The largest
natural disaster in
American history just went from bad to worse.
Sweltering heat and persistent
drought across the country has ravaged crops to such extremes this summer that
tens of thousands of farmers and ranchers are on the verge of financial ruin.
The situation is so dire that it has prompted the US Department of
Agriculture to declare more than half of America a disaster area.
…more than half of all U.S. counties –
1,584 in 32 states – have been designated primary disaster areas this
growing season, the vast majority of them mired in a drought that’s
considered the worst in decades.
Counties in Arkansas, Georgia, Iowa, Illinois,
Indiana, Kansas, Mississippi, Nebraska, Oklahoma, South Dakota, Tennessee and
Wyoming were included in Wednesday’s announcement. The USDA uses the
weekly U.S. Drought Monitor to help decide which counties to deem disaster
areas, which makes farmers and ranchers eligible for federal aid, including
low-interest emergency loans.
Source: Seattle
Times
Without the ability to harvest their crops, many
farmers are finding it difficult to make good on loans they used to fund
their operations. Cattle ranchers, who can’t find hay due to the
drought and whose feed prices are skyrocketing, are also feeling the pinch.
An AgWeb
discussion in early
July involving small business and family farmers displayed their desperation,
with many commentors indicating this summer’s
drought is the worst they’ve ever experienced. Others reported their
crops were dying and pleaded for rain.
That rain never came, and according to industry
experts and officials at the USDA, conditions are now set to intensify and
worsen.
As of this week, nearly half of the
nation’s corn crop was rated poor to very poor, according to the
USDA’s National Agricultural Statistics Service. About 37 percent of
the U.S. soybeans were lumped into that category, while nearly three-quarters
of U.S. cattle acreage is in drought-affected areas, the survey showed.
The potential financial fallout in the
nation’s midsection appears to be intensifying. The latest weekly
Mid-America Business Conditions Index, released Wednesday, showed that the ongoing
drought and global economic turmoil is hurting business in nine Midwest
and Plains states, boosting worries about the prospect of another
recession, according to the report.
Creighton University economist Ernie Goss, who
oversees the index, said the drought will hurt farm income while the strengthening
dollar hinders exports, meaning two of the most important positive factors in
the region’s economy are being undermined.
Food supplies across the country – for animals
and humans – are literally drying up.
This will undoubtedly lead to significant
food price increases across the entire spectrum of the American diet – meat, grain,
dairy, vegetables and fruit.
Tom Chatham of Project Chesapeake writes:
Corn and soybean meal are staples in animal feed and
the rising prices and drought conditions are forcing farmers and ranchers to
sell off their herds for slaughter. This will cause a glut in the market over
the short term and you may see lower meat prices as a result but this will
only be temporary. By next year the prices of meat will rise as the
supply of livestock reaches multi decade lows. Supply and demand will push
prices higher as a result.
Larry Pope, chief executive of Smithfield Foods has
recently given a dire warning. “Beef is simply going to be too
expensive to eat. Pork is not going to be too far behind. Chicken is catching
up fast.” He also stated that government regulations are going to make
things even worse. Almost 40% of the U.S corn crop goes to make ethanol fuel.
Pope said, “Its
almost a government- mandated disaster here, which is distressing”.
He warned that meat prices will rise by
“significant double digits“.
For those with the ability to do so, we recommend
putting away foods that your family eats regularly, and planning for at least
a three to six month window of upward price pressure. Tess Pennington offers
some drought
preparedness tips:
The price increases will be dramatic. Expect to see
fewer grocery store sales, especially those great “loss leaders”
we all love to take advantage of.
Prepare for this by stocking up NOW before the major
price increases hit. For
instance, purchasing bulk dried corn, corn meal, and a diverse supply of bulk
meats before the prices rise. Pamper your garden and get every single ounce
of produce you can squeeze out of it. Buy in bulk to take advantage of lower
prices and preserve food for use this winter.
Make adjustments in your shopping and eating habits
now to weather the upcoming food crisis.
If you’ve got a freezer, load it up with as
much meat as you can afford to buy. Package dry goods for the long-term and
have a steady supply of beans, wheat (or flour), corn and rice on hand to dip
into if prices do happen to jump. While we all hope for a rainy year in 2013
to get struggling farmers back on their feet and our prices at the grocery
stores to affordable levels, taking measures today based on the credible
information available to us can help save us from paying 30% or more in food
costs over the course of the next several months.
While the idea of buying
commodities at lower prices today may save us money, worst case scenario planning is always in order. A
well stocked food pantry can help us supplement our
diets for quite some time if we experience a drought similar to the Dust Bowl
of the 1930′s, which was felt for three consecutive and particularly
devastating years before things began to return to normal.
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