Dry days
As if we haven’t been writing enough about the Midwestern drought online, this week’s dead tree issue TIME also features coverage of the big dry. It’s for subscribers only, but here’s a peek:
While corn farmers smart enough to buy subsidized insurance will weather the weather, everyone else in the food chain will be worse off. First in line are livestock farmers, who will have to buy high-priced corn to feed their animals because pastures have been charred. Hog farmers, who depend on cheap corn, are hurting badly. Some ranchers are selling their cattle early out of desperation; the national cattle inventory is at its lowest level since the USDA began keeping track in 1973. The drought will actually lead to lower beef prices in the short term as a glut of cattle reach markets, but prices will rise as the industry struggles to rebuild itself after two crippling droughts in a row.
The cost of everything from hamburgers to cereals to Gatorade could go higher, since corn is the base of the U.S. food pyramid. For every 50% increase in corn prices–and corn has already jumped by more than half since the spring–retail food prices usually rise by 0.5% to 1%. It will take several months for the full effects to be felt in the processed-and-packaged-food industry, but drought will eventually deliver an unwelcome jolt to the struggling economy as it kicks inflation up a notch.
The drought’s biggest victims may be people who work in the restaurant industry, where more-expensive food will raise operating costs and might discourage potential customers from stopping in if menu prices rise as a result. There’s no subsidized insurance program for servers laid off because of the weather.
This won’t be the last mention of the drought, which seems unlikely to lift before the fall. And the damage is only getting worse—especially for those who like meat, as Larry Pope, the CEO of the major pork producer Smithfield Foods, told the Financial Times:
Beef is simply going to be too expensive to eat. Pork is not going to be too far behind. Chicken is catching up fast. Are we really going to take protein away from Americans?
I’d bet not, but get ready to pay more for your hamburger, fried chicken and hot dog. Read the rest of my piece here.