Bloomberg News

Disaster Declared in 26 U.S. States as Drought Sears Midwest

July 11, 2012

Disaster Declared in 26 U.S. States as Drought Sears Midwest

Stunted soybean plants in Idaville, Indiana. Photographer: Daniel Acker/Bloomberg

More than 1,000 counties in 26 states are being named natural-disaster areas, the biggest such declaration ever by the U.S. Department of Agriculture, as drought grips the Midwest.

The declaration makes farmers and ranchers in 1,016 counties -- about a third of those in the entire country -- eligible for low-interest loans to help them weather the drought, wildfires and other disasters, Agriculture Secretary Tom Vilsack said today. The USDA is also changing procedures to allow disaster claims to be processed more quickly and reducing the penalty ranchers are assessed for allowing livestock to graze on land set aside for conservation.

“Agriculture remains a bright spot in our nation’s economy,” Vilsack said. “We need to be cognizant of the fact that drought and weather conditions have severely impacted farmers around the country.” The declaration is effective as of tomorrow.

Moderate to extreme drought now covers about 53 percent of the Midwest, the country’s main growing region, fueling crop- price gains that are the biggest this year among the 24 commodities tracked by the Standard & Poor’s GSCI Spot Index. The rallies are boosting costs for companies from McDonald’s Corp. (MCD:US) and Coca-Cola Co. (KO:US) to Archer Daniels Midland Co. (ADM:US) and Smithfield Foods Inc. (SFD:US)

Corn Conditions

The area covered by the declaration includes most of the Southwest, which has been affected by wildfires, as well as the Southeast and the southern and eastern parts the Corn Belt, mainly Illinois and Indiana. Iowa, the biggest U.S. producer of the grain, is not included.

About 40 percent of the U.S. corn crop, the world’s biggest, was in good or excellent condition as of July 8, down from 48 percent a week earlier and the lowest for this time of year since a drought in 1988, the USDA said July 9. More temperatures in the 90s Fahrenheit (30s Celsius) are expected next week from the Midwest to the Northeast, Commodity Weather Group LLC in Bethesda, Maryland, said today.

The low-interest loans and penalty reductions provided for by the disaster declarations will cost the government $4 million, Vilsack said. They are among the “limited tools” the USDA has to help farmers with drought, Vilsack said.

Congressional Action

The secretary called on Congress to pass a five-year reauthorization of all agricultural programs before Sept. 30, when current authorization expires, to enhance the department’s ability to help farmers and ranchers in times of need.

Congress needs “to have that bill come to the floor and be voted on,” Vilsack said. The Senate approved a half-trillion- dollar plan last month. The House Agriculture Committee is considering its version of the bill today.

Representative Vicky Hartzler, a first-term Republican from Missouri and member of the committee, said farmers affected by the drought will rely on existing programs for aid.

“It breaks your heart to see what’s happening,” said Hartzler, whose family farms 2,000 acres. Still, “that’s why we have crop insurance, to help with these times,” she said in an interview.

“We need intervention from a higher authority -- rain,” Representative Jeff Fortenberry, a Republican committee member from Texas, said in an interview.

The declaration covers counties in the following states: California, Oregon, Nevada, Utah, Arizona, New Mexico, Colorado, Nebraska, Wyoming, Kansas, Oklahoma, Texas, Louisiana, Arkansas, Missouri, Kentucky, Tennessee, Illinois, Indiana, Alabama, Mississippi, Georgia, South Carolina, Florida, Delaware and Hawaii.

To contact the reporter on this story: Alan Bjerga in Washington at abjerga@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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