A report about the current drought from the Federal Reserve Bank of Kansas City tells farmers and everyone in agriculture what they are living through: The 2012 drought is the most extensive drought in half a century; the report says it has “ruined” one of the most promising crop harvests in U.S. history causing crop prices to surge; the lack of feed and forage in the drought has caused shrinking livestock profits and herd liquidations; the drought is expected to cause higher food prices for U.S. consumers over the next year. It has negatively impacted dairy operations and ethanol production. And the drought is having a detrimental effect on certain agribusinesses.
The report does say that “surging crop prices could offset yield losses and raise U.S. gross crop revenues above initial 2012 estimates.” The USDA’s next set of supply and demand estimates is out Friday morning.
The Main Street Economist agricultural and rural analysis was written by Jason Henderson, Vice President and Nathan Kauffman, Kansas City Federal Reserve Bank economist.
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