US drought worst in 25 years, food prices to rise

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The drought scouring the farming heartlands of the United States is the worst for 25 years, Agriculture Secretary Tom Vilsack said on Wednesday, after briefing President Barack Obama.

The United States is the world's biggest producer of corn and soybeans, and the warning came as prices surged and some farmers warned they may be forced to harvest crops early to sell the stalks off cheaply as animal feed.

"I get on my knees every day and I'm saying an extra prayer now. If I had a rain prayer or a rain dance I could do, I would do it," Vilsack told reporters revealing that 78 percent of US corn and soybean crops had been hit.

"This will result in significant increases in prices for corn. We've seen a 38 percent increase since June 1 in the price of a bushel of corn -- it's now $7.88. A bushel of beans has risen 24 percent," he said.

Vilsack said the intensity of the drought was not as great as that in 1988 -- which cost the US economy tens of billions of dollars -- but 61 percent of the country is affected, a much larger area than 25 years ago.

"Part of the problem we're facing is that weather conditions were so good at the beginning of the season that farmers got in the field early," he warned.

"As a result, this drought comes at a very difficult and painful time in terms of their ability to have their crops have good yields."

The secretary said the government had increased the number of territories designated as drought disaster zones, bringing the total to 1,297 counties in 29 states, where farmers will be eligible for assistance.

Vilsack said Obama had ordered that the interest rates on emergency loans for farmers be reduced and that emergency areas be opened up for livestock grazing and hay production as feed costs rise.

But he said consumer food prices should not rise immediately, since the costs from the farm door are a small proportion of a final supermarket bill, and in any case it will take a while for the crisis to reach store shelves.

"There is some degree of uncertainty about all of this," he said.

"Technology has allowed us to have more drought-resistant crops. The spotty nature of drought, the spotty nature of rains can sometimes result in better yields than anticipated. We're just going to have to see."

The World Bank has said it is watching how the drought impacts global food supplies, after sharp surges in food prices in 2008 and 2010 dealt harsh blows to poor, food-importing nations.

"While it's too early to be overly concerned, the Bank is monitoring the situation closely for potential impacts on our clients," said Marc Sadler, team leader for the World Bank's Agricultural Finance and Risk Management Unit.

"Global stocks in most of the tradable grains are lower now than they have been historically... we don't have as much in the larder as we used to."

Since June, temperatures have topped 100 degrees Fahrenheit (38 Celsius) for days in a row in many parts of the central United States, with the central plains running three to four degrees Fahrenheit above normal this month.

Mark Svoboda of the National Drought Mitigation Center in Lincoln, Nebraska said the drought was as tough as the worst in the 1930s and 1950s.

The timing has been particularly devastating, coming just at the peak of the growing season with the epicenter the central US farm belt east of the Rocky Mountains all the way to the Atlantic coast.

Farmers are now looking at cutting their losses by chopping down fields of half-mature, earless corn to feed the stalks to cattle.

"The jury is still a little bit out on it. We are in that process right now, making that decision," said Steve Foglesong, who raises cattle and corn in Illinois. "From the road the corn looks green, but there are no ears on it."

Foglesong said the next two weeks will be crucial, but weather forecasters were not encouraging.

"The worst of the drought is right in the middle of the nation, the corn belt. It's just been bone dry," said AccuWeather meteorologist Carl Erickson.

"Unfortunately across the central plains, the Mississippi valley, it looks like the overall pattern will remain in place for the rest of the month and into August," he said.

"Once you get into a pattern like this, it almost feeds on itself."