In the summer of 2012 the US Midwest saw a rather harsh drought period, and as far as I can tell the worst in about 14-years or so. Plus, it is an El Nino year with hotter water surface temps off the California and Mexico's Pacific Coast meaning more rain along the coast and less inland, even less in the Midwest.
California saw much more humidity in the summer of 2012 as a result. All of this has played hell for the mid center farmers and ranchers, not to mention the barges trying to get down the Mississippi river which is quite low. That is a scary thought indeed, just imagine 100 barges in a giant traffic jam with goods and services stuck in route unable to reach the port to be loaded on a ship for export? Okay so, let's talk about food prices, as everything affects everything else.
If the ranchers can't get water for their livestock, or those that grow the feed can't get water to grow their crops than the ranchers cannot afford large herds thus, they have to take their animals to slaughter early meaning there will be an abundance of meat and animal products on the shelves all at once as the rancher takes a heavy hint from his revenue, and supply and demand predicts costs will be quite low temporarily.
Of course, it takes years to rebuild large herds, and that costs money too, and at that point there will be a shortage of meat, and if the drought continues there will be a shortage of corn, grain, and hay for the feed. Of course, all this is exacerbated by the government intervention and free-markets. Consider if you will some other major issues;
-Food Stamps
-Ethanol
As long as the government is paying for food the demand will stay high, and with the supply low, it will only increase the costs. That sounds like a real problem, but it gets worse when you throw in the ethanol mandates which state that diesel and gasoline must contain a percentage of ethanol which requires water in the refining process, and which comes from crops which are grown, crops which need water, and crops which are needed not only here, but around the world to feed human beings.
Interestingly enough, the civil unrest we know of as the Arab Spring took down the governments of Tunisia, Egypt, and started the ruckus in Libya. What I'm saying to you is that for good or bad entire civilizations and governments could implode due to our lopsided intervention in free-markets coupled with the drought situation in the Midwest. If our supply leaves the global supply, and the global supply cannot meet the demand, well then there you have it. Indeed I hope you will please consider all this and think on it.
Lance Winslow has launched a new provocative series of eBooks on Serious Economic Issues. Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank; http://www.worldthinktank.net
Article Source:http://EzineArticles.com/?expert
Source: http://newsandsocietyblog-economics.blogspot.com/2012/09/is-food-stamp-program-causing-increased.html
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