Abstract
Droughts represent a severe and increasing risk for the livestock sector as they can reduce yields of hay and feed grain. Droughts are predicted to increase in frequency and magnitude under climate change. Here we estimate the so far unexplored effect of drought shocks on feed prices. We use an empirical example from Germany and focus on the prices of hay as well as feed wheat and barley. Our results show that regional and national droughts substantially increase hay prices by up to 15%, starting with a delay of about 3 months and lasting for about a year. In contrast, feed grain prices in our sample are not affected by regional or national droughts. These price responses can be linked to market integration, as the hay market is usually regionally organized while feed grains are traded transnationally. It is important to include this knowledge into farm management and policy actions, especially considering climate change.
Highlights
We estimate the effects on feed prices of droughts occurring on regional and national levels using an empirical example from South Germany and focusing on important feed prices, including hay and feed wheat and barley prices
Main results We found that a drought shock, i.e. ‘drought effects’, in South Germany led to a substantial increase in hay prices, up to +13% in month five after the shock
Germany-wide drought shocks resulted in similar effects on hay prices, which peaked at +15% and lasted from month 3 to month 14 after the drought shock we found no significant effects of drought on feed grain prices, independent of whether the drought occurred in South Germany or the whole of Germany
Summary
Keywords: Hay prices, feed grain prices, droughts, weather extremes, market integration Supplementary material for this article is available online Original content from this work may be used under the terms of the Creative Commons Attribution 4.0 licence. Any further distribution of this work must maintain attribution to the author(s) and the title of the work, journal citation and DOI.
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