IDEAS home Printed from https://ideas.repec.org/p/pre/wpaper/202612.html

Assessing the Impact of Climate Risks on Agricultural Commodity Prices in South Africa

Author

Listed:
  • Kenny Kutu

    (Department of Business Management, University of Pretoria, Pretoria, 0002, South Africa)

  • Renee van Eyden

    (Department of Economics, University of Pretoria, Pretoria, 0002, South Africa)

  • Sonali Das

    (Department of Business Management, University of Pretoria, Pretoria, 0002, South Africa; National Institute for Theoretical and Computational Sciences (NITheCS), South Africa)

  • Rangan Gupta

    (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa)

Abstract

This study analyses the impact of climate risks on the prices of agricultural commodities in South Africa, a nation with heightened levels of poverty, subsequent household food insecurity and food price sensitivities. Composite climate risks, including both physical and transition risks, are captured through a Google Trends-based Climate Attention Index for South Africa. Panel fixed effects, feasible generalised least squares and seemingly unrelated regression estimators are applied to a panel of 16 agricultural commodities for the period 2004--2024. Results show that climate risks are inflationary, possibly through supply-related channels, where climate risks reduce yields, resulting in a subsequent increase in prices. The feasible generalised least square estimation suggests that a one unit increase in the composite climate risk index can result, on average, in a 0.023 percentage point increase in real commodity price growth rates for production growth at the mean, ceteris paribus. Additionally, allowing for heterogeneity in the slope parameters through a seemingly unrelated regression model shows that real horticultural product prices are generally more sensitive to composite climate risks.

Suggested Citation

  • Kenny Kutu & Renee van Eyden & Sonali Das & Rangan Gupta, 2026. "Assessing the Impact of Climate Risks on Agricultural Commodity Prices in South Africa," Working Papers 202612, University of Pretoria, Department of Economics.
    • Handle: RePEc:pre:wpaper:202612
    as

    Download full text from publisher

    File URL: https://drupalwebprod-files.up.ac.za/Public/2026-04/202612.pdf?VersionId=qJbKLQeeHDnIfmpYtfMIG.5bBHQ4_yJV
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Confidence Tselane Nthebe & Teboho Jeremiah Mosikari, 2025. "The Threshold Effects of Exchange Rates on Agricultural Exports: A Flow from South Africa to the Southern African Development Community," Economies, MDPI, vol. 13(2), pages 1-22, January.
    2. Robert F Engle & Stefano Giglio & Bryan Kelly & Heebum Lee & Johannes Stroebel, 2020. "Hedging Climate Change News," The Review of Financial Studies, Society for Financial Studies, vol. 33(3), pages 1184-1216.
    3. Lin, Boqiang & Zhao, Hengsong, 2023. "Tracking policy uncertainty under climate change," Resources Policy, Elsevier, vol. 83(C).
    4. Massimo Peri, 2017. "Climate variability and the volatility of global maize and soybean prices," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 9(4), pages 673-683, August.
    5. Shon Ferguson & David Ubilava, 2022. "Global commodity market disruption and the fallout," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(4), pages 737-752, October.
    6. Rishita Kabi & Pradiptarathi Panda & Latha Chari, 2023. "Price Discovery in Agricultural Commodities Markets for India: A Case of Cotton," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 48(4), pages 478-496, November.
    7. John Baffes & Tassos Haniotis, 2016. "What Explains Agricultural Price Movements?," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(3), pages 706-721, September.
    8. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
    9. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    10. Matthews Alan, 2024. "Farmer Protests and the 2024 European Parliament Elections," Intereconomics: Review of European Economic Policy, Sciendo, vol. 59(2), pages 83-87, March.
    11. Mehmet Balcilar & Kenny Kutu & Sonali Das & Rangan Gupta, 2025. "Predicting the Conditional Distributions of Inflation and Inflation Uncertainty in South Africa: The Role of Climate Risks," Working Papers 202529, University of Pretoria, Department of Economics.
    12. Petr Prochazka & Jana Soukupova & Josef Abrham & Kevin J. Mullen & Karel Tomsik & Lukas Cechura & Inna Cabelkova & Lubos Smutka, 2025. "Protein consumption in Europe: Sustainability, tradition, and policy implications," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(1), pages 1124-1135, February.
    13. Eduardo Cebrián & Josep Domenech, 2023. "Is Google Trends a quality data source?," Applied Economics Letters, Taylor & Francis Journals, vol. 30(6), pages 811-815, March.
    14. Bonetti, S. & Sutanudjaja, E. H. & Mabhaudhi, Tafadzwanashe & Slotow, R. & Dalin, C., 2022. "Climate change impacts on water sustainability of South African crop production," Papers published in Journals (Open Access), International Water Management Institute, pages 1-17(8):084.
    15. Philly Ramoroka & Chiedza L. Muchopa, 2022. "Inter-commodity Price Transmission between Maize and Wheat in South Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 12(5), pages 57-63, September.
    16. Huong Nguyen & Marcus Randall & Andrew Lewis, 2024. "Factors Affecting Crop Prices in the Context of Climate Change—A Review," Agriculture, MDPI, vol. 14(1), pages 1-17, January.
    17. Gbetondji Melaine Armel Nonvide & Armand Frã‰Juis Akpa, 2023. "Effects Of Climate Change On Food Crop Production In Benin," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 14(04), pages 1-15, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alishba Hania & Chien-Chiang Lee & Farzan Yahya, 2025. "Climate anxiety, economic policy uncertainty, and green growth," Economic Change and Restructuring, Springer, vol. 58(1), pages 1-34, February.
    2. Teng, Meixuan & Burke, Paul J. & Liao, Hua, 2019. "The demand for coal among China's rural households: Estimates of price and income elasticities," Energy Economics, Elsevier, vol. 80(C), pages 928-936.
    3. Chukwuemeka Chinonso Emenekwe & Robert Ugochukwu Onyeneke & Chinedum Uzoma Nwajiuba & Ifeoma Quinette Anugwa & Obioma Uchenna Emenekwe, 2025. "Determinants of consumption-based and production-based carbon emissions," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(5), pages 10303-10339, May.
    4. Aynur Pala, 2014. "The Effect of Valuation Ratios, Gold Price, and Petroleum Price on Equity Returns: A Comparison of Static Panel and Quantile Regressions," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(1), pages 80-89, January.
    5. Nara Monkam & Charles Shaaba Saba, 2025. "Fiscal Autonomy and the Path to Sustainable Local Economic Development: A Multilevel Municipal Analysis in South Africa," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(5), pages 7336-7362, October.
    6. Janna Mai Nguyen & Dodo zu Knyphausen‐Aufseß, 2016. "The Role of Sovereign Ratings in M&A Markets: Empirical Evidence from Latin America and South East Asia," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 25(1), pages 5-48, January.
    7. Topcu, Mert & Gulal, Omer Serkan, 2020. "The impact of COVID-19 on emerging stock markets," Finance Research Letters, Elsevier, vol. 36(C).
    8. Ting Zhang & Dan Gerlowski & Deborah Ford, 2014. "Housing price variability: national and local impacts," Applied Economics, Taylor & Francis Journals, vol. 46(28), pages 3494-3502, October.
    9. Santos, Carlos Filipe & Fuinhas, José Alberto & Marques, António Cardoso, 2014. "O nexus energia-crescimento e o nível da auto-suficiência na produção de petróleo: análise com macro painel [Energy-growth nexus and oil self-sufficiency: macro panel analysis]," MPRA Paper 57008, University Library of Munich, Germany.
    10. Mehmet Balcilar & Ojonugwa Usman & George N. Ike, 2023. "Investing green for sustainable development without ditching economic growth," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(2), pages 728-743, April.
    11. Brandon Parsons & Joseph St. Marie & Robert Pauly, 2025. "Quantile via Moments Panel Data Analysis: Dissecting Political Regimes and the Spectrum of Internal Conflicts," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 51(2), pages 268-307, April.
    12. Hu, Xing & Yu, Shiwei & Fang, Xu & Ovaere, Marten, 2023. "Which combinations of renewable energy policies work better? Insights from policy text synergies in China," Energy Economics, Elsevier, vol. 127(PA).
    13. Abdulrasheed Zakari & Jurij Toplak & Luka Martin Tomažič, 2022. "Exploring the Relationship between Energy and Food Security in Africa with Instrumental Variables Analysis," Energies, MDPI, vol. 15(15), pages 1-14, July.
    14. Parsons, Brandon & Rabhi, Ayoub, 2025. "Shifting sands: How exchange rate volatility shapes income distribution in high-income countries," Structural Change and Economic Dynamics, Elsevier, vol. 73(C), pages 89-100.
    15. Beri, Parfait & Molem, Christopher Sama, 2024. "The impact of economic globalisation on labour market outcomes in Africa," MPRA Paper 122554, University Library of Munich, Germany.
    16. Kassi, Diby Francois & Li, Yao, 2025. "Does green financing benefit the development of renewable energy capacities and environmental quality? Evidence from Chinese provinces," Renewable Energy, Elsevier, vol. 242(C).
    17. Mariarosaria Comunale, 2020. "The persistently high rate of suicide in Lithuania: an updated view," Bank of Lithuania Discussion Paper Series 21, Bank of Lithuania.
    18. Yanan Wang & Wei Chen & Minjuan Zhao & Bowen Wang, 2019. "Analysis of the influencing factors on CO2 emissions at different urbanization levels: regional difference in China based on panel estimation," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 96(2), pages 627-645, March.
    19. Shengmiao Han & Badrul Hisham Bin Kamaruddin & Xing Shi, 2025. "The Intertwined Threads of Blue Economy, Inclusive Growth, and Environmental Sustainability in Transition Economies," Sustainability, MDPI, vol. 17(3), pages 1-24, January.
    20. Zhang, Chuanguo & Zhao, Wei, 2014. "Panel estimation for income inequality and CO2 emissions: A regional analysis in China," Applied Energy, Elsevier, vol. 136(C), pages 382-392.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pre:wpaper:202612. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Rangan Gupta (email available below). General contact details of provider: https://edirc.repec.org/data/decupza.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.