Drought’s Toll on U.S. Agriculture Points to Even-Higher Food Prices: WSJ

Reduced snowmelt is one of several factors that contribute to drought conditions, along with dry weather, warmer temperatures and population growth, which puts added strain on water resources.

Climate disasters like droughts can create ‘years of problems’

The current drought is on pace to be one of the worst ever. One of the hardest-hit states is California, home to about 70,000 farms and ranches with a combined output of about $50 billion a year. The dairy industry accounts for the largest chunk of the state’s agricultural revenue, followed by almonds and grapes.

June drought levels for the continental U.S.

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

20120

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Source: National Drought Mitigation Center

The agricultural industry throughout the West has suffered in the past decade from a number of climate-related disasters, including a severe drought in 2014-15. U.S. Agriculture Secretary Tom Vilsack has said federal support and relief programs “need to be redesigned to meet the reality of longer-term weather incidents and climate-related incidents that create not just a month, or two- or six-month, problem, but create years of problems and potentially decades worth of problems.”

Depleted snowpack set the stage for severe drought

Snowmelt is a critical part of precious water resources in the Southwest, acting as a natural reservoir that provides water deep into the summer months. During the winter and into the spring, snow accumulates in mountain ranges across the West. When warmer temperatures arrive at high elevations, the snow melts and water is distributed throughout surrounding regions.

The magnitude, timing and duration of snowmelt can affect water resources throughout the year. Annual snowpack levels have declined in the past half century, according to the U.S. Geological Survey, and snowpack was particularly low this year.

That reduction in runoff means a lot less water for farmers and ranchers, increased risk of wildfires and even the potential of electricity shortages because of reduced hydroelectric power generation.

Rising food prices

When water is as scarce as it has been, farmers and ranchers are forced to make difficult decisions to maximize the resources they have. In California, where the federal government has scaled back on water allocations, growers have paid sizable premiums to buy supplemental water.  They also have been forced to leave large parts of their land unplanted or let crops die.

The price of feed grains has risen in the past year to its highest levels since 2013, when another persistent and widespread drought tested the nation’s farm economy. It is another example of how economic strains are compounded by secondary effects of extended droughts.

When the agriculture industry struggles with higher costs and depleted production, the prices consumers pay for its food tend to rise. Several factors contributed to the recent surge in overall inflation, including an unexpected rise in demand and disruptions in supply and distribution chains.

While high inflation for some goods and services might prove to be transitory, the run-up in prices for food staples such as beef, pork and milk might be extended by the effects of severe drought.

Percentage of

U.S. livestock

in drought and

dry conditions

Abnormally Dry

Moderate drought

Severe drought

Extreme drought

Exceptional drought

Covid era

100%

CATTLE

50

2012

’14

’16

’18

2020

100%

HOGS AND PIGS

50

2012

’14

’16

’18

2020

100%

MILK COWS

50

2012

’14

’16

’18

2020

Consumer prices, change from a year earlier

20%

Beef and veal

Pork

Milk

0

–10

2012

’14

’16

’18

’20

Sources: National Drought Mitigation Center (livestock); Bureau of Labor Statistics (inflation)

Percentage of

U.S. livestock

in drought and

dry conditions

Abnormally Dry

Moderate drought

Severe drought

Extreme drought

Exceptional drought

Covid era

100%

CATTLE

50

2012

’14

’16

’18

2020

100%

HOGS AND PIGS

50

2012

’14

’16

’18

2020

100%

MILK COWS

50

2012

’14

’16

’18

2020

Consumer prices, change from a year earlier

20%

Beef and veal

Pork

Milk

0

–10

2012

’14

’16

’18

’20

Sources: National Drought Mitigation Center (livestock);

Bureau of Labor Statistics (inflation)

Percentage of

U.S. livestock

in drought and

dry conditions

Abnormally Dry

Moderate drought

Severe drought

Extreme drought

Exceptional drought

100%

Covid era

CATTLE

50

2012

’14

’16

’18

2020

100%

HOGS AND PIGS

50

2012

’14

’16

’18

2020

100%

MILK COWS

50

2012

’14

’16

’18

2020

Consumer prices,

change from a year earlier

20%

Beef and veal

Pork

Milk

0

–10

2012

’14

’16

’18

’20

Sources: National Drought Mitigation Center

(livestock); Bureau of Labor Statistics (inflation)

Food prices have risen world-wide during the past year, in part because of the weather phenomenon known as La Niña, which occurs every few years and can cause dry weather in some parts of the world and heavy rainfall in others, affecting agriculture in those regions.

Global food prices rose 4.8% in May from the previous month, the biggest monthly increase since 2010, according to the United Nations Food and Agriculture Organization. Prices in May were nearly 40% higher than a year earlier and the FAO’s food-price index was at its highest level since 2011, when prices rose after another La Niña event.