Worst US drought since 1950s threatens to drive up global food prices

By Naomi Spencer

18 July 2012

A large swath of the US Midwest and mid-South has been devastated by extreme heat and the worst drought since at least 1956. Last week, the US Department of Agriculture (USDA) declared more than 1,000 counties disaster areas—more than half of the land surface of the country—making the drought officially the largest disaster on record in the country. More than two-thirds of the country is experiencing drought.

The US is the world’s largest producer of corn, soybeans, and wheat, accounting for one in every three tons of the grains traded globally. In its weekly crop estimates this season, the USDA has repeatedly downgraded its forecasts for yields on corn and soybeans. The two crops are staple foods, and prime components of animal feed, cooking oils, and many other products.

On Monday, the government found only 34 percent of soybean acreage was in “good” or “excellent” condition, down six percentage points from the week before and 31 percentage points lower than the 10-year average for this time of year. Good/excellent ratings for corn fell to 31 percent, less than half the 10-year average rate. In the major corn-producing states of Indiana and Illinois, two-thirds of the crops were rated “poor” or “very poor.” In many of the 18 states surveyed, only 1 percent of crops were found to be “excellent.”

Overall, the government has cut its projected corn harvest to 13 billion bushels, the lowest yield since 2003.

The long-term economic, social, and environmental consequences of the extreme weather may be even more catastrophic than the immediate disaster. Meteorologists have noted that the 2012 drought is unusual in comparison to previous years in that it is impacting virtually all US growing areas at once. The widespread nature of the disaster, like other recent severe weather events, points to the impact of global warming.

“There’s not an exact definition of what the USDA means by ‘very poor’ except that it can’t be any worse,” explained Chris Hurt, an agricultural economist at Purdue University in Indiana, who spoke to the World Socialist Web Site by phone Tuesday. “For crops in that rating, it’s probably approaching no yield. The conditions continue to be extreme and the temperatures are in triple digits. We’ve only gotten spotty rain, and the forecast remains pretty much the same for the next two weeks.”

“The drought is really the worst we’ve experienced in the Midwest since 1988,” Hurt said. The drought of 1988 marked a turning point for the family farm in America, when small farmers went out of business en masse after a decade-long crisis.

“If this weather continues, it will surpass that year,” Hurt added. “We will have to go back to 1934 and 1936 for comparison. The Dust Bowl is associated with that period, and those were its worst years.”

Hurt noted that climatologists have projected that the primary corn belt would move north and westward due to warming. “I think we are seeing that. There are also many implications on animal and plant species,” he said. “Planting dates are two to three weeks earlier than they were 20 to 30 years ago.”

In addition to downgrading grain estimates, the USDA rated half of the nation’s grazing land in poor or very poor condition. Indeed, US grasslands have been so dry that since June some two million acres have burnt in wildfires.

Increasing numbers of cattle deaths have been reported in long-blighted Texas, some attributed to poisonous weeds because of the depleted pasture grass and fodder. The distress in some parts of the agricultural southwest bears a growing similarity to famine-stricken regions of Africa, and suggests a creeping desertification of arable land in the US due to climate change and poor agricultural practices.

Low river and water table levels have forced larger farms to halt irrigation, placing in question the harvest quality of currently healthy acreage. The state of Nebraska ordered 1,100 farms to halt irrigation this week because of plummeting river levels. Two hundred Kansas farms were ordered to halt irrigation last week. The southern half of the Mississippi River is so low that cargo barges have been running aground.

Some counties in the federal disaster area have recorded rainfalls 10 inches below annual averages. In a statement posted on the USDA web site, meteorologist Brad Rippey said the dry spell and temperatures above 100 degrees Fahrenheit will continue for most of the corn belt through the week, and projected “hotter- and drier-than-normal weather pattern to persist nearly nationwide.”

“I’m about an hour south of Omaha in Nebraska, and this week will end the corn crop for 2012,” Agriculture.com Marketing Talk contributor and farmer “Highyields” said. “South of me about 10 days ago, they got a shot of rain but it was a small area. We haven’t had any rain since the first half of June… Soybeans are hanging out but you can still see a mouse running down the row.”

“This is what global warming looks like at the regional or personal level,” University of Arizona geosciences and atmospheric sciences professor Jonathan Overpeck told the Associated Press July 5. “This extra heat increases the odds of worse heat waves, droughts, storms and wildfire. This is certainly what I and many other climate scientists have been warning about.” Since the beginning of the year, the National Oceanic and Atmospheric Administration has logged more than 40,000 high temperature records.

A parallel disaster is gripping the grain belt of southern Russia, the world’s third largest wheat exporter. At a press conference July 16, Agriculture Minister Nikolai Fedorov forecast a 22 percent year-over-year decline in the wheat harvest. A mild winter, followed by a spring drought, then torrential rains, have battered the entire region. The Ukraine has not publicly released an estimate on its wheat crop, but the International Grains Council has said that the country’s harvest could be halved from its initial projections.

US officials are seeking to downplay the risk of food inflation. USDA Secretary Tom Vilsack, in an appearance on CNN’s “State of the Union” Sunday, said that while commodity prices would rise, “it will have a marginal impact on food prices… The impact of a drought probably will not likely be seen in the grocery aisles until 2013.”

Seizing on the disaster, speculators worldwide have flocked to grain futures. Following Russia’s downward revision Monday, wheat futures surged by 3.1 percent to $8.74 a bushel, up 34 percent for the year. The same day, prices for corn due for December delivery climbed five percent to $7.89 a bushel on the Chicago Board of Trade. This is near the record of $7.9925 set during the 2008 food crisis. Soybeans for November delivery are currently trading as high as $16.07 a bushel, also the highest since the summer of 2008.

The price spikes that year, caused by the confluence of extreme weather and the influx into commodities markets of hedge funds and other speculators escaping the financial meltdown, pushed at least 100 million people into dire poverty. Within a year, a record one billion people—one in six of the earth’s inhabitants—suffered from hunger. The crisis triggered riots in more than 30 countries and contributed to the upheavals in the Middle East that culminated in the Arab Spring of last year.