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The 2012 drought will have far-reaching consequences

The 2012 drought will have far-reaching consequences
It’s not hard to see the immediate effects of this year’s hot, dry weather in rural Iowa—the worst drought since 1988, weather experts say.  Corn and soybean fields are withering in the hot summer sun.  Ponds, creeks and rivers are drying up. And towns and counties are instituting watering bans to preserve their precious water reserves.

But farmers are likely to feel the effects of the 2012 drought for years to come. And the long-term pain will almost certainly be felt the most by farmers who raise livestock.

Crop farmers can expect to earn higher prices for the corn and soybean they are able to raise this year and most have purchased crop insurance to help buffer the impact of the drought. Meanwhile, farmers who raise pigs, cattle and poultry typically have little protection when drought sends the price of corn rocketing higher, as it has in 2012. And unlike a manufacturer, they have no way to raise the prices of the animals they send to market to offset their higher costs.

Those higher corn costs are likely to force many livestock farmers to cut back their production or exit the business entirely.  That’s a bitter pill for Iowa and its economy, because raising livestock is a prime source of economic development for rural communities.  For example, the Coalition to Support Iowa’s Farmers recently noted that a new hog barn in Washington County would have a $1.5 million positive impact on the area’s economy in the first year of operation. It’s also tough because, in an era of rising land values, livestock production is a very good way for young people to get a foothold in farming.

And what’s the pain in the livestock business mean for consumers? They will likely see lower prices at first, as farmers send more animals to market. But down the line, probably later in 2013 economist say, the tight supplies will push meat prices higher.

As the drought settles into Iowa, I’m reminded of something an older farmer once told me early in my farm reporting career. “It will start to rain again sometime, “he said, “but a drought always has a long tail.” I didn’t know at the time how wise he was.

Written by Dirck Steimel
Dirck is the news services manager for Iowa Farm Bureau.