• Drought has led to big downward revisions to US crop production. Impact on farm sector incomes will be mitigated by several factors, particularly the large expected increases in crop prices. However, these price rises will squeeze livestock and dairy producers.
• Farm sector will be a headwind to US GDP growth in 2012 similar to that of 2011. Consumer food prices in the U.S. are likely to rise over the next year or so adding to headline inflation.
• Food security concerns likely to arise in Middle East and Central America due to low stocks, high commodity price pass-through. Emerging Asia vulnerable, but stocks should help buffer against supply shock.
• Australian agriculture sector to receive big income boost, adding around $6.0 billion to net farm incomes at current production levels. Australian consumer prices relatively immune to global supply shocks.

For further analysis download the full report.

• Implications of the US Drought – August 2012  (PDF, 446kb)