The heatwave gripping northern Europe may soon be gripping Teutonic wallets as well. German farming associations expect losses in the millions, and towns and villages will also have to dig deep to maintain infrastructure as mother nature cranks up the temperature and fails to deliver much-needed water – the town of Bitterfeld-Wolfen in Saxony Anhalt, for example, expects to spend an additional €10,000 to irrigate trees and shrubs alone as well as an additional €30,000 to repair heat-related damage.
Still, calculating a heatwave’s total cost is difficult since most heat-related losses aren’t covered. Water and electricity shortages are rarely insurance cases, and crop losses due to prolonged drought cannot usually be attributed to a single event, exempting them from coverage as well. Reinsurer Munich Re put the Europe-wide cost of the 2003 heatwave at about €13 billion. But heatwaves don’t just extract a financial cost, there’s a human toll as well: The 2003 heatwave killed about 7,000, mostly elderly, people in Germany alone.
Worried about how the drought will affect their harvests, German farmers on Tuesday will reportedly demand €1 billion in federal aid for drought-related losses after warning that potato prices could climb. The drought has made the situation “dramatic”, according to a statement by the Federal Association of the Fruit, Vegetable and Potato Processing Industry (BOGK). Harvest losses of up to 40 percent are already expected for potatoes, meaning French fries could become more expensive as quality declines and the industry suffers from bottlenecks.
Harvest failures of an average 20 percent are also expected elsewhere, according to the German Farmers’ Association. In some regions, especially in the north and east of the country, the harvest slumped by up to 70 percent. “Some farms are facing existential threats,” said German farmers’ association president Joachim Ruckwied.
Livestock owners are also having to change tack. Cattle feed, for example, may become scarce as grains struggle to ripen. Some farms have stepped up slaughter plans, with statistics from early June above those of a year earlier, according to the Association of the Meat Industry. But the troubles won’t translate to an across-the-board rise in grocery prices because raw materials comprise only a minority of food prices. “The share of the grain price in the product price for baked goods is in the single-digit percentage range,” says Herbert Funk of the Lower Saxony Chamber of Agriculture.
Beverage makers are also a perhaps surprising victim of the baking barometers: Brewers are having trouble keeping enough stock of empty beer bottles as consumers look to quench their thirst – January to June sales show a 2 percent increase and mean brewers may have miscalculated how many empty bottles they need to meet the growing demand, reports Niklas Other, editor of the industry magazine “Inside”.
Brewers who rely on unique returnable bottles are especially suffering. In a Facebook campaign, the private Moritz Fiege brewery in Bochum called on customers to return their bottles sooner rather than later. “Return your bottles first, then vacation,” it wrote. “While you lie in the sun, we’ll refill the bottles.”
Power plant operators have also been forced to reduce output because rivers warmed by the heatwave can’t accept as much cooling water from the plants. Essen’s Steag has shut down its coal-fired power plant in Bergkamen in the Ruhr area and Karlsruhe’s EnBW reduced the capacity in Philippsburg by 10 percent and paused one steam powerplant entirely on Wednesday. “We do not expect any more outages,” said a spokesman for the utility Uniper. “However, if the weather continues for the next two to three weeks, it could become critical.”
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On the spot market, the price for one megawatt hour almost doubled since the beginning of the month and rose to almost EUR 60. The providers are also struggling to keep enough raw material after water levels on the Rhine dropped, reducing the amount of coal ships can transport. Rail can replace some but not all of the volume.
Germany’s national railway, Deutsche Bahn, appears to be performing better this summer than others, where faulty or incapable air conditioning units led to complaints. New, two-level intercity cars boast stronger ACs but delays have begun to develop in the afternoon – Deutsche Bahn confirms delays are above normal. “Apparently some switches get too hot,“ said Pro Bahn passenger association head Karl-Peter Naumann.
Planes have been mostly exempt, except in Hannover last week when the extreme heat led to bulging runways. 85 take-offs and landings had to be cancelled.
Andrew Bulkeley is an editor in Berlin for Handelsblatt Global. Florian Kolf leads a team of reporters covering the retail, consumer goods, luxury and fashion markets. Kathrin Witsch is an economics and politics editor at Handelsblatt. To contact the authors: firstname.lastname@example.org, email@example.com, firstname.lastname@example.org