Drought to Cause Dairy, Meat, Other Food Prices to Rise
By Alex Sosnowski, Expert Senior Meteorologist
Jul 28, 2012
Be on the lookout for higher food prices in general in 2013. However, the greatest impact is likely to be on meat and dairy prices as livestock feed shortfalls caused by the Drought of 2012 catch up with producers and consumers.
While some improvement in terms of drought have occurred over the Upper Midwest and Eastern states in the past week, drought conditions continue to amplify over much of the middle of the nation, according to the National Oceanic and Atmospheric Administration’s United States Drought Monitor.
Processed foods are not as heavily impacted by the drought.
The United States Department of Agriculture (USDA) states that this year’s ongoing drought will push up food prices in general 2013 by 3 to 4 percent, outpacing typical yearly inflation.
AccuWeather.com meteorologists are projecting that additional episodes of rain and lower temperatures are in store from the Upper Midwest into the Ohio Valley moving forward through August, but frequent extreme heat and very limited rain will continue over a large part of the central and southern Plains through the middle of the month.
However, the percentage price increase on meat and dairy products could be greater.
According to Dr. James W. Dunn, Professor of Agricultural Economics at the Pennsylvania State University, “During the past two years, we have used more corn than we have produced. We don’t have as much of a buffer going into this year’s harvest, which will be smaller than originally expected.”
The greatest and most immediate impact will be on livestock feed, followed by trickle down impact on meat and dairy products.
“Thirty-five percent of the United States’ corn crop is used as animal feed. Ninety-five percent of animal feed is made up of corn. The rest is made up of sorghum, hay, soybeans and other additives to achieve the desired nutritional value to the animals,” Dunn stated.
While corn is largely irreplaceable in terms of feed, sorghum, hay and soybeans (protein source) are also being negatively impacted by the drought.
The United States is the number one exporter of corn in the world.
Lower exports will impact livestock producers worldwide.
In order to battle higher prices for animal feed beef, pork and poultry producers will initially butcher or sell some of their livestock, causing prices to “initially” fall or hold steady.
Some meat and dairy producers are already straining from high feed prices in recent years may go under.
The initial surge of meat on the market will eventually be depleted. Once this happens, meat prices are likely to climb.
“Significant food shortages are not likely. However, expensive food creates problems for the very poor,” Dunn said.
In some parts of the world, such as Mexico, corn is a major part of the diet and impacts there may be much greater than others.
This summer, much higher-than-average temperatures and drought are also negatively affecting milk production.
During extreme heat, cows are stressed and provide less milk. In addition, poor grass quality also restricts the amount of milk dairy cows produce.
“We have already begun to see milk prices rise this summer,” Dunn said.
Additional price increases in milk and other dairy products are possible this fall and winter. Even as temperatures fall during the change of seasons, the impact of high feed prices on producers will continue.
“From an agricultural standpoint, we could start off 2013 on the wrong foot,” Dunn stated.
In addition to lower reserves of animal feed, the impact of an El Niño pattern this fall and winter could result in the same conditions that contributed to the dry soil conditions this spring and summer.
Warmer sea surface temperatures in tropical Pacific waters, which define an El Niño, often bring above-normal temperatures and below-normal snowfall to a large part of the Plains and Midwest.
Spring snow melt is a major contributor to soil moisture and holding back temperatures into the first part of the summer.