Heat waves, drought and the corn crop, opportunities or problems for marketers?

2012 drought

 

 

 

 

 

 

 

 

Every one in the East and Midwest of North America knows that it has been hot. Whether a farmer out in the fields, an Internet marketer enjoying a break at the lake or an old  baby boomer like me just trying to function normally in an ancient farm-house without air-conditioning.

Yesterday set a record for 17 July in many parts of South West Ontario, I missed the peak to get this photo and the needle  dropped a couple of degrees when I moved the thermometer into a better position for the photo. That was at 6 pm, the highest temperatures were recorded around 4 pm, I know that we were within a hairbreadth of 100 when I looked at it earlier.

Most people enjoy hot weather, especially up here in Canada where in most summers, we only get a few days when the temperature goes over 30C or 85F. I have experienced much higher temperatures in Africa, but generally without the humidity. Temperatures over 45C or 110F are still very hot, but bearable without the humidity.

Whether you enjoy the heat or find it stifling, is not the big issue. Just as night follows day, fall (autumn) follows summer and it will get cooler, but it looks like we are going to be paying more for a lot of our purchases when it does eventually cool down.

The lack of rain in North America, the biggest corn-growing region in the world, is being called the worst drought for 50 years.

With only 31% of the US corn crop now reported to be in good shape, and 55% of the crop growing area experiencing moderate to extreme drought conditions, the outlook is not good.  Between drought and political interference of farmers, corn (maize) estimates for Southern Africa are being reduced. In a supreme example of irony, farmers who moved to Zambia after being illegally and violently removed from their farms in Zimbabwe, have now made their new country a net exporter instead of a big importer and are now sending surplus maize back to the starving Zimbabweans.

The Zimbabwean government is embarrassed enough that it has ordered all bag markings identifying the origin of this maize be removed before distribution. That won’t help them much, the bush telegraph is highly effective, the hungry, and largely unemployed,  Zimbabweans will know exactly where that maize is coming from and who is producing it.

It gives me mixed feelings, looking out of my window at 50 acres of still reasonably good corn here in Canada while imagining my farm in Zimbabwe slowly reverting to bush, not growing a single plate of anything edible except wild herbs and fruit and no longer paying the wages of my 180 former workers. A country ruined by the West’s insistence that the country be handed over to terrorists, untold thousands murdered, millions fled as refugees or illegal immigrants to South Africa and elsewhere. Millions now unemployed and starving, life expectancy down to 35 or so.

Now the West is wringing its hands over Syria, hypocrisy knows no limits.

Soya beans are only in slightly better shape. Late frosts and a wet spring have reduced wheat yields in the former USSR and much of Western Europe has had a dismal early summer.

What does all this mean?

Price increases of many food items at the supermarket, including many processed foods, beef, poultry products, beer and soft drinks. Breakfast cereals and similar products are not expected to rise significantly because the cost of the corn is a relatively small percentage of total costs, compared to packaging, promotion and distribution. Beef is expected to rise by 4 to 6% but it could go up by 10% if the crop forecasts continue to worsen and the corn price continues to rise.

Higher corn prices and reduced availability affect many other parts of the economy:

  • Crop Farmers will have less money to spend.
  • Beef, poultry & pork producers will pay more for stockfeeds.
  • Higher feed and hay costs will reduce horse owners disposable income.
  • Ethanol from corn will be less competitive.
  • Less corn will be available for food aid.
  • Prices of other cereals could rise in sympathy.
  • Substitution of sugar as a carbohydrate in some products (beer and beverages).
  • Lower tonnage of crops to be shipped by road, rail and sea.
  • Charities will have to raise more money for the same amount of food.

Ruminate on that list for a while and it quickly becomes apparent that a large number of industries will be affected, not all adversely, sugar producers could benefit from rising prices. Many others will experience a negative effect to some degree.

One industry that is likely to do even better as the economy worsens and prices rise is Penny Auctions. For the same reason that lotteries and casinos tend to do better when times are tough. Find out how to benefit from this trend by promoting Penny Auctions with Zeek Rewards. (affiliate link)

What has this to do with Internet Marketing?

Whatever affects one part of our economies tends to create a ripple effect that influences other parts.

We need to be aware of both the opportunities and pitfalls that this drought is going to create. Some people will embrace those opportunities and do well, others will suffer from the negative effects.

Which group will you be in?

Leave a comment and let us all know.

Wishing you success in all your endeavours.

 

Peter Wright

 

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