海角大神

Farmers from聽Illinois 迟辞听Wyoming are watching crops and livestock wither as the most widespread drought since 1956 persists聽across more than half the US, and higher food prices won鈥檛 be far behind.

Already, the US Department of Agriculture has lowered its crop projections for corn by some 12 percent, and the price of corn has jumped 34 percent in the past months alone. As corn聽鈥� one of the hardest hit crops 鈥� is one of the main ingredients in everything from, well, corn flakes to cattle feed, experts say a rise in聽food prices is inevitable.

鈥淧rices are going to go up,鈥� says Justin Gardner, assistant professor of agribusiness at Middle Tennessee State University. 鈥淭he only question is when.鈥�

The first categories to be hit, he says, are meats, such as beef, poultry and swine. But 鈥渇iguring how quickly the pocketbook will get hit is a bit tricky,鈥� he notes, 鈥測ou have to figure how long it takes to move corn into cattle and into your grocery store.鈥�

Americans are probably already seeing the drought鈥檚 impact, and it will get worse before it gets better, says Jeff Born,聽a finance professor and director of the executive MBA program at Northeastern University in Boston.聽

He聽visited聽parts of the afflicted area a couple of weeks ago and says there has been no significant relief with rain. He points out that聽while corn is resilient, if the stalk dies the ears cannot get water no matter how much rain falls later.聽

Bottom line, he says via e-mail,聽is that 鈥渋f you like bacon/pork you should buy it now, because by the fall you are going to be stunned at what it will cost.鈥� 聽

USDA officials, however, are predicting a less dramatic impact on food prices. According to USDA estimates,聽only 14.6聽cents of every grocery dollar goes to farmers聽or ranchers.聽Labor and processing make up a much larger part of the cost of聽food, points out Professor Gardner, adding that 鈥渢he impact of the drought won鈥檛 really change those costs.鈥�

The USDA聽calculates that overall prices rise one percent for every 50 percent increase in the price of corn.聽On Sunday, Agriculture Secretary Tom Vilsack appeared on CNN鈥檚 鈥淪tate of the Union鈥� to say it鈥檚 too soon to see the crop losses now being witnessed聽across the nation鈥檚 bread basket translate into sticker shock at the grocery store.

While commodity prices will likely increase, he said, 鈥渋t will have a marginal impact on food prices.鈥澛燞e added聽that energy prices drive up food prices more significantly.

鈥淭he prices and the impact of a drought probably will not likely be seen in the grocery aisles until later next year, 2013,鈥� he said.

But according to farmer聽Steve Ford, who is聽 an associate professor of economics at聽 The University of the South in Sewanee, Tenn., the outlook may be gloomier than government statistics project.

"My sources in the Midwest tell me that the drought is actually worse than indicated in USDA's recent yield estimates,鈥� he says via e-mail.聽He聽says the USDA estimates of a 12 percent decline in corn yields were from聽鈥渙verly optimistic initial yield estimates.鈥� He suggests that farmers will more than likely see close to another 10 percent decline in yield.

Even so, he adds, projected corn production in 2012 is still higher than the levels in 2010 or 2011.聽 What will make the difference is global demand, which is higher. As far as the economics of livestock, he points out聽that much of the adjustment to higher feed costs has already been made through reductions in animal numbers.

However, he adds,聽鈥渋t聽will still be hard for those remaining in business this year.聽The issue will be how many will remain in business until grain prices decline.鈥�

How hard聽your bottom line is hit聽depends on where you are in the food chain, says Scott Rothbort,聽publisher of The LakeView Restaurant & Food Chain Report and president of Lakeview Asset Management in Milburn, N.J.

Large companies such as Kellogg鈥檚 and General Mills hedge their losses聽in the marketplace, protecting themselves from small price gyrations of the marketplace for up to six months. Restaurants and other food vendors do the same, with longterm contracts that聽lock in price stability.

Even farmers have聽crop insurance to cover their losses, a federal program that by some estimates may top $30 billion in 2012. 鈥淏ut prices for the average consumer at the grocery store will be more problematic,鈥� he says, adding, 鈥渃ertainly fresh produce, meat, and baked goods will be impacted.鈥�

The weather may not help out any time soon, points out Clark University聽drought expert Christopher Williams.

This drought is聽unusual, he says, because normally they tend to be 鈥減atchy,鈥� meaning that while one area of the country is experiencing drought, others are聽compensating with other weather.

But what makes this drought 鈥渟o impressive is that it is largely continuous.鈥� More than half the country is聽engulfed聽by this drought, he points out, adding, 鈥渢hat makes it special,鈥� and the longer term impact less clear.聽