US Drought and Preparing For The Food Shortage

It's unusually hot and dry in the United States. Take a look above at this week's chart from US Drought Monitor and you'll see what's happening. Pay special attention to the shear magnitude of the area affected by drought. Here's an excerpt from an article released yesterday called "Half of US counties now considered disaster areas" written by Jim Suhr of Associated Press;

ST. LOUIS (AP) — Nearly 220 counties in a dozen drought-stricken states were added Wednesday to the U.S. government's list of natural disaster areas as the nation's agriculture chief unveiled new help for frustrated, cash-strapped farmers and ranchers grappling with extreme dryness and heat.

The U.S. Department of Agriculture's addition of the 218 counties means that more than half of all U.S. counties — 1,584 in 32 states — have been designated primary disaster areas this growing season, the vast majority of them mired in a drought that's considered the worst in decades.

Counties in Arkansas, Georgia, Iowa, Illinois, Indiana, Kansas, Mississippi, Nebraska, Oklahoma, South Dakota, Tennessee and Wyoming were included in Wednesday's announcement. The USDA uses the weekly U.S. Drought Monitor to help decide which counties to deem disaster areas, which makes farmers and ranchers eligible for federal aid, including low-interest emergency loans.

Now that you have a clear understanding of the current situation please observe the outlook for the next few months in the following chart.

Especially in the Midwest US, this is a tough year for the agricultural industry. The writing is on the wall! So why is this really important to any of us? The effect of the current drought in North America is bound to impact the availability and price of food.

Here's a short excerpt of what Rod Nickel of Reuters said yesterday in the article "Maple Leaf Foods sees multi-year food inflation from drought"

(Reuters) - Drought in key crop-growing regions of the United States is "highly likely" to usher in several years of food-price inflation, as companies pass on to consumers the cost of sky-rocketing grain prices, the chief executive of Canada's Maple Leaf Foods said on Wednesday.

Hot, dry conditions in the U.S. Midwest have scorched this summer's corn and soybean crops, and also driven up prices of wheat and other grains. Those higher prices have in turn pushed up the costs of producing a variety of foods, including Maple Leaf's pork, poultry and baked goods.

"It affects the entire food chain for sure," said Michael McCain, CEO and the biggest shareholder of Maple Leaf, in an interview with Reuters.

If this drought ends soon and the rain starts falling consistently we won't have anything to worry about. However, if it worsens at some point in the future the impact on the economy will be huge. Additionally, there is a school of thought which says that there is a direct connection between food shortage and social unrest. The New England Complex Systems Institute produced the following chart which quantifies this relationship in their book, Economics of Food Prices and Crises.

Here is what they also said;

Social unrest may reflect a variety of factors such as poverty, unemployment, and social injustice. Despite the many possible contributing factors, the timing of violent protests in North Africa and the Middle East in 2011 as well as earlier riots in 2008 coincides with large peaks in global food prices.

We identify a specific food price threshold above which protests become likely. These observations suggest that protests may reflect not only long-standing political failings of governments, but also the sudden desperate straits of vulnerable populations. If food prices remain high, there is likely to be persistent and increasing global social disruption.

Underlying the food price peaks we also find an ongoing trend of increasing prices. We extrapolate these trends and identify a crossing point to the domain of high impacts, even without price peaks, in 2012{2013. This implies that avoiding global food crises and associated social unrest requires rapid and concerted action.

According to The Bible, a global food shortage is coming in the future. Then, what will immediately follow is social unrest. I know we're not there yet but in our lifetime we just might see the following scripture fulfilled;

Revelation 6:5-8(NLT) - When the Lamb broke the third seal, I heard the third living being say, “Come!” I looked up and saw a black horse, and its rider was holding a pair of scales in his hand. And I heard a voice from among the four living beings say, “A loaf of wheat bread or three loaves of barley will cost a day’s pay. And don’t waste the olive oil and wine.” When the Lamb broke the fourth seal, I heard the fourth living being say, “Come!” I looked up and saw a horse whose color was pale green. Its rider was named Death, and his companion was the Grave. These two were given authority over one-fourth of the earth, to kill with the sword and famine and disease and wild animals.

The man who knows the future owns the future. We know this is going to happen. Are we prepared?