The Drought and American Families: How It Will Affect You at the Supermarket

4 years ago

While the media has barely uttered the D-word since fall, Mother Nature hasn’t spontaneously healed the Midwest. The Drought of 2012 has run over into 2013 and the National Oceanic and Atmospheric Administration's most recent explanation--that the staggeringly dry conditions were the unforeseeable combination of two key periods during which the region simply lacked rainfall--has done little to ease the fears of many whom are hardest hit. Meanwhile, observant onlookers are noticing an uncanny resemblance to the conditions we saw during the early stages of the 1930s Dust Bowl. While conflicting reports are par for the course when it comes to weather predictions, t’s difficult not to have images of raging dust storms and underfed families trudging through our heads.

The good news is that even if the weather services that are foreboding another hot and dry year are those whose predictions hold true, we’re unlikely to see images akin to the last Dust Bowl anywhere outside of weather maps and drought indices. Modern farming practices have reduced the number of acres of tilled land and the depth at which tilling takes place when it is used, one of the major agricultural practices that lead to the Dirty '30s. At the same time, irrigation and biotechnologies offer farmers more tools for dealing with the drought than they had even as recently as 5 years ago, let alone 80. This isn’t to say another drought year would be welcome, but even one of the proportions we saw during the Dust Bowl would not create the same conditions in America’s fields.

Unfortunately, her supermarkets are another story. Here’s what the average family can expect at the grocery store if 2013 proves to be another drought year:

Image: Jiang Xintong/Xinhua/ZUMAPRESS.com

Big beef prices. If you think beef prices are high now, you haven’t seen anything yet. The U.S. cattle herd is the smallest it has been in generations. While some ranchers have been able to maintain their herds with cutting-edge pasture management technology, good luck, or sheer cussedness, they are few and far between. Another drought year will result in further cuts to herd numbers. Small herds produce less beef, less beef means less supply for the same hungry American demand, and we all know what happens when demand outpaces supply: higher prices.

More expensive dairy. Like the beef herd, dairy herds are extremely dependent on good rainfall. Dairy farmers will cut more cattle as feed prices tighten resulting in the same supply to demand ratio change we see in the beef industry. Milk may not be quite akin to liquid white gold, but it’ll be close. Because the reproductive cycles of cattle are longer and produce fewer offspring than other types of livestock the dairy and beef industries will also take longer to bounce back.

Pork will catch up. Though swine are just as dependent on good grain harvests as cattle, pork prices haven’t climbed the way industry experts expected. This is the result of two independent issues. The first is that hog producers, by and large, have been more resilient in the face of 2012’s poor harvests than expected. Swine herd numbers didn’t decline to the extent cattle herd numbers did. Which means we still have a lot of pork producers pumping ample supply into the market. (More on this in a moment.) And the other is the ractopamine scare that prompted a ban on the export of pork products to Russia and China earlier this year. Cutting off the demand of two major consumers of American pork resulted in more supply for American markets, helping to keep prices down.

You’ll probably get sick of chicken. The poultry industry relies on the same grain diets as the rest of the livestock industry, but have two distinct advantages in this climate: Chickens are more efficient at converting feed to meat and they grow and reproduce quickly. Poultry prices will be the last to rise at the butcher case and the first to rebound when the weather turns around. Higher demand due to more people choosing cheaper poultry over beef and pork will probably be a far bigger player in the price of chicken than the drought itself.

Grain-based products will not be insulated. To some extent the grain-based products you find on grocers shelves --everything from loaves of bread to sodas that contain high-fructose corn syrup--have been insulated from the drought-induced price hikes we’ve seen at the meat and dairy cases so far. Much of this has to do with the way the industries work at the top and the lag in how prices trickle down. If the drought continues, companies will be forced to use more high-priced grains in their formulas and those price points will most likely rise.

Niche products will be harder to find. Small farmers will be hit hardest and first, they’ll also be those who are most likely to drop out of farming altogether. This is especially true for small livestock operations, which means local, “sustainable,” and other niche products will become fewer and farther between. Big farms have more cash flow available to leverage against rising prices giving them an advantage over smaller farms.

Produce will be the least of your worries. But that doesn't mean you won't have to worry at all. Most fruit and vegetable crops are grown in areas of the country that are less likely to experience the most severe effects of the drought and many of those crops benefit from established irrigation systems. If the drought were to deplete sources of irrigated water we could see portions of crops lost, but the price increases would be incremental in comparison.

Will these issues affect what you buy at the supermarket? Let us know your thoughts in the comments.

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