2012 Drought Will Affect Prices In Ways You Didn’t Realize

By now you realize that we're experiencing one of the worst drought's on record.  The Summer of 2012 will have lingering effects at the grocery store for months (and possibly years) to come.  However, those expected price increases may not happen to the products and goods you would expect.

Corn on the cob probably won't see dramatic increases.  Experts also forecast that the cost of breakfast cereals will probably remain steady.  However, there are sneaky places where consumers will probably feel the bite.

You’re more likely to see higher prices for milk and meat than corn on the cob. That’s because the sweet corn that shoppers buy at a grocery store is grown differently and not as vulnerable to drought conditions. As for the corn that’s used as grain feed for cows, however, farmers are paying more as the drought persists.

‘‘The financial stress is starting to mount because the bills (to feed the cows) are bigger than they were six months ago,’’ says Chris Galen, a spokesman for the National Milk Producers Federation. ‘‘What will consumers will see as a result? That’s where it gets a little murkier.’’

Grocers are forecasting a 3 to 4-percent increase in prices as a result of this summer's drought.  Where will you see these increases?

• Meat and dairy.  Farmers utilize corn crops as feed for their cattle.  Less corn will have dramatic effects on the primary food products that come from cows:  beef and milk.
• Produce.  Besides corn and corn on the cob, you'll probably see increases in other produce.  That's because corn isn't the only product that's been affected by the lack of rain.  And, most farmers plant less of these fruits and vegetables - so any diminished return will result in a lack of supply.
• Pre-packaged/convenience foods.  A lot of these processed foods utilize corn syrup as part of their manufacturing process.

Impact of corn prices on food? Not what you think - Lifestyle - Boston.com.