Goldens Bridge Financial Advisor Discusses Drought Impact

GOLDENS BRIDGE, N.Y. – The United States is in the throes of one of the most severe droughts in the past 25 years. While actual drought conditions haven’t reached the northern Westchester area, Goldens Bridge resident Kevin Peters, a senior vice president for Morgan Stanley Smith Barney, says locals already are starting to feel the impact of what is happening in the Midwest.

“Three-quarters of the corn and soy bean crops have been affected by the drought and corn prices are up 38 percent,” Peters said.

Peters noted that northern Westchester consumers likely will see a decrease in beef, poultry and pork prices in the immediate future, but warns that is only temporary.

“The farmers are liquidating the herds right now due to higher feed costs, which will bring the prices down,” he said. “But there will be less available stock later this year and that’s when the prices will start to go up. That’s the most immediate effect.”

The U.S. Department of Agriculture predicts the full effects of the increase in corn prices for packaged and processed foods (cereal, corn flour, etc.) will likely take 10-12 months before they impact retail food prices.

However, Peters said, that while you may see your grocery bill go up, the drought also is providing opportunities to counteract the pinch at the supermarket.

“Infrastructure investments will be affected,” he said. “Jobs will be needed for repairing water systems, pumps and filtration. There will be a demand for all types of water – drinking and irrigation, so technologies will be needed.”

Consequently, Peters said, this is an opportune time to invest in the water infrastructure industry.

“There is a 4-6 percent growth rate in the global water sector; that’s a good thing for jobs,” he said. “It’s a $450 billion industry. For investors, that may be a reason to look at that sector.”

Peters said companies that make machinery and filtration systems for improved wastewater management and irrigation systems are attractive to investors. He said those companies will create demand that boosts spin-off industries, such as manufacturers of piping, valves, motors, pumps, gaskets, O-rings and the specialized tools needed to install and service them.

“Desalination will likely become a more attractive option as advancements in technology reduce its cost and increase its productivity,” he said.

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