Drought in U.S. trigger off grain prices
06/08, 2012, USA.
U.S. drought already affects half of the country’s crops. The situation, the worst in half a century, has led the government to declare disaster areas more than half of the counties in the nation. The drought is particularly acute in the Midwest, the corn and the soybeans are bearing the brunt. The immediate consequence is the prices increase and potential food shortages.
In the last three months, the price of maize increased by 29%, 41% the wheat and 17% soy. The U.S. Agriculture Department has forecast an increase to 4% in the prices of staple foods for the coming year. This increase could affect the entire food chain as these grains that are used to feed animals. But it is more than likely that the impact goes beyond U.S. borders: The country is the largest exporter of wheat in the world and produces much of the world harvest of corn and soybeans. Some sectors have called on the Government to reduce or cancel for one year the mandatory use of ethanol in gasoline, for which it is intended by law third of the corn crop.
In Russia, the drought also has farmers in check. Some regions have already lost half of the crop. Here in Ulyanovsk, farmers last year exported one million tons of grain as far away as Iran. This year can be considered lucky if the harvest is enough to feed themselves. Vladimir Martynov, farmer, says: Now that we are in full harvest, we are storing grains, collect, classify it and hope for better prices.
Drought in the United States, Russia and other countries is a headache for the World Bank, which fears that escalating food prices, have dire consequences for the poorest. But there is also the social factor, history has shown that the increase in food prices leads to instability. From Tunisia to India, the rise of cereals leads to protests. Calls riots have reappeared with force since 2007.