with a lot of copper lose three hours of work every day because of heat safety rules. When rivers drop below intake levels, processing plants stop working, which slows down shipments around the world.

New zealand's fragile balance

Aotearoa feels these problems, even though they are far away from West Africa. Local dairy farms get 60% of their feed supplements from places that are prone to drought. A logistics manager in Napier says, "One late shipment means empty freezer aisles in a few weeks."

The numbers tell the whole story:
• Since 2020, imported foods have taken 12% longer to arrive.
• 8% more each year for storage that keeps things at a certain temperature
• 37% of exporters say they have broken contracts because of the weather.

These changes make it hard to choose. Families put frozen vegetables ahead of fresh ones. Manufacturers change the recipes of their products based on what ingredients are available. As the weather changes, survival depends on being able to adapt.

Ways to adapt and business opportunities

What if the answers to weather problems could help the economy grow? Industries that are looking to the future are answering this question with useful new ideas. Resilience strategies are making new markets and protecting operations, from mines in Chile to farms in India.

Strategies for resilience in farming and mining

Chile's lithium producers now run 22 plants that turn seawater into fresh water, and they are building nine more. This cuts down on the use of fresh water in dry areas. At the same time, India's Mahindra & Mahindra helps more than 500,000 farmers with AI-powered advice services. Using real-time weather data, their system predicts when diseases will break out and when to plant.

New technology and working together to find solutions

The International Aluminium Institute's heat protocols show that everyone in the industry is working together. Some of their steps are:
• Mobile shade stations for people who work outside
• Smart clothes that keep track of body temperatures
• Required breaks to cool off during the hottest times

These services keep people healthy and productive while lowering the health risks of heat. Cooling systems that use less energy in processing plants also lower costs.