Drought To Make Food Prices Grow, Says USDA
The U.S. Department of Agriculture predicts that food prices will start to rise due to the recent drought.
A government forecast released on Wednesday said that food prices will rise faster than other goods this year as the United States experiences its largest drought in a half century.
According to Reuters, food prices were already growing in 2011. The cost of food rose 3.7 percent last year and consumers can expect to pay another 3.5% this year.
But Richard Volpe, a USDA economist, said that the real impact will be seen in 2013.
“The drought is really going to hit food prices next year. It’s already affecting corn and soybean prices, but then it has to work its way all the way through the system into feed prices and then animal prices, then wholesale prices and then finally, retail prices.”
Bruce A. Babcock, an agriculture economist at Iowa State University, added:
“(Livestock is a) very corn-intensive operations. So customers will see an increase in the prices they pay for beef and dairy as the price of feed rises because of a drop in production.”
The NY Times reports that 88% of the corn crop has been affected by the drought. The Agriculture Department was expecting to have a record-breaking corn harvest this year, but recently, the government slashed expectations and is now expecting 146 bushels an acre, which is the lowest haul since 2004.
The U.S. Department of Agriculture said that the drought will cause food prices to rise between 2.5 and 3.5 percent this year, and then another 3-4 percent in 2013.