Matt’s answer: Yes, but not as much as you might think. The reduced supply of corn and soybeans that results from the drought will increase prices for those commodities, but commodity prices account for a very small portion of the food cost in the grocery store or a restaurant. The amount of corn in a box of corn flakes costs less than a dime. The bulk of food costs come from transportation, packaging and processing.
The higher corn and soybean prices will raise feed costs for livestock, poultry and milk producers. In response, these industries may be forced to cut back on production and that reduced supply could result in higher meat, egg, and dairy prices down the road, but these effects are very speculative at this point and uncertain.
Expert answer: Self-appointed pseudo-scholars use common misperception, not common sense, compiled from the National Corn Growers Association Corn Commentary blog
Lately, articles have flooded the Internet claiming that the drought will cause food prices to skyrocket. Combining the idea that a wide variety of grocery items contain corn and the fact that the hot, dry weather has damaged the U.S. corn crop, they loudly announce their “expert” analysis. Obviously, food prices will go up soon.
Unfortunately, these “Einsteins” based their supposed economic analysis in incomplete, misconstrued facts. Those actually familiar with how food prices rise and fall have come to a very different conclusion.
The truth is simple, but it requires an understanding of agriculture and our nation’s food system, something few of these “experts” actually have. Corn, and many other commodity crops, constitutes a small percentage of the price consumers pay at their local market. This means that even when the price of corn rises at the elevator or on the trading floor only a small fraction of the small increase in a small amount trickles into the foods American’s feed their families.
From the cost of slick marketing campaigns to the price of fuel — costs which may not be readily apparent to the alarmist authors — actually drive food prices in this country.
America’s family farmers, the families who will truly feel the effects of the drought, will still provide the affordable, abundant food choices upon which the nation depends. The only cause for alarm here comes from the megaphone provided to megamouths who fan false flames in a highly combustible situation.
Yelling “fire” in a crowded theater may grab attention and cause alarm, but it is illegal to do so for a reason. Causing panic for the sake of causing panic does not have a public benefit.
A more cynical commentator might note that it does help drive rating and generate revenue. But instead of focusing on the fray, take a look at the facts. According to a newly released study from National Public Radio’s Planet Money series, Americans today spend less on groceries than they did 30 years ago, nearly a full five percentage points less. Prices have declined across the board with some staple items, such as butter and chicken legs, down by 35%. Even a steak costs 30% less.
Will a drought impact America’s corn crop this year? Almost certainly. Does this spell dire circumstances that will leave the grocery consuming public taking out loans to feed their family with healthy, safe food? Almost certainly not.
In today’s America, what is truly in jeopardy is a sense of perspective. Banners flash before already stressed eyes on the evening news making dire declarations. Weary from battling real issues all day, these prophets of pain become an echoing chorus of doom drumming away basic sanity. Frantic feelings froth to a frenzy as the spiral of sustained stress with the prognosticators acting like an emotional succubus that feeds on America’s anxieties.
Stay calm. It may be hot outside, but cooler heads can prevail. Calmly, remember that America has the safest, most abundant, most affordable food supply in its history. The percentage of income needed to eat well has dropped to one of, if not the, lowest level in the developed world. Through innovation and hard work, farmers prove, time after time, that they can and will feed America, no matter what.