Calculating equilibrium cereal prices during a multi-year productivity shock

A protracted disruption to global crop yields, for example following a large volcanic eruption, nuclear winter or a climate tipping point relevant to agriculture being crossed, has the potential to seriously shock the food system; however, the severity of its impact depends upon how the food system responds. We attempt to help answer this question by creating a partial equilibrium of production, consumption and storage of the cereal market under a protracted disruption to agricultural productivity. We find that economic incentives could reduce the impact of a future shock on consumption versus past estimates, and should be considered when assessing the impact of such a shock. However, we also estimate that the global price rises under all our scenarios would be high and, under several scenarios, could exceed a factor of 10 over the present day, seriously threatening food access for low-income consumers worldwide. Our scenarios are sensitive to highly uncertain factors, including how fast the crop area can expand, the volatility of yields, as well as initial stocks. Finally, we find that incorrectly calibrated expectations of the yield shock raise its severity significantly, with both an under and over-assessment of its magnitude expected to reduce welfare, although this effect is worse for excessive optimism. We hope this framework can offer tools to assess positive and negative policy responses to future food productivity shocks, the potential for adaptation to save lives, and can be built upon over time due to its flexibility and modularity.