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Record drought raises food prices in US; trend expected to continue

Wednesday, July 25, 2012

The record drought gripping half the country is going to hit you where it hurts: in your wallet. You'll be paying for the scorching heat through next year. And here's why: In the last six weeks, dry conditions have gotten even worse. Even Alaska and Hawaii are seeing the effects.

In California, drought conditions are abnormally dry to moderate. It's hard to find a spot that isn't affected. The U.S. Dept. of Agriculture says the severity of the drought caught experts by surprise.

Some shoppers are already seeing a spike in the price of corn, and according to the USDA, by the end of the year we'll also see rising prices when it comes to dairy products, poultry and beef.

Record drought conditions in the Midwest are starting to have an effect on everyone because food is getting more expensive.

So what should shoppers expect going forward?

Investors are already spending close to 50 percent more on corn futures. Because corn is what many dairy cows eat, University of California Riverside agriculture professor Milt McGiffen says the price of milk will start to rise, but perhaps not that much.

"Farmers will switch to different feed stocks. Instead of corn, they'll feed them something else that maybe isn't affected by the drought, but milk will be the first thing," said McGiffen.

McGiffen says the price of chicken will then start to rise, followed by the price of beef.

"It's not a dramatic increase, it's not a doubling of the cost of these things," said McGiffen. "The projections are, the USDA says a tenth of a percent, to other people saying 5 to 10 percent. Ten percent is the outside most it would be," said McGiffen.

Still, that could be hundreds of dollars over the course of a year. And for those who are already struggling, it won't get any easier.

Corn and soybean products should see the biggest jump, followed by dairy, beef and poultry.

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food, economy, save money / consumer news, rob mcmillan
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