The Global Implications of the U.S. Drought

June 23rd, 2013 BY ChrisD | No Comments
bulk corn grain

The United States is in the grip of the worst drought conditions it has seen in decades. According to the National Drought Mitigation Center, nearly 56 percent of the 48 contiguous states is in moderate drought or worse. The implications of this data can have global consequences.

Midwest Woes
Ironically, projections for the Midwest corn yield were positive in the early days of the season. Precipitation increased and helped nurture new crops. Now the corn crops are in trouble because of relentless heat combined with low precipitation rates. The result of the problems in the Midwest will likely have global consequences.

Corn Use and Export
Corn sales topped nearly $40 billion in 2007, with Illinois, Iowa and Nebraska leading the country in sales. A sizable portion of the corn grown in the United States is consumed by domestic and overseas livestock. Americans only consume about 12 percent of the corn yield directly or indirectly from products like high fructose corn syrup.

As the largest global producer of corn, the drought conditions in the Midwest will have far-reaching effects on the global marketplace and community. U.S. reserves of grain stocks are at a new low. Essentially, this means less corn for export, bringing the U.S. drought to a global scale.

Global Fears
The concern lies with the consequences that may occur because of the weak corn production. One thing is certain. Prices for products that rely on corn will go up. If countries stockpile grain, it could drive prices even higher. A threat of global violence also exists as occurred in 2008. Countries hit hard by the 2008 crisis will likely experience a re-occurrence in 2012.

The global impacts of the U.S. drought bring two things to light. First, they show how interconnected the global community has become. Adverse conditions in the United States have worldwide repercussions.

Second, global warming has the potential to be much more destructive than simply making summer heat unbearable. It can hit at the core of existence. With such an unstable global economy, the crisis faced by American farmers could not have come at a worse time. Rising fuel problems are only part of the big picture.

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