Australia's Long Drought Withering Wheat, Rice Supplies

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Australia's weather woes underscore the vulnerability of the world's food production to unexpected natural crises. With reserve food supplies in many countries dwindling as supply outstrips demand, even small drops in production are enough to send prices soaring.

Adding to the concern are predictions that global warming will increase the number and intensity of such unusual climatic events.

Australia will suffer from more frequent droughts, more extreme weather, and less annual rainfall in coming years, according to a recent climate change report by scientists from government agencies, the Commonwealth Scientific and Industrial Research Organization (CSIRO), and the Bureau of Meteorology.

Fickle Weather

Global warming is just one factor affecting Australia's climate, however.

The immediate driver of its current bout of fickle weather is the El Niño-Southern Oscillation phenomenon, which amplifies Australia's climatic variability.

El Niño is the abnormal warming of tropical waters in the eastern Pacific Ocean, which tends to bring hot, dry weather to Australia. The reverse—called La Niña—often brings rain.

Flaring up every three to eight years, El Niños have been associated with many of Australia's droughts. With their effect on winter rains, the weather events can strongly influence the success of wheat crops.

"The difference between a good year and bad year can halve the total production," said Mark Howden, a CSIRO climate variability and agriculture expert.

Australian wheat makes up about 15 percent of the grain's world trade, so even small changes can ripple throughout the global market.

Unfortunately, El Niño/La Niña events are themselves highly variable.

A promising shift to a La Niña pattern in 2007 brought early rains for the Australian winter wheat-planting season. After two years of severe drought, farmers "planted up big" in response, Howden said.

"But the rain stopped early and the crops failed."

Farmers Still Suffering

Despite the inflated grain export prices, "in the last two to three years a lot of small grain traders have gone broke," said Peter Wright, a wheat farmer in Cowra, a town 188 miles (300 kilometers) west of Sydney.

Figures from the Australian Bureau of Statistics show that 10,636 families gave up farming during the most severe drought years, between 2001 and 2006.

Profits from the increased prices are often used to pay off debts racked up during the drought or to invest in technology to improve yields and increase water efficiency, Wright added. (See photos of drought-affected farmers.)

Record-high costs of fertilizer, fuel, and chemicals also offset export prices.

"We'll need four to five years of high prices to break even," he said.

Australia's relatively small population of 21 million consumes roughly a third of the country's agricultural products, with the rest sent overseas.

The reliance on world trade means domestic prices often mirror global prices, says Terry Sheales, chief commodity analyst at the Australian Bureau of Agricultural and Resource Economics.

And those inflated prices have filtered down to retailers and consumers.

James Kidman, executive chef at Otto Ristorante, a modern Italian restaurant in inner Sydney, has noticed big increases in the cost of fruits, vegetables, and meat products, especially high-end cuts.

To protect patrons from price hikes, Kidman tries to "simplify the food," which means buying less expensive cuts of meat and "getting creative" negotiating with suppliers. Most other businesses have no choice but to pass on the extra costs to customers.

Back at the farm, average rains are predicted for the coming months and producers are hopeful of a reprieve.

"No drought has gone on forever," rice farmer Gordon said. "We'll get our turn eventually."

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