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The Value of Remote Sensing Harvest Forecast Information in Global Food Security

Author

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  • Tanaka, Tetsuji
  • Guo, Jin
  • Sun, Laixiang
  • Song, Xiao-Peng
  • Becker-Reshef, Inbal

Abstract

In recent years, global market shocks have significantly destabilised the international grain market. By capitalising on seasonal differences between the Northern and Southern Hemispheres and utilising early wheat harvest forecast information derived from remotely sensed satellite imagery, farmers in the Southern Hemisphere can respond to timely information to maximise profits. This global hedging mechanism contributes to stabilising the global wheat market. We employ a panel vector error correction model (VECM) to analyse the global agricultural market balancing system using remotely sensed wheat harvest data, focusing on 12 wheat-importing countries. The value of this information is assessed based on profits derived from price stabilisation. The results indicate that import prices in the 12 analysed countries could be stabilised by 10% to 19%, resulting in annual profit gains for importers totaling 364 million USD. When extrapolated globally, the combined profit for exporters and importers is conservatively estimated at approximately 4.98 billion USD.

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Handle: RePEc:ags:aes025:356745
DOI: 10.22004/ag.econ.356745
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