July 17th, 2012
01:02 PM ET

How the drought could hit your wallet

With more than half the country in some state of drought, farmers are feeling the impact on their livelihood and consumers could expect to feel a hit in their wallet when they go to the supermarket soon, experts say.

The U.S. is facing the largest drought since the 1950s, the National Climatic Data Center reported Monday, saying that about 55% of the country was in at least moderate short-term drought in June for the first time since December 1956, when 58% of the country was in a moderate to extreme drought.

The hot, dry weather in June, which ranked as the third-driest month nationally in at least 118 years, according to the center, made the problem worse.

That has left farmers on the edge of their seat worrying about how much damage their harvests will sustain and how much of their livelihood they may stand to lose this year.

Throughout the Midwest, farmers are seeing signs of damaged crops. In the 18 states that produce most of our corn, only 31% of the crops were rated good or excellent this week, that’s down from 40% last week, according to the U.S. Department of Agriculture. This same time last year, 66% of corn crops were rated good or excellent. Soybean crops, which can be used in creating diesel fuel, are seeing similar troubles; 34% of the U.S. crop was rated good or excellent, down from 40% last week. This time last year, 64% were in that condition.

Derek Mullin, a farmer from Mount Pleasant, Iowa, told CNN’s Chris Welch that in a good year he can get 200 bushels of corn per acre, but this year he expects that number reduced by 25%.

That lost money will hurt him and his family and he said there is nothing he can do about it.

Is the drought hitting your area? Let us know how you're coping on CNN iReport.

"This is our personal business. It's right at our back door. As soon as we walk out of our house we see our investment and when it goes downhill it does take a toll on you,” he told CNN.  “One of the hardest parts about this is you can do everything just right - planting dates, work hard at putting in a good crop, have a good stand established - and when mother nature works against you, then it all seems like it was for nothing."

Mullin's expected low yield of corn, and similar situations for other farmers, is specifically why this drought is getting a lot of attention, Richard Volpe, an economist with the USDA's Economic Research Service told CNN.

"Corn is a major input for retail food," he said. "Corn is used to make feed for all the animals in our food supply chain. As this drought reduces the harvest of corn, that would drive up the price of feed for animals and then in turn meat products."

The current drought has forced disaster declarations in 26 states and a spate of emergency conservation orders. And experts say it could also lead to serious economic repercussions the same way the National Oceanic and Atmospheric Administration says it did during the 1956 drought,  which dropped crop yields about 50% in some areas.

Agriculture Secretary Tom Vilsack told CNN's Candy Crowley his heart goes out to the producers, ranchers and farmers who are dealing with something they have no control over.

"We’re really not going to know the full extent of all of this until the cotton’s picked, the beans and kernels are counted. But clearly our yields are going to be down.”

And if the crops aren’t there, you can expect to see some differences in the supermarket, Volpe said.

"You would see it first and heaviest for beef, pork, poultry and dairy," Volpe said, explaining that if you can't get the corn to feed animals, the meat market would be hit first and could have the longest-term impact.

Field corn, which is the dominant type of corn affected, is used to create feed for animals, but also corn meal, corn syrup and ethanol. Those products could also take a hit.

But Volpe wants to be clear that there isn't a one-to-one ration when it comes to the price of corn versus what you'll be paying for your meat.

"We understand historically, if the price of field corn goes up by 50%, which is a huge jump, we expect retail food in general to go up by about 1%," he said.

So you likely won't see the doubling of the price of a rib-eye steak, but over time, prices could accumulate.

And when might you expect to see this happen?

"For sure, the full effect of this drought will not be until 2013. It'll be 2013 when we see it and its in the whole supermarket," he said. "But if the price of corn shoots up, we’d see this effect within about two to three months. That doesn’t mean we’ll see a complete jump into food prices. It's just that we should start to see the effects."

Only July 25 the USDA will provide their monthly estimates of food prices, which would factor in drought conditions, Volpe said.

Volpe noted that you could also actually see some short-term lower prices on meat, noting that historically there is a small dip in the price of beef and pork before they start rising.

Ranchers "have these animals on hand, and animals that are market ready," he said. "What they do is figure out, OK well the cost of maintaining this herd in the next few months is going to shoot up because of the rising price of feed, if it make sense to do it now, get the guaranteed money."

Volpe notes that while there are many comparisons being made to the drought in the 1980s and the economic impact it had, it is important to keep in mind how much has changed since then and why that may mean you can't draw an exact correlation to how hard the economy could be hit by this drought. That's something that the agriculture secretary noted too, saying that technology had changed and conditions were different.

"The 1980s were a much different time, average food prices in the '80s were much higher than in recent years," Volpe said. "Fuel prices were much more volatile and the global economy and market for commodities were not as efficient."

While Mullin waits to see just how bad things will get he says that his saving grace, like other farmers, could be having federal crop insurance. But, he added, that only goes so far.

That’s one reason why Mullin, and others in his state, are anxiously waiting to see how state and federal authorities may be able to help.

Mullin said he is hopeful he may hear some answers from a drought conference being led by Iowa’s governor on Tuesday.

Vilsack said the biggest problem is that while the USDA has emergency loans and some other options to help, it lacks the full resources the government needs.

"The real challenge for us is the USDA does not have the tools it once had to help people through this difficult time," Vilsack told CNN.

Vilsack used the drought as an example to plead with the Senate to pass a farm bill that has already cleared the U.S. House of Representative, adding it was not enough to extend a previous bill that expired.  He noted that the 2008 farm bill which expired had provided $4 billion in disaster assistance to 400,000 farmers and ranchers while it existed.

“Just extending the 2008 bill will not revive disaster programs for livestock producers” he said.

- CNN's Chris Welch contributed to this report.

More on the intense heat, drought:

Extreme weather: Get ready to see more of it

Past 12 months warmest ever recorded in U.S.

KCTV: Intense heat take its toll on Shatto's milk supply

WLUK: Christmas tree farmers battle hot, dry conditions

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Filed under: Agriculture • Heat • Weather
soundoff (452 Responses)
  1. Jimbo

    It's divine wrath for the hate that religions spew out in the name of God. As though God wants his children to be cruel, compassionless, and judgmental.

    July 17, 2012 at 2:32 pm | Report abuse |
    • Kay

      Nothing judgemental about your statement! No sirree!

      July 18, 2012 at 8:41 am | Report abuse |
  2. Como Obama Yo Mama

    This is all untrue. There is no "major drought". This is all made up to jack up prices on everything.

    July 17, 2012 at 2:33 pm | Report abuse |
    • Helenbelle

      You are smoking crack if you think there is no drought going on. My property sits on the edge of a cornfield. The corn is dying.

      July 17, 2012 at 3:01 pm | Report abuse |
    • Joe P.

      Guess you haven't traveled through the mid West lately.

      July 18, 2012 at 4:05 pm | Report abuse |
  3. Patriot

    The 19th century Luddites, who hated science and technology, are alive today as climate change deniers. The cost of not having done anything to curb our destruction of the planet will far, far, outweigh the profits made by the gang of 'drill baby drill' plutocrats.

    July 17, 2012 at 2:33 pm | Report abuse |
  4. freedomringingnow

    I am sure the price will rise but never go back down as its the USA way of getting pricing up. The last fuel upticks got groceries and other products but when prices fell down the other stayed high.

    July 17, 2012 at 2:34 pm | Report abuse |
    • Mike

      Yes some prices might go up, but then again what they are not mentioning is that meat prices might drop as more are sent to market due to the inability to feed and water the livestock! Pork and Beef prices will probably drop fast soon!

      July 17, 2012 at 2:41 pm | Report abuse |
    • Norm

      They just recently got around the whole price increase on groceries by giving you smaller portions for the same price.
      Have you noticed the size of a can of soup lately?

      July 17, 2012 at 2:47 pm | Report abuse |
  5. Jim

    I know Obama lets send MORE of my tax dollars to these terrorist loving countries while we need it HERE for fires and drought etc. Oh I forgot you can just run our deficit even HIGHER and RUN OFF all the rich people cause you want to rip them off too and ultimately raise taxes on EVERYONE.

    July 17, 2012 at 2:35 pm | Report abuse |
    • Norm

      Handy how you lunatics can bring your partisan mental illness into every article no matter what it's about.
      I wonder if they make a pill for stupid yet.

      July 17, 2012 at 2:45 pm | Report abuse |
    • cw

      And you would have Obama do what, exactly, to combat this drought?

      July 17, 2012 at 2:45 pm | Report abuse |
    • sam

      Idiot alert...

      July 17, 2012 at 2:47 pm | Report abuse |
    • Ian

      I have explosive diarrhea.

      July 17, 2012 at 2:55 pm | Report abuse |
    • mizh

      Uh honey, your caps key keeps getting stuck.

      July 17, 2012 at 2:57 pm | Report abuse |
  6. Pappa Smurf

    I love how every time some sort or natural disaster happens the liberals want to blame it on "global warming" and the earth is going to he11 if we don't change our ways!!!

    You guys are no different than the pathetic bible thumpers that scream "it's a sign of the end" every time an earthquake, or volcano goes off. Heck the bible even predicted famines, death from plagues the like 2000+ years ago. Are you guys saying the your "science" is now catching up with what the bible has been predicting for thousands of years?

    This planet has been changing and evolving since the begining and anyone who thinks they can change nature is a fool!!!!

    July 17, 2012 at 2:37 pm | Report abuse |
    • Norm

      I guess it's better than the conservatives blaming everything on Obama.
      Once he's out of office in 2016, you guys are going to be in big trouble having to take responsibility for your own lives for a change. But I might be jumping the gun.
      Another democrat will probably get the job in 2016.
      People still won't forget what Bush did to the country for eight years.

      July 17, 2012 at 2:44 pm | Report abuse |
    • SPLAT!~

      ..........anyone who thinks they can change nature is a fool!!!!

      175 years ago Iowa was covered in tall grass prairie and woodlands. Today it's 98% corn and soybeans.


      July 17, 2012 at 3:04 pm | Report abuse |
    • George Castanza

      I wish I could give you a thumbs up or a Like or something on that comment. Thank you. This earth has been in existence for billions of years. Things came and went... and we are a very little part of earth history. Minuscule. We are lucky to even be here... and we will struggle till the last dying breath it seems.

      July 17, 2012 at 3:24 pm | Report abuse |
  7. Norm

    It's divine wrath for the republican conservatives using God's name for personal wealth and profits.

    July 17, 2012 at 2:38 pm | Report abuse |
    • Ziko

      well said but democrats do it to

      July 17, 2012 at 5:49 pm | Report abuse |
  8. Jeff Goldblum

    Good thing we're already paying them not to grow anything. Otherwise this might be a problem.

    July 17, 2012 at 2:38 pm | Report abuse |
  9. greg

    Anyone who farms, and likes to eat, should be an environmentalist. Anyone who votes GOPer is dooming the planet. Dems are not doing enough, but that's mostly bcause of the GOPers...who seem eager to let the planet burn...a true sign of the insanity that has gripped its members.

    July 17, 2012 at 2:39 pm | Report abuse |
  10. Rogue351

    Then I suggest congress and state governments stop arguing about things that really don’t matter like abortion, gun control and contempt of court issues that will never be acted on and start doing their jobs like finding money, possibly from their own over inflated salary to pay for water conservation projects, reservoirs, etc. And while they are at it they can pass a few laws the makes Fracking illegal because of ground water contamination because if this is not just more media hype, then we are going to need all the water we can get until the climate mysteriously turns back around.

    July 17, 2012 at 2:39 pm | Report abuse |
  11. charlie avila

    See and read the bible. It says in the revelation book, that in the last days, man hands will burn the planet with the continuous oil burning!!...

    July 17, 2012 at 2:39 pm | Report abuse |
    • Norm

      Chapter and verse please..........

      July 17, 2012 at 2:41 pm | Report abuse |
    • Larry David

      "Man Hands"? I loved that episode .... one of the best I wrote for Seinfeld.

      July 17, 2012 at 3:11 pm | Report abuse |
  12. Norm

    Why can't we control the weather by now.
    Stop rain that floods one area.
    Create rain where there's a drought or forest fires?
    Can I get a government grant to live on while I research this?

    July 17, 2012 at 2:40 pm | Report abuse |
  13. Pete

    I,m certainly glad I planted a very large garden this year,because I,m sure it will be like winter prices.I will have plenty to provide and plenty to sell.Tomatoes are almost $3.00 a lb. now in supermarkets,but I can sell mine for half that and still make a profit.

    July 17, 2012 at 2:40 pm | Report abuse |
  14. AGeek

    Yeah. Great idea. Put corn in our gas tank, they said. I can't eat gas, fools.

    July 17, 2012 at 2:40 pm | Report abuse |
    • bobjective2

      I will say it again, Ethanol has little to no impact on food. Byproduct from producing ehtanol can still make all of the food products that corn in its natural form can make. And an added benefit it has more nutrients per pound for feed and is already ground, if anything it reduces the cost of food production and definatly reduces the cost of transporting the food to you.

      July 17, 2012 at 2:48 pm | Report abuse |
    • I just wanna know

      Bob considering just about all food is transported by either over the road trucks and rail which uses diesel fuel not gas a gas/ethyol blend. Not to mention that it's pretty much all harvested by diesel powered harvestors and tractors.

      How do you figure that it's cheaper. In fact it cost MORE to produce a gallon of Ethy than a gallon of gasoline.

      July 17, 2012 at 3:01 pm | Report abuse |
  15. Eat more fish

    I'd say eat more fish but all the lakes are drying up too! Looks its time for canned tuna...

    July 17, 2012 at 2:44 pm | Report abuse |
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