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The Shawnee News-Star
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The Drought will cost you more at the grocery store
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By Sprouts
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It doesn’t take a genius to know that the drought will affect the prices of many goods that we all need.  Here are some predictions that, if accurate, will impact your pocketbook.



Consumers can expect the worst US drought in 50 years to cast a shadow across food prices throughout 2013, according to recently released government data. The estimates are the first to capture the effects of this summer's drought in America's heartland, and show food prices increasing at a rate well above normal expectations.



Normal food inflation has been between 2.5-3.5 percent in recent years,  and is calculated to include a variety of pushes and pulls on the economy, including fuel prices and the state of the American dollar. That so-called normal inflation rate will largely play out for the rest of this year, all things being equal, he said. The drought will surface in food prices next year.



Climate Desk has illustrated a handful of basic groceries in the graphic above, comparing the average prices for the last full year of data, 2011, with USDA's projected prices for 2013. While price increases may not seem too severe on the surface, they add up for a family on a budget across a year.



Animal-based perishable foods will be hardest hit. The USDA projects that poultry products will rise 3-4 percent next year, compared to this year's average. The biggest rises are seen in beef and veal, rising 4-5 percent from 2012 averages. Dairy products will take a hit too, rising up to 4.5 percent.



There is a lag in food prices because it takes time for the effects of a drought to ripple across the food system. Many food manufacturers lock in long-term prices with primary producers. Consumers are likely to see price hikes once the contracts are up, said Joe Parcell, Director, Agriculture and Applied Economics at the University of Missouri-Columbia. "We're going to start feeling the impact from September onwards," he said.



More than 60 percent of America's farms are located in areas experiencing drought. Two thirds of all crops and two thirds of livestock are produced in areas experiencing at least moderate drought, so we should all be looking for ways to save at the grocery store.  I'll share some ideas next time.



 

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