Summer drought: Reduces food source, raising the price for the supplies

As the world is aware, scorching heat and massive drought has strike the United States in mid-2012. This natural disaster has brought nothing but devastation as it covers almost 60% of the continent U.S.

Rumour has it saying that the price of several goods will increase in the year 2013 due to this crop-damaging weather that will have an effect on the supply and demand of the country. The good news is that not all the price of goods will be increased.

Meat and dairies which are normally consumed

Ever wondered why the government increases the price of goods?

Well, the Americans survive by consuming mainly more on meat, poultry and dairy products. The U.S Department of Agriculture have said that these are the items that the price will increase due to the drought in the range of 3% to 4%. How so? The drought will cause the grass to wither which is the reason why cows have a little to eat while grazing. Farmers will either have to spend more by using other alternatives to feed the cows or by selling off their cows to earn a living. Farmers who spend more will then result to a higher cost of sales where customers will then have to pay.

Implication of drought in front of a family farm in Lovilia, Iowa

Meat and poultry has the largest effect as most of their feed prices represent the biggest part in their cost production. Corn, soybeans and other commodities are not considered as an exception in this case. Fields dry out and crops wither across most of the country’s midsection. These items are also soared in anticipation of tight supplies after meat and poultry. Farmers will have to pay more to feed their livestock in order to produce more. This will cause the price to increase in the production of these goods.

A farmer standing in a withering field in July 2012

Fruits and vegetables on the other hand do not have a big impact compared to the products mentioned above as they are irrigated even in normal weather. Price of process food on the other hand is less affected as the cost of production does not take up much compared to the transportation and marketing cost. Therefore the demand for these goods by the consumer would not be an issue as there will be sufficient supply by the country.

The never ending demand of consumers is one of the things that the industry can’t run away from. Demand is “the desire and ability to consume certain quantities of a good and service at certain prices at a particular point of time” while supply is “the quantity of goods and services willing to be produced by firms or offered for sale at a particular time or particular place at alternative prices”. So since the supply is limited, the price of goods needs to be increased in order to ensure the continuity of goods for the benefit of the consumers.