WASHINGTON, July 25 – A new USDA food price forecast released today, the first since the severity of the drought was understood, shows little variation from its late June forecast in part because the extent of crop damage and livestock liquidation is still to be determined.
“We do not yet have specific estimates of how the drought will affect food prices,” USDA’s Economic Research Service said as it forecast an increase of 3-4 percent in retail food prices in 2013. “This will be estimated once we know the severity of the drought and, in turn, how much of the corn crop is destroyed.”
The major change in today’s forecast from the previous estimate sees beef prices rising by 3.5-4.5 percent this year, less than the June forecast, following last year’s 10.2 percent increase. A similar 3.5-4.5 percent increase forecast in poultry prices, however, is up from June. “The drought has the potential to increase retail prices for beef, pork, poultry, and dairy products first and foremost – later this year and into 2013. But in the short term, drought conditions may lead to herd culling in response to higher feed costs, and short term increases in meat supply.”
Food at home, which accounts for 60.4 percent of consumers’
food expenditures, is forecast up 2.5-3.5% this year and 3-4% next year. Food
away from home, which takes the other 39.6 percent, is seen up 2-3% this year
and 2.5-3.5% next year.
“Half-way through the 2012 crop year almost 40 percent of
agricultural land is experiencing severe or greater drought, which makes the
2012 drought more extensive than any drought since the 1950s,”
To see the full report go to: http://www.ers.usda.gov/data-products/food-price-outlook.aspx.
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