Drought Zone Increasing at “unprecedented rate”

HERE July 28, 2012

The drought in America’s breadbasket is intensifying at an unprecedented rate, experts warned, driving concern food prices could soar if crops in the world’s key producer are decimated.
The US Drought Monitor reported a nearly threefold increase in areas of extreme drought over the past week in the nine Midwestern states where three quarters of the country’s corn and soybean crops are produced. “That expansion of D3 or extreme conditions intensified quite rapidly and we went from 11.9 percent to 28.9 percent in just one week,” Brian Fuchs, a climatologist and Drought Monitor author, told AFP. “For myself, studying drought, that’s rapid. We’ve seen a lot of things developing with this drought that were unprecedented, especially the speed.” Almost two thirds of the continental United States are now suffering drought conditions, the largest area recorded since the Drought Monitor project started in 1999. “If you are following the grain prices here in the US, they are reflecting the anticipated shortages with a price increase,” Fuchs said.

“In turn, you’re going to see those price increases trickle into the other areas that use those grain crops: cattle feed, ethanol production and then food stuffs.” In some rural areas, municipal water suppliers are talking about mandatory restrictions because they have seen such a dramatic drop in the water table that they fear being unable to fulfill deliveries to customers, Fuchs said. “Things have really developed over the last two months and conditions have worsened just that quick and that is really unprecedented,” he added. “Definitely exports are going to suffer because there is going to be less available and the markets are already reflecting that.

“It’s anticipated that this drought is going to persist through the next couple of months at least and conditions are not overly favorable to see any widespread improvement.” President Barack Obama’s administration has opened up protected US land to help farmers and ranchers hit by the drought and encouraged crop insurance companies to forgo charging interest for a month. Officials have said the drought will drive up food prices since 78 percent of US corn and 11 percent of soybean crops have been hit and the United States is the world’s biggest producer of those crops. The current drought has been compared to a 1988 crisis that cut production by 20 percent and cost the economy tens of billions of dollars.

Andrew Sullivan:

Analysts are already worrying about the implications for China, where corn scarcity typically drives up pork prices. Since the Chinese consume 52 million tons of pork annually, rising pork prices could spur overall inflation. And Naked Capitalism notes, “High pork prices caused social unrest in the recent past.”

David Dayden at FireDogLake:

And when the 2013 forecasts come in hot as well, prices will continue to rise if that leads to lower yields. And so on. Combine that with the fact that the population is increasing at the rate where we actually need to double global food output over the next several decades to meet demand, and you have a total disaster in the making, where it will become cost-prohibitive for the planet to feed itself.

This is why we can expect the drought in the near-term and the long-term to cause global unrest, just like it did in 2007 and 2010, the last times we saw a rapid price spike. The article adds in the prospect of rampant speculation in commodities, which we’ve seen in past crises, exacerbating the problem.

In the near term, all the price instability and drought conditions are wreaking havoc with farmers, many of whom need emergency relief. But the House has held up a farm bill that passed through the Agriculture Committee. This is the latest plan on the Republican side:

Republicans are holding back the farm bill because they don’t want the headlines of major cuts to food stamps in an election year. It seems to me that the solution to that is to not cut food stamps, and pass a farm bill that is needed for the security of farmers suffering through the worst drought in a generation. Full article HERE