Drought Economics

The widespread drought of 2012 is now considered the worst that the United States has seen in more than fifty years. The nation’s agricultural heartland has been particularly hard hit, and losses there are forecast to have a ripple effect throughout the economy.

According to the U.S. Department of Agriculture, 1,297 counties in 29 states have been designated as natural disaster areas. With grazing lands going barren and staple crops like corn and soybeans wilting in the ground, potential farm yields are plummeting. Following the laws of supply and demand, consumers all across the country will soon be paying higher prices for food.

The cost of many other goods is also expected to rise, as corn is used in a wide variety of products.  It is a key ingredient in items like livestock-feed, ethanol, and anything that contains corn syrup.

Devastating and costly, this drought is likely to intensify as hot and dry conditions continue to dominate the weather in the mid-west.  While not on the same scale as the Dust Bowl of the Great Depression, many analysts expect this year’s drought to rank as a billion dollar natural disaster.

Corn crop withers in drought stricken field.

Image Credit: BuffaloNews