Photo: Collected
Weather has long been a fickle farmhand, devastating fields one year while delivering bountiful harvests the next. But as extreme weather events increase in frequency or become even more intense, the unpredictability is becoming more of an economic liability.
As the United States continues to battle high inflation, the
effects of prolonged droughts and extreme weather events could help keep the
heat on prices for a long time to come.
The Consumer Price Index, which measures price changes for a
basket of goods and services, showed inflation hit 8.3% in August from the year
before. But food prices rose at an even faster pace, increasing by 11.4% during
that period, according to the Bureau of Labor Statistics.
Scorching heat and drought continue to bear down on the
American West, forcing farmers in vital agriculture-producing states to fallow
land, pull up orchards, reduce livestock herds, and slash expected yields.
“The prolonged droughts that we’re seeing [present] some
increased risk that inflation remains higher for a longer time,” said Charlie
Dougherty, a Wells Fargo economist who recently co-authored a status report on
the economic state of American agriculture.
The high heat and drought have only compounded the issues
facing American farmers, including supply chain ripple effects from Russia’s
war against Ukraine that have caused inputs such as fertilizer to surge in
price; nationwide worker shortages; and inflation and high energy prices, the
economists noted.
“When you’ve put all
that together, farmers and ranchers have experienced extraordinary cost
pressures,” Dougherty said. “And those higher costs are being passed on to
consumers.” The rise in food prices is one of the key factors fueling
inflation, according to recent CPI data.
The overwhelming majority of fruits, tree nuts and vegetables are sourced from drought-stricken states such as California and Texas, the American Farm Bureau Federation noted in a recent market update.
The drought and its effects “will likely result in American
consumers paying more for these goods and either partially relying on foreign
supplies or shrinking the diversity of items they buy at the store,” according
to the Farm Bureau. “Drought conditions in the US also risk global access to
some items like almonds, since California produces 80% of the world’s supply.”
While the majority of those specialty crops are holding up,
one of the hardest-hit crops in California has been rice, according to Aaron
Smith, UC Davis’ DeLoach professor of agricultural economics.
California, which is second to Arkansas in rice production
among US states, generates about $900 million of rice annually, he said.
California is a key producer and exporter of medium-grain rice, found in sushi
and risotto dishes. While the acreage drop represents a big hit to US rice
production, the effects could be mitigated by other sources, he said.
“If you look in a global perspective, which is what drives
the price of rice, California is not a very big producer relative to the whole
world,” Smith said. “The local impact is very big; the global impact and the
consumer impact for now — not so big.”
The globalized economy and trade serve as a buffer to an
extent, said Josué Medellín-Azuara, an associate professor of environmental
engineering at UC Merced who studies climate change adaption and the economics
of agricultural, environmental and urban water uses.
“I don’t think we’re in a situation of food insecurity at
this point, but it’s really just a reminder that warmer temperatures can bring
some more challenges to produce many of the agricultural commodities we
traditionally see,” he said. “There’s a recognition that the groundwater
reserves won’t always be there to help us weather future droughts, if we don’t
use those more sustainably.”
In far western Minnesota, a few miles from the South Dakota
border, Anne Schwagerl and her family run a 400-acre organic farm.
Last year, Schwagerl and other farmers across the North Star
State endured the worst drought seen in decades. Some of the yields were halved
on her family’s farm, where they grow crops such as corn, soy beans, oats and
rye.
This year brought the rain. By mid-June, about 75% of the
state saw above-average levels of precipitation, according to the Minnesota
Department of Natural Resources.
“We had a really challenging fall harvest and then a wet
winter, which was great,” Schwagerl said. “We needed that rain, but then it
kept coming, and we had a very wet late spring. So it was this whiplash feeling
of knowing that this could change at the drop of a hat.” See details.
|Source: Online/SZK
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