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Catastrophic Drought in Texas Causes Global Economic Ripples

Source: NY Times - Katie Galbraith

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Posted on 31 Oct 2011

The drought map created by University College London shows a number of worryingly dry areas around the globe, in places including East Africa, Canada, France and Britain.

But the largest area of catastrophic drought centers on Texas. It is an angry red swath on the map, signifying what has been the driest year in the state’s history. It has brought immense hardship to farmers and ranchers, and fed incessant wildfires, as well as an enormous dust storm that blew through the western Texas city of Lubbock in the past month.

“It’s horrible,” said Don Casey, a rancher in central Texas who sold off half his cattle after getting only about two inches of rain over a one-year stretch and may sell more. “Even if it starts raining, it’s going to take so long for the land to recover”.

At the moment, 70 percent of Texas is experiencing “exceptional drought” — the worst classification — along with 55 percent of Oklahoma and significant chunks of Louisiana, New Mexico and Kansas. Northern Mexico is also affected.

Because it covers a huge and economically significant area, the Southwestern drought is having effects across the United States and even internationally, particularly in the food and agriculture sectors.

Some of the farthest-reaching effects may be on world cotton markets. Texas produces about 50 percent of U.S. cotton, and the United States in turn grows between 18 and 25 percent of the world’s cotton, according to Darren Hudson, director of the Cotton Economics Research Institute at Texas Tech

University. This year, however, yields even from irrigated crops have fallen about 60 percent on the high plains where the bulk of Texas’s cotton crop grows, Mr. Hudson said. Farmers have given up on their “dry-land,” or unirrigated, cotton crops.

World cotton prices, which had been at historic highs, have fallen recently, Mr. Hudson said, but that is mainly because the sluggish economy and other factors have outweighed the loss of supply.

“Although prices have come down, they probably would have come down more, had we had a normal crop year,” he said.

Because production has fallen off, he said, “buyers that would normally have come to Texas for this year to buy cotton for Asian markets are starting to look elsewhere” — to other cotton-producing countries like Brazil and Australia. As those buyers form new relationships, it is possible some will not return to Texas, even when the rains resume.

Other Texas crops hurt by drought include peanuts, corn and wheat. Also, pumpkins were in short supply with the approach of Halloween, the Oct. 31 holiday of which they are a feature in the United States. Rice crops will take a hit if the drought continues next year.

The cattle industry is also reeling. Many Texas ranchers are selling off large parts of their herds as the grass dries out and water becomes scarce. Some are buying hay from farms a thousand miles away, despite the high cost of shipping.

The sell-off of cattle because of the Southwestern drought could push already-high beef prices higher during the coming years, according to Kevin Good, a senior market analyst at CattleFax, a company that does market analysis for the cattle industry. That is because many cattle are headed to the slaughterhouses now, reducing future supply.

Mr. Casey, the central Texas rancher, has devised new ways of feeding his remaining herd. Because the grass they would normally graze on has dried up, he is using a byproduct of cotton gins that has the seeds and fibers removed. But he is about to run out of this product, which is often called “cotton trash” — and with Texas cotton crops reduced, it is hard to find more. So he plans to spend a few hours a day burning thorns off prickly pear cacti that grow on his land, to make them edible for cattle.

“I’m sort of waiting for it to get cold before I’m out there with that flamethrower,” said Mr. Casey, adding that ranchers doing this should be able to get exemptions from local burn bans.

Economists at the Texas Agrilife Extension Service calculated in August that the drought’s cost to Texas agriculture had reached $5.2 billion . The losses have only increased since then.

Scientists expect climate change to worsen the effect of droughts.

“While drought will always be a part of the natural climate variability of the Southern Plains, the impacts of drought in a warming world are likely to become even more pronounced,” David P. Brown, an official in the National Oceanic and Atmospheric Administration who is based in Fort Worth, Texas, said in an e-mail.

That is the case elsewhere, too, scientists say. Research by Eleanor Burke, a specialist in climate extremes at the Hadley Center of the Met Office in Britain, projects that if global temperatures rise by 4 degrees Celsius (7.2 degrees Fahrenheit) — a fairly high amount — then southern Africa, Southeast Asia, the Amazon and the Mediterranean region would be considerably more prone to drought .

Analysis released last week by the National Oceanic and Atmospheric Administration found that in the Mediterranean, droughts are already increasingly common during winter, when the region typically gets more rainfall, with part of the cause being climate change caused by humans .

In the U.S. Southwest, the current drought is generally attributed to La Niña, an intermittent Pacific Ocean phenomenon that generally causes dry and warm winters in the region.

But Texas’s state climatologist, John Nielsen-Gammon, also said that record-high temperatures over the summer — Austin, for example, experienced 90 days this year that reached 100 degrees Fahrenheit (38 degrees Celsius) — dried out the soil and worsened the drought’s effect.

La Niña has returned, and U.S. government scientists now expect the Southwestern drought to last through February at least. That is terrible news for farmers and ranchers and will affect a number of other economic sectors too, like tourism and electric power production.

For many, the worst part about drought is not knowing when it will end.

“Uncertainty is what makes it so difficult,” said Mr. Casey, the rancher. “If we knew what was going to happen, we could make adjustments.”


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