U.S. Drought 2012 – Price Increases

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From the USDA:

U.S. Drought 2012: Farm and Food Impacts

Current USDA estimates of weather impacts on the farm sector are still reflected in the monthly World Agricultural Supply and Demand Estimates (WASDE) report and the Crop Production report.

ERS’s November 27 farm income forecast reflects information in the November WASDE report and will be updated in February.

Food Prices and Consumers:

The ongoing drought has destroyed or damaged portions of the major field crops in the Midwest, particularly field corn and soybeans.

This has led to increases in the farm prices of corn, soybeans, and other field crops and, in turn, led to price increases for other inputs in the food supply such as animal feed.

Though we have already seen some price increases for meats and animal-based products in the fourth quarter of 2012, most of the impacts on retail food prices are expected to occur in 2013.

We will likely see the largest impacts for beef, pork, poultry and dairy (especially fluid milk).

The full effects of the increase in corn prices for packaged and processed foods (cereal, corn flour, etc.) will likely take 10-12 months to move through to retail food prices.


The drought has the potential to increase retail prices for beef, pork, poultry, and dairy products throughout 2013.

Drought conditions led to herd culling in response to higher expected feed costs, and this liquidation led to temporarily reduced prices for beef and pork in the months of August and September.

However, the October CPI report indicated that the impact of the liquidation has ended and prices for beef and pork are now expected to increase through 2013.

Of the major categories expected to reflect the largest increases due to the drought–beef, pork, poultry, other meats, eggs, and dairy (especially fluid milk)–all have increased steadily since September 2012 except for pork.

This likely indicates that we are seeing price impacts of the drought, given that many other food price categories have been flat over that same time period and the all-items CPI has fallen.

Farms:

About 80 percent of agricultural land experienced drought in 2012, which made the 2012 drought more extensive than any since the 1950s.

USDA’s monthly World Agricultural Supply and Demand Estimates (WASDE) report reflects current estimates of weather impacts. ERS’s November 27 farm income forecast reflects information in the November WASDE report and will be updated in February.

Highlights:

The drought rapidly increased in severity from June to July and persisted into August.

As of September 12, over 2,000 U.S. counties had been designated as disaster areas by USDA in 2012, mainly due to drought.

Like I said in the previous email; 597 counties have ALREADY been declared a natural disaster area and it hasn’t even begun to warm up yet.

All of the above items only account for the drought and don’t even begin to factor in wild fires, severe storms or any one of the hundreds of disasters that would instantly cripple our food supply.

Make sure that you are prepared to keep your family fed when the stores are boarded up and empty.