The drought will affect us for years

Cattle herds are the smallest in two generations. The resulting spike in beef prices will cause Americans to eat less meat.

By Kim Peterson Aug 23, 2012 5:43PM
The damage from this year's U.S. drought will be felt across America for years -- and may change the way we eat.

The immediate realities from the drought are these: Cattle herds are the smallest in 39 years and beef prices are at record levels, Bloomberg reports.

But the impact will last for a while. Fast-food chains are raising prices. Food could cost as much as 4% more next year, and beef prices may rise by 5% -- more than any other food group. The end result? The average American will likely eat less than 200 pounds of red meat and poultry next year. The last time that happened was in 1990.

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It will be years before things return to normal. The number of calves produced has been sharply cut. Feed prices are so high that some farmers have sold heifers instead of breeding them, and so there won't be as much cattle for packing plants next year, Bloomberg reports. It takes calves about 20 months to grow large enough to slaughter.

America may be dealing with declining herds until 2016 or 2017, one USDA livestock analyst reported, according to Bloomberg.

The problem isn't just with the price of corn, which has skyrocketed 64% since June 15. The drought has also destroyed grasses across America's heartland -- and the grass is what cattle feed on before moving to a largely corn-based diet at feedlots, Bloomberg reports. In fact, 59% of U.S. pastures have been rated "poor" or "very poor."

Wendy's (WEN) has already said it will selectively raise prices as it deals with higher beef prices. Other fast-food chains have been warning of similar actions.

Meat producers will likely also feel the pinch, including Tyson Foods (TSN) and Pilgrim's Pride (PPC). And supermarket chains will be pressured to keep meat prices competitive, which has some analysts casting doubt on supermarket stocks. Jefferies cut its rating on Safeway (SWY) Thursday to "hold" from "buy" and cut its price target on the stock to $17 from $21.

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114Comments
Aug 24, 2012 1:20AM
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my wife, my son and I are a true family farm. we do all of our work and hire  no outside labor.   the drought  the last  2  year is epic in its proprtions. our  annual  rainfall is 20 inches. we have had  less than  10 inches in 2 years.   I am so sick of people in this counrtry that are griping about farmers that get paid for not planting. we are no longer paid to  not plant ,and have not been  paid to do so for the last 20 years.with prices for grain at all time highes and government payments at all time lows we wo uld plant  plant  every acre we have under normal conditions . most of  the usda budget  is directed towards food stamps,wic,etc. we have no free ride  and our efforts  have given  the U.S the cheapest food supply in the world. quit listening to  the news channels about how the farmers are getting rich  at your expense .we are not.                                                                                                                                                      

Aug 23, 2012 9:44PM
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I just spent 10 hours on a tractor looking at hay fields decimated by the drought....Push your fat asses away from your computers and look at my world....balance your checkbooks on my hay inputs this year,,,
Aug 23, 2012 9:52PM
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I like how the picture showed Holstein cow (aka milk cows) and the article talks about beef cattle and prices.
Aug 23, 2012 6:55PM
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Congress is not worried about the drought. They took their break and left everyone else in the dust.
Aug 24, 2012 12:17AM
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Well now the chickens have come home to roost,over a 100,000,000 unnecessary eaters were let into our country & for what??? God help OUR grandchildren with unlimited immigration of 3'rd world planet eaters on the way,500.000,000 humans in America 2050!!!
Aug 23, 2012 10:34PM
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The drought may only be starting, remember the '30's and the dust bowl. Some of that was due to farming practices but most of it was a lack of rain. We have better farming practices now but we also have more mouths to feed off of the same acres. Prudence with your money is the order of the decade regardless of the example our congress has set.
Aug 23, 2012 11:40PM
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 I said it before: don't send food to L.A. and New York City and the drought will have no effect on the rest of us.
Aug 23, 2012 10:54PM
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One dry year affects us for years but a good year is gone with the wind. I wish just once an author of an article like this would assume we aren't stupid.
Aug 23, 2012 11:44PM
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You'd think there was never a drought before.  Gloom and doom and more prattle from city dwellers who know nothing.  Grassland has not been destroyed.  Feed grains will recover.  Cattle production will resume.  
Aug 23, 2012 8:32PM
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I can tell you that in CO, the price of hay just continues to go up every year.  I can understand that ranchers can't afford to feed cattle. Our state is in an "extreme drought" condition.
Aug 24, 2012 2:41AM
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I bet you lettuce munching vegetarians are happy.
Aug 24, 2012 8:57AM
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Being involved(in past) in farming/ranching and friends and relatives that have been....Don't Panic.

 

If we have a 4-5 year cycle of drought or too much rain/floods....Then worry a little more.

Farmers have never had it easy,never perfect and the best we probably have had is "middling."

Farmers in America are a resilient bunch..

Takes a 16-20 month turn around on cattle..

Takes about 6-9 month turn on hogs.

And chickens take less......"Eat mo' pig and chicken"..Your favorite "Perma Bull" (investor)

Don't let the Media scare the bullshidt out of you.

But your bread and biscuits, might be more for awhile...

 

 

Aug 23, 2012 10:27PM
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The drought's affects have been known to many for a while. I think it is finally sinking to the people who chose to let the bad news slide. Reality on a hamburger roll?
Aug 23, 2012 8:39PM
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One quarter of US grain crops fed to cars - not people, new figures show ( reported in 2010)
One-quarter of all the maize and other grain crops grown in the US now ends up as biofuel in cars rather than being used to feed people, according to new analysis which suggests that the biofuel revolution launched by former President George Bush in 2007 is impacting on world food supplies. 

Aug 23, 2012 6:08PM
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Just the other day there was a report that farmers were taking all their cattle to slaughter because the cost of feed was high. The price of beef was to plummet because of this. These reports are all BS to get the market volatile. Watch pensions disappear.  
Aug 23, 2012 6:58PM
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Hmm.  Last I checked, a glut of new slaughters should lower prices, but what's a 4.0 gpa in economics next to slick price gougers.  Besides, more gov't lies?  Milk is up 10% in the last week!  Next year?...I predict 20%..and still we'll here how there's no inflation.
Aug 24, 2012 7:26AM
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Do you really think those fossil fuel dinosaurs ate sand? The country is drying up in some areas. Large forest fires do not help the drought situation. The USA  better take it serious or pay the consequences. Limit our population and build desalination plants near heavy populated areas near the ocean. Some lakes on maps are already dry. Can't fish there except for sand lizards. THE Mississippi River is not dong well. Major droughts average 10 years over longer history and are major killers of life. Planning, Preparation and Discipline by major leaders or pay the grim reaper, not in gold or silver, but in life's of many living creatures.
Aug 23, 2012 9:02PM
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Jobs are the cash flow life blood of the American financial infrastructure.     The OUTSOURCING OFFSHORING cancer  that caused the American job drought will affect us for years.  Housing market phooy , what a Bait and Switch.  Drought, water or cash flow will affect us for years to come.
Aug 24, 2012 11:25AM
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Lets see here, no water, building plants to convert sea water cost too much. Obama signs a agreement to send $ 10 billion  yr to the Afgans until 2024. Harry Reid wants to build a high speed train from Las Vegas to the middle of the Ca desert, Victorville for $5 billion. CA wants to build a high speed train from No Ca to somewhere in the middle of CA for $69 Billion. Obama gives Brazil $ 8 to 12 Billion to explore for oil that is going to be sold to China and a major investor in Brazilian oil is Geo Soros, a friend of Obama's , who bought million dollar  houses for Obama and V. Plume. The list goes on and we can't build these water plants to save the country ???? What are we missing ???? 
Aug 23, 2012 9:51PM
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actully if the fed govenment would alow pple to farm instead of paying pple not to farm or paying them to farm something else this would not be an issue at all. The fact the government regulates who can farm and what they can farm hurts us. We use to have farms everywhere and with that was an abundance of food, but the gimmement could not have that at all..so they came in slowly took over and now farming in all areas is dying. The first drought or the first flooding bad weather hurts us due tot he fact ther eis no other real back up in the stuff being grown. So we do with less.
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