Corn, Drought, and Food
H
ave you seen an increase in food prices lately? If not, experts are predicting that consumers will see the economic fallout of the 2012 drought by the end of the year. The drought was so widespread that 80% of all farmlands from Ohio to California were affected, but the impact was most concentrated in the Midwest, particularly Illinois and Iowa. This is the worst drought in the US since 1956, although we have seen lesser droughts more recently. The US produces a number of feed grains both for use here and around the world, but corn is our number one grain crop, accounting for over 80 million acres of production. You would think that all of that corn is being used for food in some way, but because of the “green” movement over the past few years, we are now using over 40% of the corn we produce to make ethanol, a gasoline additive. Originally, the mandate was for 17% of the corn crop to be used for ethanol, but as crop production and gasoline demand increased, so did the ethanol demands. Consumers will be seeing higher gas pump prices for quite some time, until the new corn crops are harvested. The rest of the current corn crop is divided between animal feed (36%) and human food (24%). Over 75% of all grocery products do include corn in some form. Barbeque sauce, soda, cereals, even dog food and bourbon all depend upon corn. Experts predict that general grocery prices will rise probably 2.5% to 3.5% for the next year. The drought in the US is a particularly devastating one, for the worst of it was felt in late June and early July, just when the corn plants were beginning to produce. Rainfall just did not happen when it was needed. Because of this, the fields now are filled with dry, twisted stalks of corn with no or disfigured ears, useless for any application. Some farmers have begun to “chop” the stalks (cutting it up into livestock feed), but
Kathy Gaudry
there is no nutritional value in this. Corn has been used for decades to feed and “finish” livestock (steers and pigs) intended for market; it adds the marbling that makes meat so tender. Without that feed available, livestock producers are culling herds now, keeping only a limited number of breeding stock, and selling the rest. The immediate result of this for the American consumer is lower meat prices, but the intermediate and long term result will be much higher meat prices, probably 4-6% higher. Dairy and chicken production will not be as affected as the beef and pork industries, although corn is a major part of the poultry diet. Dairy herds are traditionally fed a high protein alfalfa diet, and hay has not been as affected as corn, although prices of hay are at record levels. Interestingly, 70% of an egg is derived from corn, and chicken feed is primarily corn, so there is some residual effect here. Retail prices of dairy and poultry products over the intermediate and long term are expected to rise by 1-3%. The drought may force corn growers to look to other methods for better production during difficult times. Organic practices have been proven to be effective during droughts and pest-infestations. Pete Rily of GM Freeze, says that “The sooner we switch to agro-ecological farming techniques, such as avoidance of monocultures, long rotations and the use of natural predators to control pests, the better.” Organic may be one of the long-term solutions to a problem like drought. Meat production, being devastated by early selling, will not revive in the next couple of years, until herds are rebuilt. As corn prices go up, however, there is a side benefit; next year, more corn will be planted and with that bounty (barring no weather issues), the price of corn and its various products should begin to fall and the American consumer won’t feel the brutal money pinch at the store. {B} www.blikki.com - 23