Drought of the Century Crushing California’s Economy

Wayne Ellis

Soy bean field in Santa Cuz, Bolivia

Drought of the Century Crushing California’s Economy (Bloomberg)

Farmers in California’s “farm belt”– where the Merced and San Joaquin rivers come together — are losing as much as two-thirds of their crops to this year’s devastating drought. And because California is the single-largest agricultural state, producing some $44 billion in revenue annually, the effects of the worst drought since 1910 are already being felt. According to the California Farm Water Coalition, as much as $5 billion in milk, beef, wine, avocados, strawberries, almonds and more, has already been lost for 2014 — and we’re not even a month into the new year. Should the drought endure, farmers may not. If that’s the case, you can wave good-bye to today’s prices on many grocery store items, and get ready to pay through the nose for everyday products. As an investor, where do you think the opportunity lies in this? Perhaps opportunity lies in the companies such as Monsanto or Archer Daniels Midland, which supply feed to farmers, who may see prices skyrocket?

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