Drought Will Likely Increase Food Prices

Things are not looking good for the corn crop this year.

The Department of Agriculture put out a new report saying the expected corn production is down 12 percent this summer because of the dry conditions.  That is pushing the price of corn and other grains up and you don't have to be a farmer for that to impact your bottom line.

"The bottom line is we need rain. There really is no silver lining. This really is a tough situation," Sid Pederson of Pederson Commodities said.

Pederson has been in the business since the 1970s and has watched prices of corn and other grains go through plenty of ups and downs. But right now, with the ground drying out across much of the nation, prices are going one way and in a hurry.  

Pederson can't recall a situation like this is quite some time.

"1988 was the last time we had a full-blown drought and we raised half a crop that year and corn doubled in value," Pederson said. "It's hard to say, we could get rain yet, that's still a possibility, but a lot of areas are really hurting."

The increase in prices may not stop there. If grains continue to go up in price, that will raise the cost of feeding cows and hogs. In turn, those meat prices go up and could reach your dinner plate. 

"Eventually, it's going to cause some inflation. Higher grain prices certainly affect a lot of different things. We use corn for a lot of different things and food stuffs," Pederson said.

Pederson says everyone could use a good rain, whether you're living far away from the country life or on the farm.

"Certainly the farmers that I talk to are really in a tough position because they're not going to raise as big of a crop, which means less income. So, it really is a frustrating situation for everybody," Pederson said.

And it's not just corn; soybean and wheat production are also expected to be down.