A hot and dry spell in the farm belt of America means higher food prices around the world
By Richard C. Longworth
Finally, the rains have come, flung up the Mississippi River valley by the tail of Hurricane Isaac, cooling temperatures and greening the crops—or what’s left of them. It’s been a cruel summer, the worst in 50 years: day after day of unrelenting sun, temperatures above 100 degrees Fahrenheit (that’s about 38 degrees Celsius), hot winds, and teasing clouds that promised rain but didn’t deliver. It’s over now, we hope. But it’s too late.
We usually don’t have droughts around here. Down in Texas and Oklahoma, maybe. But not here, not in the nation’s farm belt, the fecund upper Midwest that produces more corn and soybeans than anywhere on Earth. We feed the world or we feed the animals that feed the world. When Iowans sing their state song, they stand up for the last line: “That’s where the tall corn grows!”
Not this year. The interstate highways knife between acres of short, singed corn, unpollinated and hence unproductive, with curled brown husks harbouring stunted ears; the drought was bad enough but it was the heat that did the damage. Over in the bean fields, it was the drought more than the heat. When we say beans, we mean soybeans, those rich protein factories that, in a normal year, feed livestock and poultry around the world. Beans have to flower at a certain time to be productive: this year the flowers, parched, crumbled into a sterile dust.
All this was preceded by a mild winter with little snow, and warm nights ending in sparse morning dew. Throw in a balmy March that lured many farmers to plant prematurely, only to get nipped by an April frost. It rained for a few days at the end of April, and then stopped.
Farmers, naturally, are singing the blues, but they’re not the ones who will suffer. You won’t find many Midwestern farmers standing forlornly outside Walmart, rattling a Styrofoam cup. But around the world, in the countries that import the Midwest’s produce to feed their animals and their people, it’s going to hurt. When Iowa burns, China blisters.
The statistics are grim. Combined Midwest temperatures and rain in June and July were the hottest and driest in 75 years. About 52 per cent of the Midwest’s corn fields were in poor or very poor condition in early September, experts said. Corn yields will be 122.8 bushels per acre, down from 152.8 bushels two years ago. Total corn output will be 10.7 million bushels, down about 13 per cent from two years ago. Soybean yields are 35.3 bushels per acre, compared to 43.5 bushels in 2010. Total output is down about 20 per cent.
For foreign customers, it gets worse. About 40 per cent of the Midwestern corn crop is committed to production of ethanol, a politically popular but economically senseless use of one of the world’s great foods. Exports would be down anyway, for both corn and beans. The ethanol mandate means corn exports will be down even more.
It doesn’t end there. Basic economics says that low supplies mean higher prices, and it’s happening. Corn prices, which was $6.60 per bushel last year, are up to $7.80 at this writing, near the record of $8.20, and climbing. Soybeans were $14.20 per bushel a year ago; now they’re $17 per bushel and bound to rise.
So sympathy for farmers is misplaced. If their corn crop is down by 13 per cent, their per-bushel price is up nearly 20 per cent. Crop insurance helps. So do government subsidies, especially to megafarmers (2,000 acres or more) who dominate major crop production in the Midwest.
Medium-sized farmers, those with about 250 acres or less, will be hurt, but they are already being squeezed out of business by the demands of global agriculture. Interestingly, small niche farms that sell to farmers’ markets or restaurants seem to be doing fine. Many irrigate and, apart from some badly damaged apple and peach crops, their output is holding up.
The higher prices could mean higher food prices in the US, but probably not by much. Basic food itself contributes little to grocery prices in this country; by the time the processor, packager, advertiser, shipper, and grocer take their share, a pittance goes to the farmer.
The real impact will be felt abroad, in major importing nations such as Southeast Asia, Mexico, Brazil, the former Soviet Union and, especially China, where basic food inputs account for a bigger share of shelf prices. This will be tough on everybody but especially on the billions in the world’s new working class who are just getting used to eating meat or poultry on a regular basis.
“The United States is the world’s largest exporter of corn, soybeans, and wheat, and likely price spikes will ripple through markets globally, with devastating consequences for those already struggling to get enough food to eat,” an Oxfam official, Eric Munoz, told the New York Times.
It’s not all the fault of American weather, though. Another drought, this time in Russia and Kazakhstan, has cut global production of wheat, the most staple crop of all.
There’s more to this than global warming, of course; one summer’s drought doesn’t prove anything. But despite what the science deniers say, it’s obvious that global warming is happening. Farmers know this. US Department of Agriculture maps show growing zones inching north year by year, with crops growing now in places that were too cold for them a few years ago.
More droughts are likely. So is hotter and drier weather in general. Big corn and soybean farmers, who usually rely on normal rainfall, will have to start irrigating, putting pressure on rivers and aquifers that, for now, are adequate but are not inexhaustible.
The Midwest will keep growing crops. Bio firms will produce seeds that are drought- and heat-resistant. New equipment and chemicals will lead to higher yields. If famine occurs, it won’t be for lack of global food supplies.
But it’s a race against nature. In a world that still depends on Midwestern farmers for its food, that food is going to be a little less plentiful and probably a lot more expensive.