The worst drought in the US for 50 years could push up food prices into 2013, government officials have said.
Hot weather has hit corn and soybean yields in parts of the US and led the US Department of Agriculture to warn retail prices for some foods could increase in the coming months and into next year.
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“We will likely see impacts within two months for beef, pork, poultry and dairy, especially fluid milk,” the USDA said today. “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 first and foremost – later this year and into 2013.”
Half-way through the 2012 crop year almost 40% of agricultural land is experiencing severe drought, the USDA said. Forty per cent of corn and soybean production is in these areas and, in recent weeks, the prices of these commodities have soared. The USDA noted 44% of the country’s cattle production is in areas of severe drought.
Officials at the USDA said the drought could, in the short term, lead to farms culling herds, which would push up the supply of meat and lead to lower prices. That trend, however, would reverse as supplies shrink.
“Drought-induced prospects for significantly higher feed prices and heat stress on crops, pastures, livestock, and poultry are likely to restrain growth of US cattle and hog breeding herd numbers as well as poultry and milk production,” it said.
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By GlobalDataPoultry production estimates starting in fourth-quarter 2012 and going through 2013 have been reduced. Meanwhile, recent high temperatures will likely restrain milk production over the course of the summer, the USDA added.
