The US drought

Remember the last drought? 2013's could be worse

CNBC,

26 November, 2013,

Ongoing winter storms won't be doing much to relieve some drought-stricken areas of the U.S. In fact, conditions could get worse in the Southwest and Southeast,according to the National Oceanic and Atmosphere Administration.

NOAA last week forecast below-average precipitation for those regions this winter, meaning that "after some relief during the past few months," the Southwest's three-year drought is likely to redevelop and spread to the Southeast.

In 2012, the U.S. suffered through the most severe and extensive drought in 25 years, according to the Department of Agriculture. Some 80 percent of all U.S. agricultural land experienced drought last year.

The drought cost some $40 billion in lost crops and livestock, along with 123 related deaths in 2012, according to the National Climatic Data Center.

Destruction of crops like corn, wheat and soybeans caused price rises in those commodities late last year and into 2013. Corn prices reached a high of $7.63 a bushel in August 2012, nearly a dollar more than the $6.88 high of 2011. Current corn prices hover around $4.13 for December futures after reaching $7.13 in March. 

Farmers who aren't able to see profits from the price increases usually have a fallback, said Ernie Goss, professor of economics at Creighton University.

"Some 80 to 90 percent of crop farmers have insurance, and they get price supports from the government," he said. "That's not to say farmers aren't hurting, but there are ways to mitigate any loses by taking precautions as a lot of farmers do."

Those measures include heavy storage of commodities like corn, wheat and soybeans as well as developing new irrigation methods, said Goss.

And naturally, while some farmers are obviously feeling the dire economic effect of drought, others are not.

"Droughts can increase prices for commodities and raise revenues, especially for those farmers getting good weather and not getting hit," said Goss. "That's especially true for flash droughts or droughts that are like flash floods and don't stay long."

Higher prices skip consumers

Despite the drought and predictions of higher food prices for consumers this year, the impact on consumers' pocketbook was much less than anticipated.

Retail food prices actually decreased slightly on average for the first six months of this year, with price increases overall are on track to be up to 2.5 percent higher than 2012—but lower than the average annual inflation rate,according to the USDA.

In crop projections this month, the USDA increased its estimated total for corn to 1 percent over last year's estimate, and soybean production up 3 percent from the 2013 estimate. Corn will see total production at a record level of nearly 14 billion bushels. 

Those higher estimates came despite many areas of Iowa, Minnesota and the Upper Midwest dealing with late planting, along with some late-season drought conditions.

Net farm income is also on the rise. It's forecast to be $120.6 billion in 2013, up 6 percent from 2012's estimate of $113.8 billion. After adjusting for inflation, 2013's net farm income is expected to be the second highest since 1973, according to the USDA.

Droughts as warning signs

As for when or even if the drought will end, it's as hard as predicting any kind of weather pattern.

NOAA's forecast on the winter drought is somewhat contradictory, said Shafik Islam, professor of water diplomacy at Tufts University.

"It's a slight negative bias toward drought conditions, and based on conditions that might not happen. They could be right, they could be wrong," he said. "Our ability to do forecasting is limited."

Whatever happens, it has to be taken seriously, said Christopher Williams, professor of geography at Clark University.

"It might not be possible to point the finger at climate change for the drought, as there are lot of variables," he said.

"But we're seeing much drier conditions in areas like the West, and we have to start considering these droughts as warnings signs," he said. "This could only be the beginning of things to come."