F5
FARM & RANCH
THE NORTH PLATTE TELEGRAPH
SEPTEMBER 2020
Study indicates rising temperatures will increase yield risk
Midwest Messenger MANHATTAN, Kan. — Kansas State University agricultural economists have taken a different approach than most to deter- mine the risk farmers face in growing crops under in- creasingly higher average temperatures. The results indicate that yield risk will increase in re- sponse to warmer weather, with a 1 degree Celsius in- crease associated with yield risk increasing by approxi- mately 32% for corn and 11% for soybeans. KSU economists Edward Perry, Jesse Tack and Jisang Yu conducted the analysis using roughly 30,000 coun- ty-by-year observations from a relatively untapped source of information included in “cause of loss,” or COL data. That information is part of
even if rainfall levels are normal, Yu said. At the farm level, produc- ers make annual decisions on input expenditures such as seed and fertilizer, based on the distribution of poten- tial outcomes, Tack said. “When those outcomes are riskier, producers may de- vote fewer inputs into the production process, or increase their use of risk-re- ducing inputs in the same way investors shy away from risky stocks.” More information is available in the Nature Communications arti- cle, including details about methodology for the study. Information about climate change and temperatures is available on the National Oceanic and Atmospheric Administration website.
temperatures will differ de- pending on where you are located,” Perry said. The team also found that the increase in production losses linked to drought are larger than those linked to heat, and that the combined heat/drought increases are larger than the combined ex- cess moisture/cold decreases on average across U.S. dry- land counties, Yu said. “This is a unique find- ing that comes from (using) the cause of loss data. This difference in losses across different causes matters to farms in terms of how they can adjust to and mitigate weather impacts on their crops,” he added. The analysis highlights the important role of heat and drought stress in in- creasing yield risk. Both are associated with increased risk when temperatures rise,
variability around lower av- erage yields will change. That’s important for several reasons, including that un- expected yield shortfalls can dramatically affect produc- ers’ well-being, especially if they are deep or stack up over multiple years. Federally subsidized crop insurance can provide some protection, Tack said, but producers must pay a por- tion of the premium and premiums are based on how risky production is. Perry noted that their es- timates indicate that rising temperatures will have dif- ferent effects in different parts of the country. In some northern regions, higher temperatures will actually reduce downside risk. “One implication of the heterogeneity in warming impacts is that produc- er adjustments to warming
insurance indemnity pay- ment data. COL data is publicly avail- able and maintained by the USDA Risk Management Agency. The economists in- vestigated data from 1989 to 2014. The research has been published in Nature Communications. “We find that warming temperatures on average are associated with higher risk, and our results suggest that the cost of insurance per unit of liability — the pre- mium rate — will increase as a result,” said Tack, who is an associate professor in the KSU Department of Agricultural Economics. He said that warming weather is expected to re- duce average yields for many of the major dryland corn and soybean production re- gions in the United States. What is less clear is if the
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