Drought To Cost Billions Of Dollars, Experts Warn
Midwest corn and soybean crops are drying up and failing to pollinate at levels not seen since the 1980s and U.S. food experts warn that the dry conditions are likely to cost billions in lost export revenue.
The United States currently supplies almost half of the world’s corn and soybeans which are used in various food products and to feed livestock. Unlike years past much of the dwindling U.S. supply is expected to be made up for by other corn and soybean producing countries.
U.S. agriculture currently accounts for almost 10% of the country’s $1.5 trillion export market and areas where the drought has hit hardest account for $53 billion in agricultural production.
Experts are not sure exactly how much the drought will affect sales but they estimate that the average farmer will receive 10% to 15% smaller yields compared to 2011 numbers.
According to CNN meteorologist Dave Hennen:
“You’d have to go back to the 1930s to find any drought as widespread as this one.”
Predicting total yield is still difficult because soybean crops could be saved if rain falls over the next two weeks. Experts do warn that as least some corn crops have already been lost due to poor rain conditions.
Most U.S. based corn and soybean experts go to China, Japan, Mexico and South Korea, countries that could be forced to change their food consumption if import totals fall in 2012.
China will likely avoid corn-based issues as the countries own crops are closing in on a new production record.
CNN notes that Cutting back on meat does not equal hunger as experts note high yields for rice and wheat in 2012. Experts also note that stockpiles of corn, soybeans and other crops can be found all over the world.
The drought has not only raised questions about food prices but also how crops should be used. The dilemma forced The Baltimore Sun to ask “Food or fuel?” The question comes at a time when experts are questioning whether ethanol mandates should be eased during a time of severe drought. The publication argues:
“Corn may be regarded as an important resource to ethanol producers, but it is vital as animal feed, and that needs to be the higher priority.”
With food prices estimated to increase by 4% this year the debate over drought based regulations and export rules is likely to heat up.