HSBC : Farming a fragile

Wheat is among the crops likely to be affected by climate change

Climate change not only raises temperatures, it can alter water cycles and exacerbate extreme weather, increasing the risks to food, water and energy systems. The effect on agricultural commodities can threaten both people and their economies.

Agriculture accounts for 4.6 per cent of global GDP and 27 per cent of employment. Farm production volumes have increased by 76 per cent since 1990. However, crop yields could halve in some countries in the next 30-35 years, according to the Intergovernmental Panel on Climate Change, severely risking livelihoods and development.

We have looked at which crops and countries are most vulnerable, examining 15 important plants in 70 countries that account for 80 per cent of the world population, 86 per cent of agricultural production, and 94 per cent of global GDP. We considered not only the exposure to the effects of climate change - temperatures, water availability and extreme weather - but also a country's potential to respond and the importance to its national GDP.

The countries posing the greater systemic market risks to global commodity markets are China, followed by Brazil, Indonesia, India and then the US. Extreme weather patterns in these nations could have a big impact on the availability and cost of agricultural products worldwide. Indonesia is a major palm oil producer but the other countries grow a wide variety of crops.