The U.S. Department of Agriculture is predicting a steady increase in food prices for next year (one that will remained constant in the midst of a major, nationwide drought), with food prices expected to increase by 3 to 4 percent on average and with retail food costs potentially increasing by up to 14 percent in 2013.
The price increases are the result of an ongoing drought plaguing farmers from California to Ohio. With over 80 percent of the country experiencing at least abnormally dry conditions, and with 62 percent experiencing at least moderate drought, the recent weather conditions are on track to be one of the worst natural disasters in American history. Rough estimates place potential agricultural losses at over $8 billion and predict that 85 percent of the nation’s corn crop has been or will be affected.
The damage to the U.S. corn crop will have severe reverberations throughout the country. Given corn’s ubiquitous role in American food production (whether it be as a food additive, livestock feed, or in the role of high fructose corn syrup), damage to the corn crop will lead to increased costs for most other food products.
Perhaps most affected by the drought is the meat industry. With about 40 percent of American corn crops going to livestock feed (and with feed costs accounting for up to 70 percent of the total costs of livestock production), meat production is dependent on a stable corn supply. While meat prices are expected to drop in the near future (with many ranchers selling their herds in order to limit their expenses), the drop in long-term supply could have disastrous consequences for months, even years to come.
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Written by: Justin Ellison / Farm Plus Staff Writer