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Drought may lead to higher food prices in 2013
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Agriculture Secretary Tom Vilsack sought to assure Americans that food prices would not immediately rise, though droughts and higher food prices globally have raised concerns.
Vilsack’s statement comes amidst “the most severe drought in the American midwest in the last 50 years and a little more,” says Paul Jay of The Real News.
“The drought stretching across the U.S. from Ohio west to California is deepest in the middle of the country, and major farm states like Iowa and Illinois are seeing conditions get worse each week,” the Washington Post reported last week.
Jay also notes that the U.S. government expects higher food prices in 2013.
While costs may not seem immediately apparent — the consumer price index remained unchanged in July — corn and soybean prices rose this week on fear that the government underestimated the crop damage done during the month of July, according to Bloomberg News.
“Early harvest results are disappointing, and if they are indicative of the rest of the Midwest, then the risk is for crops to get smaller than the USDA is forecasting,” Jim Gerlach, the president of A/C Trading Inc. said in a telephone interview to Bloomberg News.
“I think what is certainly true is that this drought is going to have a severe impact on the amount of U.S. corn and soybeans in particular that we produce,” Tim Wise, director of the research and policy program at the Global Development and Environment Institute at Tufts University, said in an interview.
“The latest estimates dropped predictions by 2 million bushels, which is 15 percent,” Wise added. “That will have an impact on global corn and soybean prices because we are one of the world’s largest producers and largest exporters of both.”
The administration has employed emergency measures recently to aid struggling farmers, including the purchase of $170 million of meat products to help farmers stricken by the drought.
“The purchases will help mitigate further downward prices, stabilize market conditions and provide high quality, nutritious food to recipients of USDA nutrition programs,” Vilsack said in a statement, according to the Associated Press.
Around the globe, food prices have risen substantially. The World Bank noted in April that “global food prices have increased by 8% in the last four months since December 2011.” According to the World Bank, the only food that has not risen in price is rice.
The result is devastating for developing economies, driving “44 million people into extreme poverty since June 2010.”
Oxfam warned that “price rise threatened a return to 2008 when similar price rises triggered riots around the world as the UN said a billion people were going hungry.”
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