Food, Weather & Water Heading North

By Mark Harper 7 August, 2013

Weather patterns shifted to a more disruptive phase, with major implications for agriculture & agri-commodities

Expect a 20-30 year cycle of more rain in North China as Pacific Decadal Oscillation moves into cool phase
Mixed news for agri due to a drier South where 75% of rice is grown & wetter harvests
Possible rise in food prices & social tensions as agri-sector adjusts to new weather patterns

In a panel discussion entitled Water, Weather, Wherever at the Standard Chartered Earth Resources Forum (SCERF) in Hong Kong in June 2013, the largely institutional investor audience unanimously agreed that the weather has been changing for the worse over the last decade. The panellists which included acclaimed climatologist Evelyn Browning-Gariss, and from Standard Chartered, Abah Ofon Director of Agricultural Commodities Research, and Adrian Foulger, Head of F&B and Soft Commodities, all agreed that these changing weather patterns have affected and will continue to affect agricultural commodity markets.

“every 30 to 40 years, the climate reaches a tipping point, changing from somewhat benign to disruptive”

Evelyn Browning-Gariss, Browning Newsletter

The discussion here is not about man-made climate change. The fact is that weather is already changing and according to documented climatic cycles, our weather patterns are likely change for the worse over the next decade. According to Browning-Gariss, “every 30 to 40 years, the climate reaches a tipping point, changing from somewhat benign to disruptive”.
The bottom line is that we should prepare for the impact of more storms, more extreme temperatures and more erratic rainfall, which in turn will have significant implications for the global economy.
So here are some key global weather patterns and shifts and how they affect food, weather and water in China…

Food is heading North

In China, only around 15% of land is arable. This means that even a small change in climate and weather conditions can affect a greater proportion of China’s agricultural productivity (for background on water and agriculture issues in China click here).
During the panel discussion, Browning-Gariss pointed out that historical records show that a temperature change of one °C (cooling or warming) will move the freeze zone by up to 1,000km. Since 1900’s the global average temperatures have risen by 0.8°C which has moved the freeze zones and in turn farming zones, pushing the traditional farming belts further north and negatively impacting equatorial and Southern hemisphere regions. For example, as noted by Browning-Gariss in her November 2012 newsletter, it is “Go north, young corn! As climate is changing, Kansas is abandoning corn and Canada is growing more”. She also noted that agribusiness giant Cargill Inc. had increased their investment in northern U.S. facilities in anticipation of the increased grain in the north.
With farming belts being forced up North, this could be bad news for China. The North China Plain, where wheat and corn are grown, is already facing severe groundwater water issues (more here). Moreover, there is a mismatch with arable land and water: Only 23% of China’s water resources lie in the North compared to 64% of arable land.
But perhaps not so in the future, as it seems that water is also heading up North…

More rain also expected in the North

Oceans make up 71% of the Earth’s surface and are important in regulating the global climate. As the ocean’s temperatures change, air temperature and pressure also change influencing weather patterns and rain. Warming oceans for example potentially fuel and lead to more intense and frequent storms, typhoons and hurricanes. There are numerous ocean currents which move warm waters around the globe affecting both regional and global climates. Familiar ocean cycles include: the 6-18 months El Nino Southern Oscillation (ENSO); the longer Pacific Decadal Oscillation (PDO) at 50 years; and the Atlantic Multi-decadal Oscillation (AMO) at 60-70 years. (More on the PDO see box text below and for more on ocean cycles here).

“This is not good news for Asian temperatures. When the PDO is in its cool phase, the water temperatures around Asia and in the Indian Ocean go up. Any global warming over the next two to three decades will be felt more intensely in East Asia.”

CLSA “Coping with Weather Change”

The link between disruptive weather changes and oscillating patterns in ocean currents has been long established with regards to ENSO, and has been the subject of much scientific research in recent years. Indeed, in June 2013 the UK Meteorological Office attributed more rain in the future to the AMO and expect more unusual weather and disruptions to its infrastructure, industry and agricultural sector that the UK. Already the UK Farmers Union have seen a 30% drop in winter wheat.
In 2006, the PDO switched to its cool phase. According to CLSA’s “Coping with Weather Change” published in April 2011: “This is not good news for Asian temperatures. When the PDO is in its cool phase, the water temperatures around Asia and in the Indian Ocean go up. Any global warming over the next two to three decades will be felt more intensely in East Asia.” The report continues to say that “the change in PDO will distort global rainfall. For Asia this will mean much more rainfall for western India, central and northern China and Japan.”

Asian Outlook for next 10 years

A wetter North – mixed result for food

With 64% of China’s arable land in the North, surely this is good news. China’s agricultural sector should benefit from increased rainfall brought about by the PDO over the next 20-30 years.
But a wetter North brings about other concerns. With wetter harvest seasons, it is more difficult to dry crops sufficiently for storage and transport. This could lead to increased capital costs for farmers such as investment in better storage silos, exacerbating already high loss rates for food-in-transit.
Man-made warming and pollution is adding to the impact of the cooling period of the PDO. Air pollution during or before the Asian summer monsoon, will also affect cloud and rainfall patterns further increasing its vulnerability to the impacts of shifting weather. Smoke and dust particles act like ‘seeds’ for water droplets which form to make clouds. The more particles in the atmosphere, the more the water vapour spreads out, and the longer it takes to rain. Scientists believe this could result in more extreme rainfall events because it could lead to the formation of larger clouds over the Tibetan Plateau, which carry more water, thus increasing the flooding risk.
Too much rain could also lead to an erosion of topsoil. Moreover, land baked hard by arid conditions in the North will be less permeable to rainfall and more prone to flash flooding, which could hamper groundwater replenishment.

A drier South – rice at risk?

Thanks to the PDO, the South is expected to experience a weaker monsoon, and therefore drier conditions increasing the risk of drought1. Hunan for example is currently experiencing a major drought which has left 384,000 people short of drinking water.
This along with global warming spells bad news for China’s rice farmers, as 75% of China’s rice crop is grown in the South. Not to mention that, rice becomes sterile and produces no grain if exposed to temperatures over 35°C for more than an hour. The 2007 IPCC report highlighted that more detailed analysis of rice yields by the International Rice Research Institute predicted reduction in yields in excess of 20% across the region per degree Celsius of temperature rise (for this report on rice & climate click here).
It is not just rice, less water in the South could also disrupt river transportation and hydropower generation (see China Hydro: Tough Weather Ahead). Moreover, since water is naturally moving North, does China need to spend US$62 billion on the South-to-North water diversion project?

Watch out for rise in food price & potential riots!

The shift to the cool phase of the PDO makes Asia more vulnerable to the impacts of La Niñas. The graph shows that droughts during the La Niñas of 2007-2008, 2010-2011, and 2011-2012, had a negative impact on global crops, particularly crops in the US, Argentina and Southern China. This in turn affected global food prices.
La Nina Impact on Global AgricultureAccording to the CLSA report, the La Niña of 2011 affected the winter phase of the East Asian monsoon, making it very cold and dry causing major damage to Northern China’s crop of winter wheat and Southern China’s vegetable crop.
In addition, shifts between PDO phases are disruptive times for farmers and will likely cause production to suffer and food prices to rise. Each phase (warming and cooling) can last from 20-30 years and it could take around seven to ten years for farmers to adapt to the change in precipitation patterns and adjust their settlements and farming practices accordingly. This is particularly true for traditional, small scale and subsistence farmers.
The CLSA report warns that the last time the PDO shifted from cool to very warm in the 1970’s, it led to social unrest in the Middle East.

Time to pay more attention to the weather

Whilst shifts in climate create major problems, they also create opportunities by driving new demand: for improved sustainable farming; more efficient irrigation techniques and equipment; drought resistant seed; better logistics; and improved infrastructure. Changes in weather may also increase opportunities for further experimenting with climate modification, more here.
Weather matters. We too need to shift the way we do business or invest. Those ignoring the forces of nature, relying on old investment models that worked for the last 20-30 years may be making an expensive mistake. It’s not just food/agriculture that will be affected, river transportation and hydropower generation could also be at risk. A drier south could leave China’s hydro expansion plans & the South-to-North water diversion project high and dry. In addition, warmer sea surface temperatures in the Indian Ocean and along the Asian coastline will mean increased typhoon activity in the South China Sea2. Insurers should take note. Climate change is here to stay, it’s time to adapt.

Pacific Decadal Oscillation

In Asia, we are at the mercy of the PDO. As the Hong Kong Observatory reports “the Pacific Decadal Oscillation (PDO) is the predominant source of inter-decadal climate variability in the Pacific Northwest. Like ENSO, PDO is characterized by changes in sea surface temperature, sea level pressure, and wind patterns“.
The last PDO warm phase was from 1976 to 1998, when the warm waters off the coasts of the Americas, created ample rainfall for Argentina, Canada and the US making them the breadbaskets of the world. It also caused Australia’s “Big Dry” (more on weather & agriculture here). At the same time, according to Y.K. Leung of the Hong Kong Observatory, in a PDO warm phase, countries on the western coast of the Pacific had cooler temperatures and on average less rainfall, causing a dry period in China1. This also meant lower levels of typhoon activity in the South China Seas2.
The chart below from the Joint Institute for the Study of the Atmosphere and Oceans (JISAO) illustrates that the PDO can be in one of two phases: a warm phase (often called positive) and a cool phase (negative). The warm phase creates unusually warm sea surface temperatures near the equator and along the coast of North America, and abnormally cool sea surface temperatures in the central North Pacific and along the Eastern coast of Asia. The cool phase is the opposite. Each phase typically lasts around 20-30 years.
Pacific Decadal Oscillation


Additional Reading


1 “Regime Shift in Summer Rainfall in Southern China.” Y. K. Leung et al. Hong Kong Observatory, 2005
2 “Variations in Tropical Cyclone Activity in the South China Sea.” Y. K. Leung et al. Hong Kong Observatory, 2005
Mark Harper
Author: Mark Harper
Mr Harper has worked for over 15 years in the field of corporate sustainability and environmental engagement. At John Swire & Sons Hong Kong, he is responsible for managing the Group's ESG disclosures and advising Swire companies on their ESG submissions. In addition to his reporting work, Mr Harper is responsible for assisting the Group on policy and strategy development, particularly in the areas of climate resilience, biodiversity, waste, and sustainable water management. He also leads the Research Committee of the Drink Without Waste working group Mr Harper has extensive experience in ESG disclosure standards, such as the UN Sustainable Development Goals, GRI and the Hong Kong Exchange ESG Reporting Guide, in conducting sector-focused benchmarking studies, corporate environmental management, and in organising hands-on corporate citizenship and CSR training programmes for many corporations, including HSBC and HKEx. Mr Harper worked in a number of senior management positions before joining John Swire & Sons Hong Kong in high-profile NGOs, including the Earthwatch Institute, Fauna & Flora International, China Water Risk, and the Business Environment Council, where he was responsible for managing the organisations' advisory services on ESG reporting and corporate sustainability strategy development. Mark was project manager of China Water Risk for 2013 and articles written below were during his tenure at China Water Risk.
Read more from Mark Harper →