The heatwave economy

**Hannah Merlaine** (0:01)
Europe is still in the grip of a sweltering heat wave.

**Matteo** (0:04)
This is the worst drought I have ever seen.

**Heather** (0:07)
Our yields have been really knocked back.

**Hannah Merlaine** (0:13)
I'm Hannah Merlaine, and today on World Business Report, we're taking a look at how the extreme heat is impacting farmers around Europe, and what that could mean for food prices. We'll hear from a SpaceX employee who's been made a millionaire after selling his shares, and is it ever acceptable to wear shorts in the office?
Hello, and welcome to the programme. We're starting with a story that's been constantly in the headlines the last few weeks. It's heat. Italian officials have placed all of the country's major cities on the highest level of health alert today, as large parts of Europe remain in the grip of a heatwave. This summer, we've been seeing heatwave after heatwave, which is the highest in the world.
Temperatures hit over 40 degrees in Western Ukraine and Slovakia, set an all-time temperature high for the second day running. So what does this mean for business and agriculture specifically? Tomas Dvorsak is a senior economist from Oxford Economics. Tomas, thanks for joining us.

**Tomas Dvorsak** (1:11)
Hi, good to be with you.

**Hannah Merlaine** (1:12)
Give us a sense then of what the economic could be of these big heatwaves we've been having over the summer so far.

**Tomas Dvorsak** (1:20)
So the most immediate and probably the most direct and severe impact we'll see is, as you've mentioned, in food and agriculture prices, where the impact has really been severe. Now, this is something that consumers won't really feel in their wallets until probably at the turn of the year, because just basically how the pricing in food retail works. But the shock has already happened. We're just waiting for that to hit the shelves with the supermarkets.

**Hannah Merlaine** (1:45)
We've been speaking to Heather today, an arable and bee farmer in the UK, and Matteo, who is a crop and dairy farmer near Nantes in France. And they've been talking to us about how the heat waves have been impacting their businesses.

**Heather** (1:57)
Ten days, two weeks ago, we'd had 67 mil of rain. Now, on average, we would probably see, that's probably a third, we'd see about 200 to 250 in that same time frame. So our yields have been really knocked back. I don't know, what's it like in France?

**Matteo** (2:11)
This is the worst drought I have ever seen. We had four heatwaves, and for several days, and because of the heat, my milk production dropped by about 25%.
Fortunately, all my cows survived. In a normal year, my cows grazed from March to until July. But this year, I had to stop grazing in May, because the grass was already dry and yellow.

**Heather** (2:37)
We drilled our spring barley crop in middle of March, thinking that there was rain on the forecast, and that rain never came. And we are in a situation, I ran the figures this morning, where we will might or might not put the combine in to harvest the crop. We are looking at probably with the yields where they're going to be of a loss of a thousand pounds a hectare, which isn't something that's sustainable and can't go forward.

**Matteo** (3:01)
I feel very much that it won't be possible in the future to do the same in my region, because we have known for many years that climate change will bring more extreme weather.
So we have been trying to make our farm more resilient. We keep stock from good years. We have a lot of grassland. But honestly, adapted to climate change is becoming more and more difficult, even for farms that are already quite resilient. Milk production, which is decreasing, so I sell less milk. I also had to sell five cows out of my head of 70, because I didn't have enough feed for all of them.

**Heather** (3:37)
So I was with a friend yesterday, walking the beans, actually, because they're probably about a week, 10 days away from harvest, and looking at the grass, and she said it looks like Spain, just because it's brown and it's dry, and there are cracks in the ground that I could probably get my arm down, not just my hand.

**Hannah Merlaine** (3:53)
Whilst many farmers like Heather and Matteo in Europe are reporting poor crop yields, some countries are bucking the trend. Places like Turkey and Romania have seen bumper harvests, with rain early in the season, making that crop able to continue to grow over the hot weather.
Cezar Gorge is from the Grain Market Consultancy, Agricolum in Bucharest, Romania.