Food Costs Rising Fast In America

The corn crop is especially sensitive to high heat. The tassel at the top of a stalk pollinates the silk of each shoot. In such high heat, the corn silk dries and browns, leaving the pollen with no opportunity to reach the kernel.

The U.S. is one of the largest producers of corn, and farmers planted more corn this year than any other since 1937. However, approximately 51 percent of the American corn crop is in poor or very poor condition. In August, the USDA projected the corn yield at a record 376 million tons. Just one month later, the dismal drought conditions necessitated a revised figure, reducing the yield by 47 million tons.

Major corn consumers — livestock farmers, the ethanol industry, and of course, our beloved moonshine bootleggers and bourbon distillers — realize that rationing is not an option. These corn consumers saw the price of corn soar 61 percent in from June to August alone. CBS News reports Scott Shallady of the Trean Group, says, "This is not inflation. We just don't have any."

While more recent rains from Hurricane Isaac and other succeeding storms failed to resurrect hope for corn farmers, soybean growers remain (relatively) reassured. Because of their moderate maturation rate in comparison to corn, soybeans have a higher survival potential, with only 36 percent of the crop currently considered poor or extremely poor.

But despite its durability, the soybean crop unsurprisingly suffered. The average cash price for soybeans soared to $15.71 in July, a substantial leap from the average cash price of $11.30 for 2010 to 2011.

Hay farmers are also seeing a drastic reduction in yield. CBS News reports farmers in areas like Edwardsville, Ill., saw their hay production drop almost 50 percent, and are now only hoping to break even for the year. Moreover, such reduced returns caused a 50 percent price increase of hay at market.

These Midwestern crops — corn, soybeans, and hay — are all contributors to livestock diets. Even as cash crop prices rise, they remain affordable on the produce aisle, but the indirect influence is on the meat aisle.

Carnivores, take caution.

The world bacon shortage brings all to attention. Photo by Digital Vision.

The USDA reports beef and veal will rise 3.5 to 4.5 percent in 2012 and by as much as 5 percent in 2013. Dairy products will rise by 3 percent this year and 4.5 in 2013. Pork will rise between 2 and 3 percent, and up to 3.5 percent next year .

And we cannot possibly ignore the world bacon shortage, now known as the "Aporkalypse." Some are calling it hogwash, but others are hoarding. The truth is, bacon will not completely disappear, but do expect at least a 10 percent price hike. So the Junior Bacon Cheeseburger may no longer be on Wendy's dollar menu.

To defeat the dearth of corn, cattle farmers are now discovering suitable corn substitutes in the most unlikely forms: candy. The candy rejected by retailers makes up about 5 to 8 percent of one Kentucky farmer's cattle feed. Joseph Watson, owner of United Livestock Commodities in Mayfield, Ky., reports that the high-calorie candy does a fine job of fattening his cows. But is it organic? Probably not.

 

Rest assured economists (and you gluttonous carnivores) will soon be vying for more vegan converts, and who can blame them?

But don't expect said suggestion to put a dent in the drought damages. The Great Drought of 2012 is the dominant issue, but there are additional contributors to rising grocery receipts.

Food prices have been making a steady climb since the era of cheap oil ended. According to economists, gas prices appear to be an initiator of inflation. The Bureau of Labor Statistics reports gas prices surged 0.6 percent in August of this year, the sharpest spike since June 2009. These prices undoubtedly cause food prices to rise.

So in efforts to ease prices at the pump, more recently biofuels have become a planet-pleasing option. However, an increase in biofuel production (or ethanol, specifically) means an increase in corn demand. In 2008, 25 percent of the U.S. corn production went to ethanol, but in 2012, 40 percent of the U.S. corn production goes to ethanol. Biofuel users now compete with other corn consumers (livestock farmers, bootleggers, etc.), sending prices soaring. The unending debate still stands: Use corn for food, or use corn for fuel? The government will have to face this fate as prices continue to rise.

But perhaps the largest problem is production versus consumption. It should be no surprise to most that our world consumes more than it produces. The food stockpile is our only savior. But according to the U.N.'s Food and Agriculture Organization, the stock-to-use ratio for 2012 and 2013 is unnerving.

Evan Fraser, an associate professor of geography at the University of Guelph in Canada writes, "Only when we have a bigger buffer between urban consumers and the dangerous swings of international commodity markets will we be able to prevent a repeat of the food related political unrest."

This stockpile is like a savings account for rainy days, or in this case, a savings account for days without rain. But when we use our food buffer frivolously, we must fear for the future. The world population rises by 1 percent each year, and the Chinese population alone rises by 9 percent each year. With a stagnant stockpile, our world has reason to worry.

Social unrest is a direct effect of rising food prices and rising food shortages, and this trend is nothing new. In 2010, drought and wildfire destroyed 25 percent of the Russian wheat crop, causing the Kremlin to ban grain exports. As a direct result, food prices and food shortages soared in other countries, prompting protests in Tunisia, Algeria, and Egypt that eventually initiated the Arab Spring.

With a greater threat to global food security, history has the potential to repeat.

In America, food pantries are hit hard by higher food prices. While part of the cause is plunging government aid, the global drought is certainly a contributor. The FoodBank felt aid from the USDA drop 35 percent in 2012 alone, which it attempted to make up by aggressively developing an assemblage of regular donors. But as food prices rise, these donations drop.

This brings the issue of hunger to the home front. With high unemployment rates reaping havoc on our economy, food banks are fundamental for survival. And the end is not near. The USDA predicts food prices will rise by as much as 4 percent next year.

Produce prices have skyrocketed. Photo by Noel Hendrickson.
 

So are there solutions? The short-term solution should be to abate biofuel initiatives until the food buffer is rebuilt. Food must come first. With the pressures of rising food prices and rising populations, governments must adjust their perspectives. There are other options for ethanol, including certain grasses, hemp, and algae. Honestly, current green endeavors must be economically agreeable, not competitive with consumers.

An improvement in precision agriculture is also pressing. This includes optimizing returns while preserving resources, by using enhanced technology when applying seed, water, and fertilizer to fields. Essentially, farmers must be innovative with techniques to increase yields.

But the long-term solution is sustainability — a slow process with significant potential. In 2008 The World Bank Group initiated programs that assist client countries (like Rwanda and Haiti, among others) with agriculture and agriculture-related investing, financing, and advice. With an increased agricultural awareness, there is an increased potential of food production. This also cuts the cost of production and distribution, removing the problem of rising gas prices.

All eyes are on the sky. As farmers harvest the current crops, they fear the future. Willie Vogt, editorial director of Farm Progress reports, "We don't need to be too worried about agriculture this year," he says. "But if we have another drought next year, you better get a gun."