Tags: Cheese | Food | Price | Drought

Milk, Cheese to Lead Food-Price Spike as Drought Intensifies

Thursday, 19 Jul 2012 09:48 AM

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A drought searing much of the United States is charring corn yields and sending the price of the grain soaring in futures markets, which will soon send grocery prices rising and hitting milk and cheese first, experts say.

Corn is used in some three-quarters of supermarket products and is also a key component into animal feeds.

The worst drought in over five decades has sent corn soaring 45 percent this summer.

Editor's Note: The Truth About the Economy — Government Documents Lead to Eerie Conclusion

Rising prices at the grocery store will stress households plagued with joblessness, stagnant wages and economic uncertainty.

Furthermore, prices hikes won't be uniform either, as the entire agricultural sector will be affected.

Expect milk and cheese to rise first.

"I can't imagine situations where you'd have people standing in line to get milk at the dairy counter. But they might not want it at the price it's selling at," said Roger Hoskin, an agricultural economist with the Department of Agriculture's Economic Research Service, according to USA Today.

"You'll see less cheese on pizzas and in salad bars."

More than 50 percent of the United States has been stricken by drought conditions, which makes 2012 one of the worst in the country's history.

The Dust Bowl drought in the 1930s, however remains the worst.

At its height in July 1934, almost 80 percent of the country suffered drought conditions, USA Today adds.

Some experts say a household's overall grocery bill won't skyrocket, at least from the drought's affects on corn, which has take a particular hit.

"A 50 percent increase in the price of corn tends to raise total shopping bills by about 1 percent,” said Ricky Volpe, a research economist with the U.S. Department of Agriculture, according to SmartMoney.

In 2008, just 15.8 cents of each dollar shoppers spent on food went to farms, SmartMoney added, citing USDA figures.

The rest paid for things like labor, packaging, transportation and advertising.

The U.S Department of Agriculture will release a monthly report on July 25 forecasting how high food prices may rise.

Editor's Note: The Truth About the Economy — Government Documents Lead to Eerie Conclusion


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