Drought impact on food prices to strengthen in 2013

Food Business News | Dec 27, 2012

By Jay Sjerven

The Economic Research Service of the U.S. Department of Agriculture in its Food Price Outlook issued Dec. 21 indicated food price inflation in 2013 likely will be higher than in the current year largely because of the delayed impact of the worst drought in decades across the Midwest.

“Retail food prices, despite the severe drought in the Midwest, have been flat in 2012,” the E.R.S. said. “The food-at-home Consumer Price Index (C.P.I.) increased a total of 0.3% from January to November 2012. Prices rose for beef and veal, poultry, fruit, and other foods in 2012; however, prices fell for pork, eggs, vegetables, and nonalcoholic beverages. For the remaining food categories, prices remained unchanged for the most part. The drought has affected prices for corn and soybeans as well as other field crops, which should, in turn, drive up retail food prices. However, the transmission of commodity price changes into retail prices typically takes several months to occur, and most of the impact of the drought is expected to be realized in 2013.”

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1 Comment on "Drought impact on food prices to strengthen in 2013"

  1. With corn it won’t just be the price going up for food, but also the price of ethnol fuel since farmers have to sale at least 10% of their corn crop for ethnol.

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