Implications of the Drought on the Livestock Industry Essay

Submitted By shaikh18
Words: 2077
Pages: 9

Economics for Business

In this essay I will be discussing possible implications of the drought on the livestock industry in the US and provide relevant examples from across the world, that discuss the economic implications of a food scare. Drought is defined by (2012) “a period of dry weather, especially a long one that is injurious to crops”.

The US has been in drought which has severely damaged their livestock industry. The biggest implication of this issue is the price of food being pushed up across the world, as the amount supplied decreases the demand for crops, beans etc, will increase immensely, what this does it will increases the prices as there is limited stock available.

A few implications of the drought in the US are things such as Corporate Author (2012); Broiler production estimates for 2012 and 2013 have been reduced to 36,889 and 36,445 million pounds, respectively, down from 37,201 million pounds in 2011, due to higher feed costs. Milk production in 2012 is projected to be 1.7 percent higher than 2011, but high feed costs are expected to result in essentially no change in milk production in 2013. While milk prices are projected to remain lower than 2011 levels in both 2012 and 2013, anticipated prices for 2013 were raised somewhat in the November World Agricultural Supply and Demand Estimates (WASDE) report. Milk prices received by farmers averaged $20.14 per hundredweight (100 pounds) in 2011, and are projected at $18.50-$18.60 per hundredweight in 2012 and at $19.10-$20.00 per hundredweight in 2013. This increase will happen because the drought will cause the Crops fed to the cattle to decrease as there is not enough rainfall to grow the crops, so the cattle will eat less and produce less milk to be sold to the public.

Thomas Schueneman (2012) suggest that “the ongoing drought made for a tough summer for farmers. The USDA classifies about 51 percent of the 2012 summer corn crop as in poor or very condition. Last year only 20 percent of the corn crop was classified as poor or very poor. Corn yield projections in May were set at 166 bushels per acre, but came in at only 122 bushels per acre. The soybean harvest is still underway, but lower yields are expected there as well. With 22 percent of the soybean crop in, 34 percent of that is considered in poor or very poor condition.
Ranchers throughout the drought-stricken west and midwest have sold off large portions of their livestock in response to dried-up pastures and lack of water. The drought has also driven up hay prices for ranchers, which has led to a marked increase in the theft of grass. Stealing hay may seem relatively harmless, but combined with pervasive drought it threatens ranchers’ livelihoods“. Having dry crop fields and no crop to or livestock will cause farmers to close and sell their ranch and land to make money, as result the overall supply amount will decreased heavily if farmers are forced to shut their farms down. This will defiantly push up the price of food quite a lot as there would be less choice of suppliers, so that would mean they can charge a higher price, which might mean inflation rates would increase, jobs would become loss as a result of the closed farms and loss of business from transporting of the goods to shops.

As the drought becomes severe or greater it impacted about sixty seven percent of cattle production and around about seventy to seventy five percent of corn and soybean production, Corporate Author (2012). In Ohio between July and August the estimate of corn crop size has fallen by twenty to twenty five percent. Eshelman, R (2012) writes that the in 2011 the livestock industry accounted for $44 billion in economic activity and $4 billion in exports mainly to Mexico, Canada, Japan, Hong Kong and Taiwan. So this means if this industry grins to a halt due to the drought significant sums of money will be loss from the issue, the government will have to produce and…