http://www.foxnews.com/us/2012/07/17/historic-drought-conditions-can-lead-to-higher-food-prices-experts-say/
The historic drought baking the nation's breadbasket is about to hit American consumers where it hurts most -- the supermarket checkout.
"Prices are going to go up," Justin Gardner,
assistant professor of agribusiness at Middle Tennessee State University, told the
Christian Science Monitor
. "The only
question is when."
. "The only
question is when."Everything from breakfast cereal to roast beef will cost more as a result of the worst drought in 24 years, which has already prompted authorities to declare more than 1,000 counties in 26 states -- nearly two-thirds of land in the lower 48 states, stretching from Nevada to South Carolina -- natural disaster areas.
Only in the 1930s and the 1950s has a drought covered more land, according to federal figures released Monday. So far, officials say there's little risk of a Dust Bowl-type catastrophe, but crop losses could mount if rain doesn't come soon -- and that means across-the-board higher food prices.
The U.S. Department of Agriculture has lowered its crop projections for corn by 12 percent, prompting a 34 percent hike in prices in recent weeks. Since corn goes into so many food products for both humans and livestock, its effect on overall food prices is massive.
The rising prices of livestock feed are already impacting some businesses.
Jack Sabolik, a butcher in Ohio, said customers are
cutting back at his store as the rising cost of feed has brought corresponding
increases in the price of meat, Fox 8
Cleveland reports.
."A lot of people aren't buying as many steaks as they would in the summer time, buying more hamburger and stuff like that to make it go by further with the families and stuff," he said.
Jeff Born, a Northeastern University finance professor and director of the executive MBA program, told the Christian Science Monitor it will only get worse.
"If you like bacon [and] pork, you should buy it now, because by the fall you are going to be stunned at what it will cost," he wrote in an email.
In Illinois, the drought has already taken a heavy toll, with more than 80 percent of corn, soybean and other crops considered to be in fair condition or worse. Less than 10 percent of farm fields have adequate topsoil moisture. Farmer Kenny Brummer has lost 800 acres of corn that he grows to feed his 400 head of cattle and 30,000 hogs. Now he's scrambling to find hundreds of thousands of bushels of replacement feed.
"Where am I going to get that from? You have concerns about it every morning when you wake up," said Brummer, who farms near Waltonville. "The drought is bad, but that's just half of the problem on this farm."
In Ohio, produce vendor Mike Shull told Fox 8 Cleveland that the lack of water may drive corn prices up.
"It's hard to get the stuff in if it ain't growing," Shull, an Ohio vendor selling produce, told Fox 8 Cleveland.
But USDA officials are predicting less of an impact on prices, the Christian Science Monitor reports. The agency estimates that only 15 cents of each dollar spent on groceries goes to farmers. Labor and processing make up the bulk of food costs, and that won't be impacted much by the drought, Gardner said.
The federal government is already moving to help farmers and ranchers. Agriculture Secretary Tom Vilsack last week announced plans for streamlining the aid process. A major goal is to cut the time it takes to declare an agricultural disaster area. He also reduced interest rates for emergency loans and made it cheaper for farmers to graze livestock or cut hay on lands otherwise locked up in a conservation program.
Some state governments are stepping in, too. In Wisconsin, Gov. Scott Walker declared a state of emergency in 42 counties last week to speed up the issuance of permits for temporarily using stream or lake water for irrigation.
During a visit Monday to a southern Illinois corn and soybean farm, Illinois Gov. Pat Quinn announced that drought-affected farmers would be eligible for state debt restructuring and loan programs in addition to the aid the USDA announced last week
Read more: http://www.foxnews.com/us/2012/07/17/historic-drought-conditions-can-lead-to-higher-food-prices-experts-say/#ixzz20uq6ZBaD
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