61% of Land Mass in U.S. Affected by Drought; Food Prices to Go Higher

Agriculture Secretary Tom Vilsack Prays for Rain

July 18, 2012

ABC News - Agriculture Secretary Tom Vilsack is praying for rain to bring relief from the drought, which is devastating crops and likely to push up food prices.

"I get on my knees every day," Vilsack told reporters at the White House today. "And I'm saying an extra prayer now. If I had a rain prayer or a rain dance I could do, I would do it."

Sixty-one percent of the U.S. is experiencing a drought, the worst in 25 years. Blistering heat and a lack of rain are threatening close to 80 percent of the corn and soy bean crops, leading to declining yields. The country's livestock is also in harm's way, as a result.

"Our hearts go out to the producers, the farm families who are struggling through something that they obviously have no control over and trying to deal with a very difficult circumstance," Vilsack said, following his Oval Office meeting with President Obama.

As of today, nearly 1,300 counties have been designated as disaster areas.

The secretary admitted that the drought, which is already driving up corn and bean prices, will likely impact the greater economic recovery.

"One out of every 12 jobs in the economy is connected in some way, shape or form to what happens on the farm," he said. "So, obviously, this drought will provide some degree of uncertainty."

Vilsack urged Congress to provide help and assistance to the nation's farmers.

"The most important thing is for Congress to take action to provide some direction and assistance so that folks know what's going to happen, what kind of protection they're going to have," he said. "That certainty is really important, and that's whether they want to get to work on the food, farm and jobs bill, they want to develop a separate disaster program or an extension of existing programs, whatever it might be. Having that done as soon as possible will be quite helpful."

In the meantime, the USDA is opening areas in the Conservation Reserve Program for emergency grazing and giving farmers access to low-interest federal loans.

Grocery Prices Headed Higher as Drought Lingers

July 18, 2012

AP - Shoppers across the country should stand up and take notice of the Midwestern drought that has already hurt supplies of corn and soybeans.

The drought will lead to higher supermarket prices for everything from milk to meat. How high will depend on what happens with rain and high temperatures in the Corn Belt in the next few weeks.

“We’re at the cusp of seeing how severely this is going to impact consumer prices,” said Darrel Good, professor emeritus of agricultural and consumer economics at the University of Illinois at Urbana-Champaign.

The drought and heat, he said, have "already done permanent damage to the crops, but our concern is the outlook for the weather is not very good and we’re expecting a further deterioration.”

If that happens, he continued,

“Prices will go up ever higher and have more severe and long-lasting impacts.”

In a twist that may sound counterintuitive, prices in the next few weeks for certain products may end up being major deals as a result of the drought.

For example, you may want to make room in your freezer for meat because prices for beef and pork are expected to drop in the next few months as farmers slaughter herds to deal with the high cost of grains that are used as livestock feed, said Shawn Hackett of the agricultural commodities firm Hackett Financial Advisors in Boynton Beach, Fla. But, he added, everything from milk to salad dressing is going to cost more in the near term, and eventually the meat deals will evaporate as demand outstrips supply.

Agriculture experts and economists largely agree that the weather conditions are expected to hurt corn crops, and in turn will impact retail prices in the weeks ahead. But we won’t know the full impact of the drought until early August or September, said Richard Volpe, research economist for the Economic Research Service of the U.S. Department of Agriculture.

Rain is in short supply across most of the country and you could be paying the price for it at the grocery store. NBC's Janet Shamlian reports.

“We don’t yet know what’s going to happen and we don’t yet know how severe the drought will be and the amount we end up getting at the end of the corn harvest,” he stressed.

The USDA provides monthly estimates of food prices but the June data showing increases of less than 5 percent for key items such as dairy and meat products does not take the recent grain issues into account. Updated figures on the drought’s impact will be released July 25.

Volpe wouldn’t provide specific projections based on conditions now, but he did say price increases for milk, that were expected to be flat or decline this year, could head up “if there’s a major jump in feed prices.”

At this point, he added,

“there’s been enough damage that we know we’re not going to have a record crop in field corn. Now the question is, how far below the record crop is this going to fall? What happens in next two weeks will drive what happens to corn and that will have an affect on all food prices.”

Field corn, also known as feed corn -- which is different from the sweet corn many of us eat during our barbecues -- is in about 74 percent of the foods consumers buy in supermarkets, he pointed out.

This year, corn supplies were expected to be more than ample because many growers in the Corn Belt -- including Illinois, Indiana, Iowa, Nebraska and Minnesota -- increased acreage of the crop to meet growing global demand, said John Riley, assistant extension professor at Mississippi State University.

“But it will now fall short because of the drought and heat,” he noted.

The price for a bushel of corn hit $7.48 a bushel at the Chicago Board of Trade this week, and government figures now project this year and next that a bushel will be as much as $6.40 a bushel, up significantly from last month's projections of $4.20 to $5 a bushel.

The expected rise in food prices is nothing new for consumers.

“Food price inflation in 2011 was well above normal,” explained Corinne Alexander, an agricultural economist at Purdue University. Grocery store food inflation was 4.8 percent last year, she said, and the expectations were of about 2 percent this year.

“The drought means above normal food price inflation in 2012, and going into 2013,” he noted.

While prices for processed foods such as cereal are not expected to rise considerably unless the shortages get much worse because producers had already instituted huge price hike last year, she continued.

But, she added, the cost of things like oil and salad dressing are likely to rise because soybean crops have also been impacted.

The food-price roller coaster is a scary ride consumers have been on for some time. There have been tight supplies going back to 2006, said Mississippi State’s Riley.

“Weather events and a bump up in demand for corn for renewable fuel,” he explained, have all contributed to the problem.

When asked if consumers should start praying for rain, he said,

“any rain moving forward is a blessing and is going to help, but I don’t know if it’s going to make it better.”

Midwest Drought Threatens Crops, Livelihoods and Food Prices

July 18, 2012

USA TODAY – Ask Craig Ganshorn how his corn crop is faring and he winces before replying. "Basically, it's burnt up," he says.

Ganshorn, 62, who has farmed 500 acres of corn and soybeans here since 1976, is confronting the grim realities of a drought that he says is worse "by far" than the one in 1988 that's remembered as among the worst in U.S. history.

Ganshorn's farm is in Kosciusko County, which is in extreme drought. He figures he won't get much return on his corn crop but hopes his soybeans, which are hardier and pollinate later than corn, will survive.

He's already calculated what this hot, dry summer means to his bottom line.

"It just cancels any idea" of buying a newer used combine to replace his rickety old one, he says, and "there will be no trip to Colorado this year."

Searing temperatures and below-normal rainfall across a broad swath of the USA have created a drought that is killing crops and drying up streams. More than 1,000 counties have been declared natural disaster areas, giving farmers access to low-interest loans. Mississippi River water levels in some areas are nearing record lows. The conditions have prompted water-use restrictions in Illinois, Indiana and elsewhere, increased risk of wildfires and a marketplace domino effect that could mean more expensive groceries.

The U.S. Department of Agriculture (USDA) last week dropped the estimated average corn yield by 12%. That means higher prices for corn, which forces livestock producers to liquidate herds because feed is too expensive. That, in turn, could mean higher prices for meat and dairy products next year because there will be fewer cattle, hogs and cows.

Food prices already are ticking upward. The Labor Department said Tuesday that food costs rose 0.2% in June from a month earlier and are up 2.7% from June 2011.

The culprit is a weather pattern that produced dry conditions in the middle of the country starting last fall, says Brian Fuchs, a climatologist at the National Drought Mitigation Center. Those conditions were exacerbated by a winter that was warmer and drier than normal, he says.

"Currently, almost 61% of the country (not including Alaska and Hawaii) is in drought, compared to 29% a year ago," Fuchs says. "Even though it is part of the natural variability of climate, this is a rare event." About 78% of the country's corn-growing regions are in drought, he says.

The Palmer Drought Severity Indexsays this drought covers the largest percentage of the contiguous USA since December 1956.

There isn't much good news in long-term weather forecasts.

"Over the next several weeks to even the next month or so, we're not really anticipating any changes to the pattern," Fuchs says.

Crops are withering

In the Clunette area, some of the drought's effects are obvious. Corn stalks are 4 or 5 feet high, about half what they should be at this point in the summer, and nobody has to mow their lawn anymore. Grass is brown and dead, and farmers are conserving water for irrigating their fields — though even some watered corn is struggling.

The drought's effects are causing alarm across the Midwest:

•The Arkansas River near Syracuse, Kan., last week had less than 1 cubic foot per second of water flowing in it. The historical mean flow: 394 cubic feet per second. The flow was the lowest recorded for this time of year since records began in 1902, says Brian Loving, a U.S. Geological Survey hydrologist in Lawrence, Kan.

The temperature of the water flowing in the Wakarusa River, southeast of Topeka, reached 103 degrees on July 7, Loving says. High water temperatures reduce the amount of oxygen available in the stream to fish and other aquatic life.

"This could be the worst drought for our streams since we started keeping records a little over 100 years ago," he says.

•Randy Miles, a soil scientist at the University of Missouri-Columbia, stuck a probe into a farm field on Monday and found no moisture more than 5 feet deep. In a normal year, he would expect only the top 12-16 inches to be dry.

Current conditions, he says, mean that "crops won't thrive." The drought, Miles says, affects everything from earthworms, which must bore deeper to find moisture, to nutrients in the soil.

•Kent Lorens, who raises livestock, wheat and corn on a 3,400-acre farm near Stratton, Neb., is giving his cows and calves protein supplements because the dry grass they're eating doesn't provide enough nutrition. They're drinking 20 or 30 gallons of water daily instead of the usual 10, he says.

•At Honker Hill Winery near Carbondale, Ill., "Some of the plants are beginning to shed their leaves like they're dying. A lot of the grapes are drying up, too," says manager Stan South. Wine is still being made from last year's excellent crop, he says, but he thinks "it's very possibly time to invest in an irrigation system."

•Salesman Mark Holzum says foot traffic at Heuer Sons Implement Co. in Cape Girardeau, Mo., is "a fourth of what it normally would be" as farmers scrap or postpone equipment purchases. "They're not in a good mood," he says.

Close to 'total failure'

Iowa and Illinois are the top corn-producing states, according to the USDA, and usually account for about one-third of the U.S. crop. Indiana typically ranks fifth, says Chris Hurt, an agricultural economist at Purdue University. Much of Iowa is abnormally dry or in moderate drought, but its situation is not as bad as the one in Illinois and Indiana.

About 61% of Indiana's corn crop is rated poor or very poor — the worst of any major corn-producing state, Hurt says.

"Those crops are getting close to having total failure," he says.

At this point in 1988, 90% of Indiana's corn was rated in those two bottom categories. "This one is not yet as intense and horrible as 1988," he says, "but it's the only one that's close to comparable."

Tell that to Bruce Ferguson, who walked into the Clunette Elevator Co. — which helps manage and stores crops — one day last week with a 6-inch ear of corn with silk hanging from it. The corn had not pollinated, which means that it would never produce full rows of kernels.

Multiply that one ear by all the unirrigated corn planted on Ferguson's 1,400-acre farm for a sense of what the drought means to him. Only about 150 acres are irrigated, he says. "You have to be prepared for a pretty complete failure this year," says Ferguson, 60, who has farmed here since 1978.

Only a "minimal amount" of his crop was insured, and Ferguson estimates his eventual losses at about $500,000 unless conditions change. "If we get 2 or 3 inches of rain soon and 1 inch every week after that, the corn could rebound," he says.

John Anglin, the elevator's co-owner, doesn't expect a reprieve.

"We can already identify some (corn) fields that will have zero yields," he says. Although some farmers will recoup most of their losses through insurance, that's no consolation, he says. "It is hard for the farmers to accept" a failed crop, Anglin says. "They would rather have a good crop than the dollars."

Meredith Powell, the Clunette Elevator's entomologist, says the drought is creating expensive problems that go beyond dryness.

"Insects thrive in this environment," she says.

Dry soil encourages Goss's bacterial wilt, which affects corn, she says, and the elevator is doing aerial spraying to try to eradicate adult corn rootworm beetles and spider mites, which attack soybeans.

John Powell, 55, who farms 2,000 acres here, faces a couple of big decisions in the next few days.

"Right now we have to decide whether we're going to put more money into the corn crop," he says. Fungicides and herbicides that would help keep surviving corn healthy would set him back another $13-$15 an acre, he says.

Powell raises ducks with his brother-in-law and already has taken a big hit on that venture because of the drought. A couple of weekends ago when the temperature hit 104 degrees, 1,700 ducks died in a single day, he says.

Miles, the soil scientist, says the drought is so widespread and severe that even a return of regular rainfall through fall won't be enough to end it.

"It would be nice," he says, "to have a winter … with plenty of snow and rain."