Drought's effect on crop prices has food advocates worried

Severe summer drought may lead to higher food prices in the fall

July 25, 2012

Scott Kanowsky

flickr/brandoncripps
The U.S. corn crop has been decimated by prolonged drought this summer--and that has many worried food prices will be on the rise by the end of the year.

Food prices are expected to rise due to the severe drought that's affecting much of the nation, according to a report released by the U.S. Department of Agriculture on Wednesday.

The department reported an increase of as much as 5 percent in the Consumer Price Indexes of everything from meat to bread. Beef and veal were projected to rise between 3.5 to 4.5 percent.

High heat and sparse rainfall have reduced corn yields across the country by nearly a third – an important figure considering the commodity is used in the production of a number of food products. Corn prices at the Chicago Board of Trade have steadily risen this summer, with the crop selling at nearly $8 a bushel at the end of Wednesday.

Independent market analysts have confirmed that prices could rise at local supermarkets by the end of the year, which has raised concerns that those currently on food stamps will have trouble supporting themselves.

“They need assistance. They don’t have another resource to turn to, they don’t have more dollars that they can bring in to just make up for the rise in food prices.  So it will make it especially difficult for them to feed their families,” said Doug Schenkelberg, vice president of advocacy and outreach at the Greater Chicago Food Depository. 

The Illinois Department of Human Services states almost 1.5 million people in the state currently accept funds from the Supplemental Nutritional Assistance Program (SNAP), commonly known as food stamps.

He said he expects more to join the program should the projected price increases come to fruition.

This concern arises as Congressional leaders continue debate over new legislation that would cut federal funding for food stamps. Known as the "farm bill," the measure has already passed through the U.S. Senate. But it has stalled in the House of Representatives, where Republicans are wary about the bill's high cost, among other issues.

Lawmakers are not expected to pass the legislation before Congress goes into recess in August. However, they must reach an agreement before the end of September, when the current version of the farm bill expires.

Schenkelberg said he worries a farm bill that decreases food stamp funding "makes a bad situation worse." 

Experts say that protecting or increasing funding for food stamps is an especially difficult prospect given election-year political realities.

"If prices for poultry and meat and corn went up really dramatically ... then there might be political pressure to increase the allotment of food stamps," said Ron Baiman, director of budget and policy analysis at the Center for Tax and Budget Accountability. But he said that is highly unlikely.