Q&A: Climate Risk and Investment Opportunities in the Food Sector

Ceres recently released a new report “Cultivating Investment: Resilient Agriculture Can Pay Off for Food Companies.” The report shows the escalating risks of a warming planet on the global food system and considerable opportunities for building more resilient agricultural supply chains. 

We caught up with the report’s main author, Carolyn Ching, director of climate research, food and forests, to hear insights about extreme weather impacts and potential solutions in the food sector. 

What risks do food companies face from climate-fueled extreme weather events and what impacts are we already seeing?  

Carolyn: As global temperatures rise, the frequency and severity of droughts, floods, cold snaps, heat waves, and other extreme weather events increase, creating chronic conditions that reduce yields and heighten pressure on farmers. These declining growing conditions – further threatened by climate change – don’t just impact farmers; they create a long-term vulnerability for companies as well. The quality, availability, and stability of commodities are at risk, and these consequences will cascade through the supply chain. 

Through our research, we are starting to see these consequences play out. Our new report shows that specific extreme weather events are already translating into measurable financial impacts for food companies. And these repercussions will only increase as the planet warms. Our modeling shows that if we were to reach 3 °C of warming by 2060, the intensity of climate events could lead to price spikes that are two to six times higher than they are today for companies purchasing beef, cocoa, coffee, corn, dairy, or soy.  

One example we highlight is what has been happening in the coffee market. In 2021, South American droughts disrupted the Arabica coffee supply, causing a 6.5% drop in global coffee production and a 36% jump in global coffee prices. Tough climate conditions continued, and by 2025, global Arabica coffee prices were a staggering 150% above the 2020 price. That really hurts the profitability of companies that rely heavily on Arabica coffee because there is only so much they can do to diversify sourcing or pass the extra cost on to consumers.  

What are solutions the food sector can use to reduce the risks posed by extreme weather events? 

Carolyn: We found that regenerative agriculture – adopting practices that restore and improve soil and farm systems like no-till and cover-cropping – is a considerably advantageous risk management strategy. By investing in farmers and farmland, companies can help stabilize supply, buffer environmental shocks, reduce market volatility, and produce results that are mutually beneficial for companies and farmers. Our analysis even revealed that major food companies like Tyson Foods or General Mills could safeguard up to $500 million in profits annually through investing in regenerative agriculture and improving producer resilience. 

Although our report focused on the value of regenerative agriculture as a risk management strategy and way to support producers in building a stronger food system, it is important to note that companies should still be acting on their contributions to climate change. To slow planet warming, mitigation remains a priority. While adaption strategies, such as regenerative agriculture, can help companies cope when extreme weather events occur through minimizing impacts and helping them bounce back quicker, they will not address the full scope of climate risks facing companies today and into the future.  

How do events like El Nino relate to the findings of this report 

Carolyn: Our research looked at how climate-driven extreme weather events, including prolonged drought and excessive rainfall, impacted commodity production. The current super El Niño is creating the conditions for these types of extreme weather events around the world, and we will likely see their repercussions disrupt production over the next year.  

As the planet warms further, events like the super El Niño can become more frequent and intense, creating more severe consequences for producers, food companies, and the world’s economy.