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Analysts: Southwestern US Drought Might Raise Global Food Prices

Aftermath of a fire in Texas (file photo)
Aftermath of a fire in Texas (file photo)
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As wildfires burn across the drought-stricken state of Texas, farmers and ranchers there and across the southwestern United States are facing devastating livestock and crop losses. Analysts say the effect could ripple across the U.S. and world economies.  And there is no assurance that the dry spell will end any time soon.

In several southwestern and midwestern states, experts are describing the damage to agriculture from this year's drought as the worst in decades. In Texas, officials estimate there have been more than $5 billion in losses so far. Many ranchers in Texas, America's largest beef-producing state, have had to sell off their herds for lack of feed and water.

Texas is also the nation's biggest producer of sorghum and a major producer of sugar cane, peanuts, grapefruit, oranges, carrots and melons - all of which have been hit by the drought.  Drought has also crippled grain crops like wheat and corn in states like Oklahoma and Kansas.  

Economist Bernard Weinstein at Southern Methodist University in Dallas, Texas, says these losses will be felt far and wide.

“Not only will this affect consumers in the United States, but to the extent that there is less food -- particularly grain available for export - that will have an impact on the global markets because America is the world's number one exporter of food,” Weinstein said.

Weinstein notes that the drought has also damaged important non-food crops like cotton, which is a major e xport.  Texas provides about half of the cotton produced annually in the United States and nearly half of the fields planted in the state this year had to be abandoned for lack of water.

Weinstein says the dry spell is also having an impact on another important industry in Texas and nearby states - energy.  Many companies extract oil and gas trapped in shale formations deep underground by pumping in water that Weinstein says is getting harder to obtain.

“When you use the technology of hydraulic fracturing to get oil and gas out of shale formations, you use millions of gallons of water.  And there is a concern right now that with farmers and cities competing for water that there may not be enough water around to sustain the oil and gas industry,” Weinstein said.

Even more worrisome for Texans is the possibility that the drought will extend into next year.

Climatologist Brian Fuchs of The National Drought Mitigation Center at the University of Nebraska cautions that North America rain patterns are affected by a periodic cooling of Pacific Ocean waters, known as La Niña.

“You are always going to have wetter periods and drier periods.  But what La Niña really does is block those storm systems from reaching the southern part of the country.”

Fuchs says atmospheric changes caused by La Niña move the jet stream higher, which keeps rain storms from reaching the southern plains.  He says La Niña events typically last one year, but that it is possible this one will extend into next year.

“Earlier this summer, there was only about a 10 percent chance of La Niña reestablishing itself this fall and winter.  And over the last month or two, that has been up to a 50-50 chance.  If we go back and look at some of the historical La Niña events that are on record, especially the stronger ones, more often than not they are followed up the second winter with another La Niña episode.  But usually, it is a little bit weaker,” Fuchs said.

Another dry year would set back farmers and ranchers in this region even further and increase the likelihood of more devastating wildfires.  Since the beginning of the year, fires have raged across dry prairies in western and central Texas, and forests full of dry, dead trees in eastern Texas.  Several large fires in the area between Houston and the Texas capital Austin in recent days have driven thousands of people to public shelters and burned hundreds of houses.

But Economist Bernard Weinstein points out that the fires might also have some positive effect on the economy. “When you start to spend money to compensate for losses in a natural disaster, like these grass fires, that can actually be stimulative to the economy and create some jobs.  We saw something similar happen after [Hurricane] Katrina hit New Orleans six years ago.  There was a huge influx of both insurance money and public assistance that has gone to rebuild the New Orleans economy,” Weinstein said.

Although no one would wish for such disasters merely for their economic stimulative effect, it could provide at least something in return for all of the suffering and loss.

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