http://www.businessweek.com/articles/2013-01-10/why-are-food-prices-rising-check-the-weather
This is a simple article in which the author reviews the devastating effects of extreme weather on agriculture production; the subsequent results come in the form of food shortages and rising prices. Furthermore, the article provides details on the local, regional and global effects of this erratic weather by explaining the loss of crops, and the significant monetary consequences as a result. For example, the severe drought in the US Central and Southern Plains of 2011 resulted in the significant fall in wheat output, costing the US an estimated $20 billion. An example such as the one above that causes global shortages tells us that nature is in fact inflationary - more demand but fewer goods available is a recipe for higher prices. This raises the question of wether there is a solution, or maybe we must simply continue to weather the storms? Is there any way of mitigating Mother Nature's force? But as for now, we must contend with the fact that crop production will fall, farmers will continue to suffer losses, you will pay more for rice (for example), prices will rise, and with all this, Economists must/will rise to the occasion.
If only there were a way to control natural disasters, then the economy would be stronger at these times. Because we can't control these disasters, we should use precautionary measures to prepare for these events. For example raising prices, storing a surplus of food and crops, and saving more money that can be spent on the expensive saved food and crops.
ReplyDeleteOn the other hand, I would state that because of the rising temperatures and longer, warmer farming seasons, farmers are able to produce more crops. These extra crops could be stored, as stated above, and be saved for when there is a natural disaster or in a time of need.
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