U.S. Agriculture Secretary Tom Vilsack says he is praying for rain and warns current drought conditions across the United States “are the worst they have been since 1988,” a development he says will eventually raise food prices and threaten to force producers out of business.
Speaking at the White House following a briefing on the drought to President Barrack Obama on Thursday, Vilsack addressed reporters and said while crop insurance will aid farmers in staving off the economic losses brought on by the drought, cattle producers will be hit the hardest.
“Almost a third of U.S. counties have been declared secretarial disaster areas as a result of this historic drought, which is affecting about 61 percent of the landmass which is currently being categorized as impacted by this drought. Our hearts go out to the producers and farm families who are struggling with a problem they have no control over,” Vilsack said during a press briefing following his meeting with the president.
Vilsack says 78 percent of the corn crop is being grown in an area impacted by the drought and 77 percent of soybeans also are impacted, noting that about 38 percent of the corn crop is reported as poor to very poor and 30 percent of soybeans are rated poor to very poor.
“This will obviously have an impact on our yields. Right now yields are down about 20 bushels to the acre for corn and about three bushels down for beans. That may be adjusted upward or downward as weather conditions dictate. This will result in significant increases in prices. In corn we have seen a 38 percent increase in prices for corn since June 1. Corn is currently (July 19) at $7.88 a bushel and bean prices have risen about 24 percent,” Vilsack added.
He told reporters that his briefing with the president was at the request of the White House and says the Obama administration is taking quick action to offer help and assistance. The first measure includes streamlining the disaster declaration system and the time it takes to have a county designated as a disaster area, which is designed to make low interest loans available to producers in those counties declared disaster areas in the least amount of time.
“He (President Obama) also instructed us to open up new opportunities for haying and grazing as cattle producers are in deep trouble because of the drought. They don’t have any place for their cattle and are looking at very high feed costs. We are opening up areas in the Conservation Reserve Program for emergency haying and grazing. Normally when that happens producers have to return a portion of the CRP payment they receive, but this amount is being reduced from 25 percent to 10 percent,” Vilsack outlined.
But Vilsack says more relief for producers is needed and says USDA will need to work with Congress to provide assistance either through the passage of the Farmer Food and Jobs Bill, through additional disaster programs, or perhaps additional flexibility through the Commodity Credit Corporation to provide assistance to farmers.
Concerning higher food prices, Vilsack says because cattle producers will potentially have to begin reducing their herds due to higher feed prices, he expects food prices for beef, poultry and pork products may go down a bit initially, but warns overtime prices will rise.
“Over time we will probably see those higher prices — later this year and the first part of 2013,” Vilsack told reporters.