- The Washington Times - Tuesday, August 13, 2002

Food prices are expected to rise because of widespread drought conditions, Agriculture Department officials said yesterday.
The department slashed its forecasts for the production of grain and soybeans the two commodities used in hundreds of foods and as feed for hogs, cattle, chickens and other livestock.
"It's been extremely hot and dry. The drought has had a profound impact on these crops," said Gerald A. Bange, chairman of the World Agricultural Outlook Board, a panel that reviews and approves the department's crop forecasts.
The department lowered its estimate for corn production by 7 percent from last year, predicting that almost 8.89 billion bushels will be harvested in 2002. It would be the lowest output since 1995.
"The corn crop is clearly the saddest I've seen in years," said Bill Nelson, a commodities analyst with A.G. Edwards & Sons who recently visited farms in Nebraska and other states hit by drought.
The Agriculture Department also lowered its forecast for other crops, including soybeans. Department officials said production is expected to be 2.63 billion bushels, down 9 percent from 2001.
Forecasts for wheat production were lowered by 14 percent from last year's crop to 1.69 billion bushels.
The Maryland Department of Agriculture yesterday estimated bushels per acre will be the lowest since 1993. But those estimates are based on an Aug. 1 survey, and there has been no significant rainfall since then.
"As bad as the estimates are, it's already gotten worse. It continues to deteriorate every day that we don't have rain," said spokesman Don Vandrey. "I think it's very possible it will be worse than 1993."
The outlook also is poor for soybeans, tobacco and apples in the state.
Nationally, the average price of corn is expected to be about $2.50 a bushel this year, 50 cents higher than last year, Mr. Bange said. The average price of soybeans is expected to jump to about $5.60 a bushel, he said.
Ann H. Gurkin, an analyst for Davenport & Co., an independent stock brokerage in Richmond, said prices are likely to rise, but it's "too hard" to say by how much. It is too soon to tell what kind of ripple effect the corn and soybean price increase might have on other kinds of foods, such as meat, she said.
A spokesman for the Food Marketing Institute, an industry trade group, said prices will not rise immediately because many food manufacturers have lengthy contracts with growers, with prices locked in for six months or more.
"We're at least six months ahead of the pipeline," said spokesman Gene Grabowski.
In addition, heavy competition in the industry will pressure food manufacturers to hold the line on prices, he said.
The last major spike in food prices came in 1998, when the El Nino weather conditions persisted for several months and forced the industry to raise the price of some fruits and vegetables, Mr. Grabowski said.
This year, the lack of rainfall has forced some cattle ranchers in Midwestern and Western states to sell their herds because they can't afford to feed the animals.
Areas that have been severely affected include agricultural states in the western Corn Belt, Great Plains, Ohio Valley and Atlantic Coastal Plain, which includes Maryland and Virginia.
Ray Garibay, state statistician for the Maryland Agriculture Statistics Service, said the drought is devastating for farmers, who have huge investments in their crops.
"We're not talking $10,000 or $15,000. We're talking hundreds of thousands of dollars that go into making a crop," he said.
Agriculture officials recommended on Friday that Maryland Gov. Parris N. Glendening, a Democrat, seek a drought disaster declaration from the federal government to make farmers eligible for loans at 3.75 percent interest to help them prepare for next year's planting season.
The paperwork is expected to be completed and the request forwarded to the federal government by the end of the week, Mr. Glendening's spokesman said.
Nebraska Gov. Mike Johanns, a Republican, has asked Agriculture Secretary Ann M. Veneman to declare his state a disaster area so farmers can obtain federal assistance.
Ron Woollen of Wilcox, Neb., anticipates that he will lose nearly half of his corn, soybean and sorghum crops even though he is irrigating two-thirds of the nearly 2,000 acres he farms.
"We have had trouble really keeping up, especially lately on the water, primarily because there's been no rain and it's been so hot out here," he said. "Our irrigation costs are going to be just astronomical."
Mrs. Veneman already has declared Utah an agricultural disaster area. The state has been hurt by drought for four years.
Although several Midwestern states are also dry, rain fell in much of Minnesota and Iowa in July, allowing most areas in those states to escape the drought.
But conditions have worsened in Kansas as a heat wave continues. State statistics indicate half of the state's corn crop is very poor or poor.
Other commodities also are suffering because of the dry weather. The Agriculture Department says cotton production is expected to be 18.4 million 480-pound bales, 9 percent lower than last year's crop.
Farmers may get some short-term relief from the hot summer weather this week. The National Weather Service is forecasting about an inch of rain over the western Corn Belt, and a cold front may sweep across the Midwest.
Mr. Nelson, however, said the dry regions need several rainfalls to moisten the soil, because crops can use up to a quarter of an inch of rain per day.
This article is based in part on wire service reports.

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