Drought Means Pain At The Grocery Checkout

July 29, 2012

Economists say food prices are likely to rise in the coming months in the wake of record-breaking temperatures and drought in the major corn and soybean producing regions of the U.S.

Despite early predictions of a record corn crop, estimates have plummeted after a string of record-high temperature days and dry conditions stretching across the Midwestern farm states.

The USDA is predicting that meat prices will rise, with beef and veal expected to increase in price  3.5 to 4.5 percent during the remainder of the year. Beef prices are currently 6.9 percent higher than this time last year, with steak prices up 8.1 percent and ground beef prices up 7.3 percent. In the short term, beef prices are forecast to actually fall a bit, as increased feed prices force producers to decrease herd sizes and, in turn, increase the beef supply.

The USDA is forecasting an increase of 3.5 to 4.5 percent in chicken and turkey prices, also due to higher feed prices.

Consumers can expect to pay more for cheese and milk, with dairy prices seeing an anticipated 3.5 to 4.5 percent jump. Eggs are forecast to rise about 2 percent in price.

Cooking and vegetable oil, with soybeans as the main ingredient, are forecast by the USDA to rise 4 to 5 percent in price in 2012.

There’s one bright spot in the consumer price forecast from the USDA. Since last year at this time, fresh vegetable prices are down 3.6 percent, with potato prices down 3.4 percent, lettuce prices down 6.4 percent, tomato prices down 6.9 percent, and other fresh vegetable prices down 1.8 percent

“We need rain, and it doesn’t look like we’re going to get it,” says Iowa State University economist Dermot Hayes.

Pork and chicken prices will go up, as well as beef, milk and eggs, because corn and soybeans are key ingredients in animal feed.

Pictured top: Corn in Walnut Hill suffers the effects of drought earlier this year. The area has since received significant rainfall. NorthEscambia.com photo, click to enlarge.

Comments

8 Responses to “Drought Means Pain At The Grocery Checkout”

  1. David Huie Green on July 30th, 2012 6:18 pm

    REGARDING:
    “If you are finding ethanol on your gasoline, it is NOT because of the government. Instead, private companies are doing it all on their own”

    Interesting you would claim that when the Environmental Protection Agency says they do require it.

    http://www.epa.gov/otaq/fuels/renewablefuels/regulations.htm

    2012 Standards for Renewable Fuel Standard Program (RFS2): Final Rulemaking
    “EPA is establishing the volume requirements and associated percentage standards that will apply under the RFS2 program in calendar year 2012 for cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel. The standards will ensure that transportation fuel sold in the United State contains a minimum volume of renewable fuel as required by the Energy Independence and Security Act of 2007. “

    Please also consider the fact that it takes more petroleum to produce ethanol than the ethanol has in volume or energy. Private companies do not benefit unless the government offsets the increased price with subsidies, in which case tax payers get the higher expense and China loans us more money. The entire world loses out in requiring ethanol in gasoline – - – well, except for some corn farmers, of course.

    David considering how politicians buy votes

  2. Tuf on July 30th, 2012 7:18 am

    Norm, you may want to read this article about governmental tax subsidies and ethanol. If you are finding ethanol on your gasoline, it is NOT because of the government. Instead, private companies are doing it all on their own… free market capitalism. Enjoy the read… http://www.nytimes.com/2012/01/02/business/energy-environment/after-three-decades-federal-tax-credit-for-ethanol-expires.html

  3. nrwe on July 29th, 2012 11:36 pm

    @bin do you really blame Bush? I know that he has no control or power over the weather. I don’t see Obama doing any better. So let’s clean house from the lowest elected position to the top position.

  4. David Huie Green on July 29th, 2012 9:34 pm

    Consider current natural gas prices approximately equivalent to 77 cents per gallon versus equal energy value of diesel. I saw Larry Walker today and he mentioned the natural gas garbage trucks are saving ECUA much money due to vastly cheaper fuel.

    We all know I favor nuclear but until it fits into a car, natural gas is nice too.
    It won’t work for long distance hauls, not enough stations, but potential.

    David thinking folks would think twice
    ere running to nuclear powered car,
    like a souped up Pinto

  5. bin on July 29th, 2012 7:57 pm

    i blame bush.

  6. norm on July 29th, 2012 8:27 am

    If your government would quit using corn in the production of gasoline then perhaps the cost of food would not go up. I know this makes to much sense and wwwill never happen. Just goes to show where out government priorities lie. it is a shame.

  7. Mic Hall on July 29th, 2012 8:22 am

    NOT GAS! Diesel! It is treated differently in taxing from gasoline. One of the problems it that we put NO effort as a country to try to keep its price down and instead add regulations and taxes that increase it. Every penny that Diesel is increased it adds to FOOD prices and everything else.

    NOTHING MOVES IN THIS COUNTRY WITHOUT DIESEL. At some point it is put on a train or big truck that runs on diesel. Most things are never moved by gasoline until you take them home. We need to recognize this difference and the difference in how diesel is treated by the government.

    We need to do everything we can to keep low-sulfur diesel as cheep as possible to help hold down the cost of almost EVERYTHING.

    And NO MORE ETHANOL! We are driving our cars with higher food prices and it has been proven with no improvement in the environment and instead making it worse when growing it is added to the calculations.

  8. Jane on July 29th, 2012 6:14 am

    If it wasn’t the drought the price of everything that moves from one place to another by truck would go up anyway with the price of gas. So that just means you can add the price of gas to the equation. I guess we should be glad we still have food to buy, unlike a lot of countries that were hit by the drought in places like Africa a few years ago where many people starved to death. Be grateful for small favors.

Written by William Reynolds · Filed Under FEATURE TOP STORY, Features, News