'Volatility Is Opportunity': How The Agriculture Sector Is Responding Positively To Climate Change

The American west is burning.

Over 2.77 million acres that have gone up in flames so far this year, or about 800,000 more acres than had burned at the same time in 2020, Vox reported. 

Heatwaves in the U.S. have spread across the American south, west and southwest, with expected temperatures to reach 100 degrees  in the Dakotas and Montana, and even higher in Arkansas, Missouri and Oklahoma.

The Midwest is anticipated to experience extremely high heat temperatures, according to National Oceanic and Atmospheric Administration.

What's Happening: Agricultural companies and commodities have been adapting to the changing weather patterns, ensuring they maintain higher profits and the world is fed.

Despite concerns from power-holders, including U.N. Secretary-General Antonio Guterres, who recently warned people in Rome that climate change is fueling poverty, income inequality and higher food prices, others are not as worried about crop production.

Sal Gilbertie, CEO of Teucrium Trading, an ETF provider focused on U.S. agricultural commodities, said a warming global climate is a net positive. 

“Volatility is opportunity,” he said. “Every farmer is becoming more sophisticated in the type of plants they grow,” he said.

Gilbertie noted that the U.S. breadbasket has seen an astounding production of grains, and demand for diesel and soy beans has increased.

In fact, the CEO said that agricultural products are continuing to expand into areas beyond food, including fuel and industrial production.

Why It Matters: The agriculture commodities market has seen a boom in many of its products, as soybean oil, soybean, corn, coffee, wheat and sugar cane have all seen price increases over the last year.

“The impacts of global warming have been beneficial to the major grains of the world,” said Gilbertie, adding that, “Human ingenuity has overcome a lot of the weather-based uncertainty.”

University Professor in the department of agricultural economics at Texas A&M University Bruce McCarl agreed. Some of his research has found that climate change has caused crop production to expand in much of the U.S. The Dakotas, for instance, have tripled their corn production in recent years. The states hit hardest by climate change are already warm.

“The place we get into trouble with the extremes is in the south,” he said, noting that extremely hot days damage crops.

McCarl also noted that as crops shift to northern states, there are secondary issues, including the need for transit infrastructure that otherwise does not exist — like better roads, bridges and trains — to ship products.

“There’s a whole set of secondary issues that goes along with the crops moving around,” he said.