Agriculture Secretary Tom Vilsack said the drought gripping much of the U.S. may cause a “small decline” in corn and soybeans exports, and he urged Congress to provide additional aid to farmers.
The damage to crops and to grazing land for livestock ultimately will affect food prices, Vilsack told reporters at the White House after briefing President Barack Obama on the federal response. Earlier, he widened the federal drought- disaster declaration to 1,297 counties in 29 states from 1,016 counties in 26 states.
Describing the drought as “the most serious situation we’ve had probably in 25 years,” Vilsack called on Congress to give the Agriculture Department more flexibility in assisting farmers and to bolster assistance programs. He said 61 percent of the U.S. is affected.
The worst U.S. drought in decades is damaging or killing crops across the nation, cutting production and driving up grain prices that are likely to push U.S. and global food costs higher.
Vilsack said prices for beef, poultry and pork probably will rise later this year and increases in the cost of processed foods will hit in 2013. Before the drought, Vilsack said the department was estimating food prices would increase between 2.5 percent and 3.5 percent this year.
“There is some degree of uncertainty about all of this,” he said. “The spotty nature of drought, the spotty nature of rains, can sometimes result in better yields than anticipated. We’re just going to have to see.”
The disaster declaration, which also covered wildfires and other disasters, makes farmers and ranchers eligible for low- interest loans.
The USDA also said it was streamlining procedures to process farm disaster claims more quickly and was reducing penalties on livestock grazing on conservation land. Vilsack said the administration will work with Congress on additional disaster programs and greater flexibility for the Commodity Credit Corporation, which covers farm subsidies.
Corn may reach a record $8.50 a bushel, leading to a cut in exports of the U.S.’s most valuable crop, accord to broker Newedge USA LLC. Corn futures for December delivery rose 1.5 cents, or 0.2 percent, to $7.7275 a bushel at 9:33 a.m. on the Chicago Board of Trade.
USDA crop-condition ratings for corn and soybeans, as of July 15, were the worst for that time of year since a drought in 1988.
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