Could a drought this year derail the U.S. economic recovery?

In its annual spring forecast report, the National Oceanic and Atmospheric Administration (NOAA) included a grave warning regarding the ongoing drought in the United States: It is likely to continue.

As we have reported previously on this blog, the drought that began several years ago has resulted in billions of dollars in losses for farmers throughout the nation, and has led to consumer price increases across the globe.

Earlier this month, the U.S. Department of Agriculture (USDA) released its initial findings regarding the worsening of the drought last summer. By August, nearly 43 percent of all farms were experiencing "severe impacts" due to the lack of water. According to the Bent County Democrat, a regional Colorado new source, many farmers who employ multiple work teams are struggling to meet expenses due to the drastic drop in revenue.

"We are faced with another year of zero revenues, and we are looking at $40,000-$50,000 of added healthcare costs," Bill Long, the commissioner of Bent County, Colorado, was quoted as saying at a local town meeting. "It's not pretty, not at all. There are big problems that haven't even hit us yet and it could snowball bad this year. We are in the third year of a drought and we are not going to be in for a good year if there is no change."

Both the NOAA and USDA acknowledged that the worst of the drought's economic effects have yet to be felt, in terms of both price appreciation and farmer distress. As a result, investors with financial stakes in agriculture companies or related industries may want to take steps to hedge against potential losses. One avenue is exploring cash flow real estate, or rental properties that provide a monthly source of income. To learn more, download a "Free Game Plan Report" from today.