Agriculture at breaking point
Agriculture is among the sectors most acutely exposed to global heating. Crop yields can be reduced by a combination of climate-related pressures, such as direct heat stress restricting plant growth, or prolonged periods of drought that limit access to water. Excessive rainfall and flooding can be equally destructive, damaging crops, eroding soils, and preventing farmers from accessing fields during critical stages of the production cycle. Meanwhile, chronic water stress is generating significant financial pressures across the livestock sector, driving higher feed costs and increasing reliance on alternative water supplies.
These effects are already visible across major agricultural regions. In August 2026, the European Commission’s Joint Research Centre reduced yield forecasts for all major EU summer crops to below their five-year averages, with reductions of up to 14 percent for the worst-affected crops. In some of the worst-affected regions, local crop failures were considered likely. In the UK, recent heat waves have presented a similar challenge; analysis by the Energy and Climate Intelligence Unit estimated that heat and drought could reduce cereals and oilseed production by as much as 2.5 million metric tons compared with projections made before the summer, resulting in hundreds of millions of pounds in lost revenue for arable farmers.
Beyond the farm gate
For many businesses, however, the most significant impacts are felt not on the farm itself, but across the wider value chain. Climate-related disruption affects commodity availability, input costs, transport networks, and, ultimately, consumer prices. Drought conditions can reduce river levels used to transport grain and agricultural inputs, and spark wildfires that damage farmland, infrastructure, and storage facilities. Poor harvests may tighten supply and increase reliance on imports, exposing organizations to geopolitical risks and global market volatility. The repercussions of these impacts extend far beyond agriculture, affecting food manufacturers, retailers, hospitality providers, and consumers alike.
Livestock producers face a parallel set of challenges. Higher temperatures increase heat stress, constrain water availability, and reduce the productivity of pastures. As a response, farmers may be forced to rely more heavily on purchased or stored feed. In the UK, research from the Environment Agency reports that livestock farmers resorted to using winter feed earlier than normal during recent droughts, while wildfires affected protected sites and prime agricultural land.
At the same time, rising temperatures are bringing biosecurity into question. Warmer climates facilitate faster pathogen reproduction and enable disease-carrying vectors to thrive, increasing opportunities for transmission. And when heavy rain follows periods of drought, localized flooding can disperse soil-borne pathogens and waterborne parasites across fields, and into direct contact with grazing livestock. Furthermore, thermal stress on cattle suppresses their immune response, increasing vulnerabilities to infection. As many zoonotic diseases can pass between animals and humans, changing disease patterns also have the potential to jeopardize labor availability and broader population health.
The overriding objective is not just responding to individual climate events, but preparing for the cumulative effects.
Where businesses are concentrated around single commodities, suppliers, geographies, or methods of production, their operations can be particularly exposed. Chocolate producers, for example, have had little choice but to absorb the sharp fluctuations in cocoa prices in recent years. In response, some organizations are diversifying their sourcing operations, while others are pushing to become more vertically integrated – such as cattle farmers producing their own feed. But while these strategies may improve resilience, they cannot entirely eliminate exposure to fuel costs, fertilizing prices, or wider commodity-market volatility.
Case study: British Columbia vineyard fires
The wine industry offers a particularly vivid illustration of these shifts. Traditionally associated with specific geographies and climatic conditions, winemaking is increasingly being forced to adapt to a changing environment. Rising temperatures, water scarcity, and more volatile weather patterns are challenging established growing regions and altering long-held assumptions about where, and how, wine can be produced.
The multiyear destruction wrought by wildfires on Canadian vineyards exemplifies this dynamic. Fire spreading through British Columbia’s wine country crippled production and destroyed property, grapevines, and crops across multiple sites. Grapevines are perennial plants that take between two-to-five years to mature and produce commercially acceptable yields; they cannot simply be reseeded the following spring. Therefore, permanent damage to grapevines created a prolonged gap between the initial loss and the restoration of productive capacity.
As tasting rooms and winery tours were abruptly halted during the peak tourism season, substantial revenue losses deprived wineries of income to support reinstatement efforts. Even for vines avoiding direct contact with flames, smoke blanketing the region was readily absorbed through grape skins in a process called ‘smoke taint’. This imparts an unpalatable, unfixable ashy profile on grapes – rendering them commercially useless. Consequently, inventory that took years to accumulate was lost.
Restoring acres of scorched and incinerated vines is a multi-year undertaking. Without immediate water access during peak summer heat, surviving root structures experience severe hydric shock, stunting bud development and lowering crop potential for consecutive seasons. Repairing or replacing irrigation systems, trellises, and other infrastructure necessary for future growth further complicates this process. Producers must also source labour to discard ruined vines in preparation for subsequent seasons – creating yet further costs to absorb.
Food security in a changing climate
These pressures are creating a growing food-security challenge. As yields decline and conditions become less predictable, producers are being forced to reconsider where, and which crops, they grow. In Italy’s Po Valley, some farms are reportedly losing half or more of their production due to drought, while water shortages are forcing some farmers to consider abandoning rice cultivation entirely. Similar debates are emerging elsewhere. In parts of India and Pakistan, less water-intensive crops such as millet and chickpeas are increasingly being viewed as alternatives to traditional rice and wheat. Australian agriculture, by contrast, offers a glimpse of how the sector may adapt. Long accustomed to drought and water scarcity, producers have invested in water-security infrastructure, precision agriculture, and modified livestock breeding and feed strategies. These businesses increasingly treat climate resilience as a core business-planning issue, rather than a pure sustainability concern.
Such adaptations may improve resilience at farm level, but they also raise food security questions from a macro standpoint. Nations producing fewer staple crops will inevitably become reliant on imports, leaving them exposed to disruptions elsewhere in the world. At the same time, climate pressures are converging with geopolitical instability, inflationary pressure, and trade tensions in many crucial territories. For instance, since the outbreak of war in 2022, nations reliant on Ukrainian wheat or Russian fertilizer have had to contend with dwindling supply and commodity market volatility.
As global heating across the world persists, higher commodity prices are expected to be further exacerbated by diminishing agricultural yields and recurring supply disruptions. For businesses throughout the broader agricultural supply chain, the overriding objective is not just responding to individual climate events, but preparing for the cumulative effects. A single poor harvest will influence the procurement, sourcing, and investment strategies for years after the event itself. The most resilient organizations will increasingly be those that understand where their critical dependencies lie, and which build climate considerations into their long-term planning.