Droughts, Record Colds Threatening Global Food Staple Supplies

Droughts, Record Colds Threatening Global Food Staple Supplies

The continuing cold across the United States and Russia, in combination with a drought in Argentina and heat waves in Australia could cause a large decline in crop outputs from four of the world’s bread baskets. With global food supplies already coming under strain from a rapidly growing population, increasing economic development, and re-purposing food crops for products such as Ethanol, it’s fair to ask if 2013 could see a serious famine.

Droughts, Record Colds Threatening Global Food Staple Supplies

The growing season through much of the United States is just getting started and it’s getting off on the wrong foot. Kansas and other Great Plains states could see their winter wheat crops severely damaged by extended cold. Winter wheat is generally planted right after the fall harvest for spring wheat and is grown throughout the winter. While cold and even snow fall can be advantageous for the wheat, if the cold extends too far into the summer and spring, entire crops can be lost.

Exclusive: Voss Value Launches New Long Only Special Situations Fund

Since its inception in January 2012, the long book of the Voss Value Fund, Voss Capital's flagship offering, has substantially outperformed the market. The long/short equity fund has turned every $1 invested into an estimated $13.37. Over the same time frame, every $1 invested in the S&P 500 has become $3.66. Q1 2021 hedge fund Read More

Winter wheat accounts for over 70 percent of the wheat grown in the United States. Right now, analysts are predicting that as much as 25 percent of the winter wheat crop could be lost to the continued cold. This could cause a dramatic rise in prices not just in the U.S. market, but around the world. The United States is now the world’s largest exporter of agricultural products and many nations without advanced agricultural sectors depend on cheap U.S. food staples to get by. The severe cold spell is also being compounded by a massive drought that could further destroy crop supplies.

Meanwhile, the world’s third largest wheat exporter, Russia, is facing a similar threat of combined record colds and a prolonged drought. Russia faced a warm spell earlier in the winter, which caused the wheat in some areas to begin to germinate. Should a late cold spell move through, it could destroy crops. And even without a frost, the continued dry spell could kill crops. Russia had been hoping to harvest some 95 million tonnes of wheat, but the risks of a prolonged dry spell has caused the government to scale back its expectations.

Meanwhile Australia is seeing its wheat and other crop productions threatened by cold spells and looming potential heat waves. Temperatures have begun to swing more widely in the Land Down under, creating problems throughout the year. And as is a common theme around the world, Australia also has to worry about droughts, which are becoming more and more common.

Argentina’s Soy Bean production is also under threat and farmers are even beginning to horde their supplies. Argentina is facing an extended drought that has already hit corn and soy supplies. At the same time farmers are trying to horde their soy beans as the nation’s economy continues to spiral south. Soy beans are in high demand around the world and are seen as a safe investment and a way to hedge against a devaluing currency and inflation.

With booming Asian nations relying on grain supplies from other countries, prices could surge through 2012. While many consumers in North America, Asia, and Europe may be able to cope with the rising prices, poorer nations across the world could suffer. Advances in agricultural production has helped keep food prices low even amid increasing demand. The low prices of exported food from advanced nations has, in turn, wiped out the nascent agricultural sectors in many countries. In short, people across Africa and other poor regions of the world depend on access to cheap foods. In a very literal sense, a drought in the Great Plains could cause a famine in the heart of Africa.

All is not lost, however, many analysts are predicting that corn and other food staples will record record crops this year. Meanwhile rice production is increasing world wide and numerous aid programs and national efforts are starting to slowly increase self-sufficiency in various poor nations. Still, if global leaders are not careful and do not properly manage any food shortages, the risk of famine remains high.


No posts to display