Climate changes combined with rising food prices are delivering higher prices and a brighter future for Prairie farmers, according to two studies.

Stanford University researcher David Lobell concludes in a paper in the prestigious journal Science that climate change has already begun to slow harvest growth rates almost everywhere in the world, except in the United States and Canada.

"In some sense, Canada has gained relative to a lot of other countries because Canada has not seen significant trends so far and other countries have, on average, been hurt by climate change, which has driven up prices," Lobell said.

He and his co-authors asked a simple question: how has the average increase in global temperatures of .13 C per decade since 1950 affected yields of wheat, corn, rice and soybeans? Those crops account for about 75 per cent of the world's calories.

Analysis showed that two-thirds of countries in the world have already experienced statistically significant temperature increases for corn and rice cropland. Three-quarters of the world's wheat lands and about half its soybean acreage have experienced similar warming.

The worst affected countries include those in eastern Europe, Russia, Turkey, Mexico and China. Canada and the U.S. had little temperature shift, so there's been little effect on crops. The net result of climate change has been slightly good for rice and soybeans and slightly bad for wheat and corn. Because wheat and corn account for a greater proportion of the world's food supply, the overall effect is negative, the study concludes.

"Production is still going up for almost every region in every crop," Lobell said.

The paper calculates that about 6.4 per cent of global price increases for agricultural commodities are due to climate change. Because Canadian yield gains aren't being slowed yet, Canadian farmers get to reap the benefits without paying the price.

"Canadian farmers are probably a little bit better off than they would have been without climate change," Lobell said.

"That doesn't in any way say that that will continue, but it does point to the fact that there are winners and losers in any situation where you're affecting agriculture differentially across the world."

Meanwhile, BMO Economics is forecasting that Canada's agricultural sector will grow 3.5 to 4 per cent this year after two years of negative growth, thanks largely to the global economic recovery.

Demand from emerging market economies, like China and India, is helping drive commodity prices to two-and three-year highs, the study found. Biofuels production is also rising, which is increasing the price of wheat, corn and canola, used as feedstock for biofuels. The livestock sector should also see a rebound in 2011, after suffering from disease issues and trade restrictions since 2003 and a global recession in 2009.

Despite the challenges of recent record Prairie flooding and higher input prices, the effect of improved demand and expected increases in production should make 2011 a good year for most Canadian farmers, BMO concludes.

from Western Investor June 2011