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IATP

You’ve surely heard about the worst drought in a generation that is devastating farmers throughout the Midwest and Great Plains. Many of us may have brown lawns and suffering gardens, but besides these inconveniences, how does the drought impact the rest of us who are not farming? Here’s a brief rundown.

  1. You are not likely to go thirsty. Despite the numerous long-term challenges the U.S. faces with water use and water quality, this is a time to appreciate the infrastructural investments that we have made in water and wastewater treatment. It’s remarkable how rare it is for drought to impact our ability to draw clean water from the tap and to safely treat wastewater.

  2. You are not suffering in dust storms. Decades of improvements in farming practices and crop genetics have mitigated the impacts on crop production. Photographs of the Great Plains in the 1930s are full of amazing dust storms that are unimaginable for most of us today. The widespread recognition of that time, that farmers had to make major transitions in tillage practices, and that policy had to support that transition, is a tribute to the foresight of previous generations.

  3. In many ways our food system is less resilient to shock than it used to be. Yes, our impressive food handling, trade and transportation systems have made it far easier to get food to places that need it, but in other ways our system is increasingly vulnerable. The lack of crop diversity on tens of millions of acres of Midwest corn and soybean fields leave agriculture susceptible to severe impacts from new pests and disease, and this agricultural system is highly dependent on plentiful chemical inputs and fossil fuels.

    Perhaps most alarming are long-term changes to federal policy pertaining to grain reserves. USDA previously had policies that encouraged farmers to hold over some of their grain from season to season. This provided farmers with the flexibility of holding onto their crop if prices were low, and provided all of us with the security of having grain in storage if the next year’s crop production suffered.

    U.S. grain reserves, measured by a stocks/use ratio, are now at an alarmingly low level. The result is that this drought has more of an impact on commodity prices than it would in previous years when the stocks/use ratio was higher, and subsequently it has more of an impact on the price we pay for food.

  4. Opportunities to buy directly from smaller, more diversified farms could take a hit. Both in markets and in agricultural policy, the U.S. has a widely recognized bias toward large farms with minimal crop diversity. The advantages of large farms become most apparent in times of crisis, times when access to capital and insurance are most needed. I worked extensively with direct marketing farmers in southeast Minnesota after the summer 2008 floods, the vast majority of whom did not have crop insurance because the federal program does not serve the needs of these farmers well. While a couple of the farmers weathered the storm well enough to expand their operation, other farmers ended up selling their farms due to financial hardship and exhaustion. The drought might be most readily apparent in the price and availability of locally-produced food throughout the Midwest and Great Plains.

  5. Food prices will increase. USDA is forecasting moderate food price increases over the next couple of years. While any price increases aren’t pleasant, the impacts are muted here in the U.S. While corn prices have jumped about 50 percent since last year, the expected impact on food prices is only 2 to 5 percent. On the other hand, in countries like Mexico where much of the population directly purchases commodities like corn, those consumers will experience a much larger jump in food prices.

  6. The impact on federal taxpayers is unclear. We can expect the outlays for federally subsidized crop insurance to increase this year, and there has been movement in Congress to provide disaster assistance to livestock farmers. Yet while these programs will incur more taxpayer costs, the high commodity prices reduce other USDA farm payments such as counter-cyclical payments. Despite the wide variability in floods, droughts, high prices and low prices over the past 15 years, one thing is constant: The USDA has spent at least $10 billion a year on farmer support programs.

  7. How all of this impacts healthy eating is unknown. Will high livestock feed costs increase the price of meat and dairy products and encourage consumers to eat more fruits and vegetables? Or perhaps the feed costs will narrow the price difference between grain-fed livestock and grass-fed livestock and encourage more people to eat Omega-3 rich grass-fed products. Or will consumers resort to more simple carbohydrates that are low cost and calorie rich?

    We’ll have to wait and see how this story plays out, but if the past few years are any indication, we are clearly in an era with lots of variability. We’ve had the drought of 2012, the food crisis of 2008, the flood of 2007—what will 2013 and 2014 be known for? And will we have the policies in place to keep agriculture thriving, and our food supply safe, abundant and healthy?
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