USDA predicts average food price inflation despite drought - KOTA Territory News

USDA predicts average food price inflation despite drought

The U.S. Department of Agriculture estimates almost 80 percent of agricultural land in the nation is experiencing some kind of drought.
 
And while the agency has revised crop production down considerably from earlier estimates, a recent analysis predicts it won't impact food prices too much in the near future.

In fact, the USDA estimates food price inflation will be about 3 percent this year, almost a full percent lower than last year.
 
"I can't say I really put too much faith in their statement," said Susan Hodge, a Rapid City woman browsing the aisles of Don's Valley Market.
 
Like many shoppers, she's already seen prices rising.
 
"Anything that has a corn product has raised," she said, adding that since she's a "senior citizen, have to watch my money, and some things you just don't buy."
 
The most recent USDA report predicts a 13 percent drop in corn production this year, the lowest since 2006.
 
"As long as we're having the drought," said Box Elder's Edna Oliver, "I would say they would have to raise prices just to make it."
 
And corn prices are skyrocketing.

In June, futures were trading at under $5.50 a bushel. Now, they're approaching $8.
 
"I think some stores it affects more than others, especially the smaller stores," said Amber Bailey, a Rapid City mother of four.
 
That's partly because commodity prices -- say, for a bushel of raw corn -- make up just 14 percent of the total retail cost.

The rest, according to agriculture analysts, goes to things like processing, packaging, and transportation.
 
"I pretty much don't shop unless I have, you know, a lot of coupons or discount options," Bailey said, "because it's just too expensive."
 
Hold on to your wallets, because that same USDA analysis predicts it'll get even more expensive next year -- another 3.5 percent on top of this year's 3.
 
"I really don't look for it to get better," said Hodge.

Customers could see the cost for other products rise sooner than for those that use corn.

The Agriculture Department predicts meat and dairy prices could spike in the next month or two.