Food prices are expected to surge after the worst drought in the U.S. for half a century destroyed one-sixth of the country’s expected corn crop over the past month.
The hottest July in U.S. history has caused irreparable damage to crops, forcing corn farmers to abandon fields greater in area than Belgium and Luxembourg.
The crisis has prompted the US Department of Agriculture (USDA) to forecast record-breaking price rises, and some of the world’s largest food manufacturers, including Kraft, Tyson and Nestle, have already indicated that they will pass on the increase to consumers.
USDA now expects 10.8billion bushels of corn to be produced this year – 2.2 billion bushels less than the projection it made last month.
USDA chief economist Joseph Glauber told the Financial Times: ‘We’re going to see very high prices.’
The problem could have far-reaching consequences internationally.
In 2007-08, high food costs led to riots in more than 30 countries, but Jose Graziano da Silva, the director general of the UN’s Food and Agriculture Organisation, said the current crisis was not as severe.
‘We do not have the demand pressure from China and India as five years ago.’
The situation has worsened since the week ending July 29, when USDA found that 48 per cent of the nation’s corn crop was either poor or very poor.
The department said 47 per cent of the soybean crop was in very poor or poor condition.
They were the worst ratings since the drought of 1988, which cut production by 20 per cent and cost the economy tens of billions of dollars.
With grazing pastures also parched and feed prices at record highs, many ranchers are sending their animals to slaughter early because it is too costly to keep them until full size.
President Barack Obama’s administration has opened up protected US land to help farmers and ranchers and has encouraged crop insurance companies to forgo charging interest.
It has also provided emergency low-interest loans to farmers in 31 states, where disaster areas have been declared due to the drought.