Global crop and food prices are skyrocketing to multi-year highs, and the culprit could be due to La Nina, a weather pattern characterized by the cooling of the equatorial Pacific and triggers atmospheric shifts that cause droughts in some regions of the world and wetter conditions in others. The prospect of a severe drought in the US has already be outlined in previous notes. Now it appears the worst drought in 20 years has struck agricultural rich Brazil.
Over the last month, Brazil has been faced with drought during its traditional rainy season.
“Soils are parched, and river levels are low in the nation’s Center-South region, a powerhouse of agricultural output. The drought is so severe that farmers are worried they’ll run out of the water reserves that help keep crops alive over the next several months, the country’s dry season,” said Bloomberg.
The cost of this year’s drought could severely impact coffee, sugar, and orange crop yields.
Coffee farmer Mauricio Pinheiro, 59, began irrigating his arabica-coffee crops in March, more than two months earlier than usual after his 131-acre farm received only half the rain it needed. He’s using so much water that his wells are running dry.
“My irrigation reservoir is drying up now — that usually happens in August,” said Pinheiro, who resides in Pedregulho in the Alta Mogiana region, in Sao Paulo state. “I’m concerned about running out of water in the coming months.”
One of the worst droughts to hit the country in decades is coming at a time when agricultural prices have rallied to multi-year highs, fanning fears of food inflation.
As much as the Federal Reserve is hoping for “transitory” inflation – La Nina altering weather patterns could exacerbate food inflation and make the problem global and last for years.
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