Food prices are expected to increase due to the worst drought in more than 50 years pushing more than 1,000 counties in 26 states into natural-disaster status. The USDA announced the news last week, stating that about 55% of the US has been designated as experiencing moderate to severe drought conditions, the worst since December of 1956. The worst conditions might not have arrived yet, either. If the weather doesn’t turn and deliver some desperately needed rain, the majority of food crops could be impacted. Right now corn and soybeans are feeling the biggest hit, as the worst of the drought conditions are centered around the Corn Belt.
Let’s look at how this plays out for you and me as everyday citizens.
Corn has a huge economic ripple effect in both the food and energy markets, as #2 field corn is the commodity of choice when the word “Corn” is mentioned. Most likely genetically modified to be Roundup Ready, #2 field corn is not used much as corn, but disassembled into components used in the processed food industry. If you haven’t looked at what food ingredients are derived from corn, you are in for a surprise! Google “Ingredients derived from corn” and start reading. There are a few hundred commonly used food ingredients the corn supplies us via the extraction process! Pretty much any food that has a wrapper or is processed has some form of corn in it, unless it is Certified Organic. Corn is also a major ingredient in commercial beef feed, so expect to see a resultant increase in the price of store-bought beef.
There could be a loss of almost 40 – 50% of this year’s corn harvest.
Obviously if this year’s corn crop is wiped out in a significant number of areas – many farmers in the Corn Belt are calling 2012 a total loss – the commodity or base price for corn will rise. It has already doubled in the past 2 months and is expected to double again or even more. Any packaged or processed food could see a noticeable increase in price in the coming months.
Now would be a perfect time to take a hard look at what packaged and processed foods you routinely buy and look for alternatives. Look for fresh, locally grown or minimally processed replacements. Find a local baker, butcher and get to know them or know them better. Your local farmer’s market is a great resource for locally made replacements to processed and packaged foods, often tasting much better and being healthier in the bargain. You might be surprised to find that they just might cost the same or even less! This way, you are less dependent on price fluctuations from a major food supply shock while supporting your local economy and keeping your money closer to home.