Food prices soar in wake of crops destroyed in US mid-western floods
Pastor Dale Morgan
Food prices soar in wake of crops destroyed in US mid-western floods*
* Ewen MacAskill in Washington and Daniel Nasaw Cedar Rapids, Iowa
* guardian.co.uk,
* Thursday June 19, 2008
Devastation to farms caused by week-long flooding in America's farm belt
is threatening to push up already soaring food prices.
The cost of corn and soybean has reached record highs on the US market
amid concern of a shortfall in production.
The mid-west, one of the biggest corn-growing regions of the world, has
been hit by the worst flooding in 15 years. An estimated 16% of farms in
Iowa, one of the most badly hit states, have been destroyed and lost
their crops.
Five other states have been hit, with residents along the Mississippi in
Illinois and Missouri today frantically building up sandbag barriers to
prevent further losses.
President George Bush and the Republican presidential candidate, John
McCain, flew to the devastated areas today. Bush flew to Cedar Rapids,
Iowa, which has suffered its worst ever flooding after the Cedar River
overflowed, and then planned to continue by helicopter to view the
farmland and small towns still under water.
Higher food prices, combined with public outcry over a huge rise in
petrol prices, will add to general disillusionment with the Bush
presidency, and McCain, as the Republican candidate, could suffer from
the association. McCain, who has been distancing himself from Bush,
travelled separately to the flooded areas.
Twenty-four people have been killed and 148 injured. There have been at
least two dozen breaches of the levees intended to prevent such
flooding. The Army Corps of Engineers, which is responsible for the
levees, predicted waters could flow over 20 or more levees over the next
few days.
LeRoy Lippert, mayor of Danville, Iowa, said that after the floodwater
recedes, stricken farmers will have to work through to the autumn to
clear silt, tree limbs and other debris before they can plant next year.
"There's going to be absolutely no farming this year," he said. "They've
lost it. It's gone. Nothing at all. No beans, no corn this year."
Dave Miller, a grain farmer and director of the Iowa Farm Bureau, an
insurance company, estimated that as much as 16% of Iowa's grain crop
was destroyed.
The prospects of smaller crops jolted the markets. Corn prices in the
mid-west have crept closer to an unprecedented US$8 (£4) a bushel, a
four-fold increase. World corn prices have risen to record highs and are
90% higher than they were a year ago.
Estimates are that 5m acres across the mid-west have been ruined and
will not produce a crop this year.
Farmers outside the effected areas, said the traders were panicking and
that, as long as there was no more heavy rains, 90% of them will deliver
their crops.
Corn and soybean are used in processed food and are fed to cattle for
meat production.
Some analysts said the reduction in grain output could force food prices
even higher - or at least lock them in - at a time when many countries
around the world are already struggling with the rising cost of basic foods.
Vic Lespinasse, a grain analyst at the Chicago Mercantile Exchange who
produces a daily blog, said much depended on what happened next with the
weather. "If the weather continues to be a problem, we could see nine or
even $10 a bushel corn, we could see $20 a bushel soybeans, so it all
depends upon the weather."
Lespinasse also blames the weak dollar for pushing up the price of corn
because other countries have more spending power in the international
markets.