Tags: Drought | food | prices | us

Experts: Drought to Cost US More Than $12 Billion, Worst Since 1988

Thursday, 26 Jul 2012 09:50 AM

The crippling drought searing well over half of the nation will cost the country $12 billion, the worst such disaster since 1988, experts say.

“There does seem to be near-unanimous agreement from industry experts that this year’s drought losses will surpass the $12 billion recorded in 2011,” meteorologist Steve Bowen of Aon Benfield, a global reinsurance firm, told USA Today.

In terms of scope, current drought is one of the largest since the Dust Bowl during the Great Depression, which affected over 80 percent of the nation.

Editor's Note: Prophetic Economist Warns: “It’s Curtains for America.” See Evidence.

“Right now, it is difficult to say whether we end up reaching the loss levels of 1988 ($40 billion) and 1980 ($20 billion), given that it will be several months for agricultural industries to fully assess the total extent of their losses,” Bowen said, adding the 1988 drought would cost $78 billion today when adjusted for inflation.

“If the intensity of this year’s drought is prolonged throughout the rest of the summer, it may not be out of the question to experience losses that rival something seen out of those 1980s events,” Bowen added.

Other experts agree the drought will cost the country big time, including Joseph Glauber, chief economist for the U.S. Department of Agriculture.

The government will not have a clear picture on the extent of the damage until the release of a report on the drought in August, though Glauber said “it is safe to say” that this year’s crop-insurance payments to drought-stricken farmers will top the $10.8 billion paid last year, USA Today added.

The USDA said food prices next year could rise by 4 percent thanks to the dry weather, which has cut into corn yields and other crops.

Beef prices could rise as high as 5 percent next year, as corn is a key feed input.

“In 2013 as a result of this drought we are looking at above-normal food price inflation. ... Consumers are certainly going to feel it,” said USDA economist Richard Volpe, The Associated Press.

Grocery prices normally rise about 2.8 percent a year.

Editor's Note: Prophetic Economist Warns: “It’s Curtains for America.” See Evidence.

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