Where no water is. Australia is struggling through a 1 in 100 year (and counting) drought. Water supplies are threatened and the whole economy will share the effects.
Treasurer Peter Costello warned Thursday that Australia's farm sector could be slipping into recession. Howard dismissed that claim on Friday, but said the drought would almost certainly affect Australia's gross domestic product, which has experienced unprecedented growth over the past 14 years. "It will affect GDP growth. Just how much remains to be seen because it depends on the extent to which our booming economy in other areas can offset it," he told Melbourne's 3AW radio station. [More]
Worst of all, it could be just the beginning. With a weak (so far) El Nino beginning, rainfall could decrease even more drastically. Remember hot weather is just beginning Down Under.
But if El Niño were to strike in the next few months, Australia's eastern crops, including corn and sunflower, would be the hardest hit.
"The winter crop's pretty much done. So an El Niño will have little bearing on the current crop," said agricultural consultant Brian Bailey of Australian Crop Forecasters.
"It would first have an impact on the summer cropping areas. If the El Niño remained through April and prevented sowings, then it would hit the winter crops," Bailey said. [More]
Rightly or not, the drought is being linked to anthropogenic global warming. Australia is a hold-out to signing the Kyoto Protocol on greehouse gas emissions. It is likely to be a point of contention as this crisis wears on.
While far away and admittedly profitable for US producers (especially long-suffering wheat growers), I have experienced enough dry years to pray for rain in Australia. Those are fellow farmers and they could lose it all before this is over. One of our biggest wheat export competitors could be importing soon. This is not the type of windfall profit that can be enjoyed as "well-earned" on our part.