As the members of the Ag Committee await the fate of the Farm Bill that was recently marked up by their committee and sent to the House leadership for possible floor time, a widespread and deepening drought is gripping the nation and sending shock waves through commodity markets. A drought specialist with the national weather service recently compared the drought and heat wave with the catastrophic dry period of 1988 that cost agriculture $78 billion.
USDA Chief Economist Joe Glauber recently said that “49 percent of the corn crop, 50 percent of the soybean crop, and 45 percent of the hay crop are all in areas that are experiencing drought,” adding that a lot of that area is actually in the “severe drought” category.
The U.S. Drought Monitor paints a grim picture of America’s heartland. All of the top ten corn-producing states are experiencing various stages of drought, with the situation worsening by the week. The entire state of Iowa, Illinois, Nebraska, Indiana, South Dakota, Kansas, Ohio and Missouri are in various stages of drought, as is roughly half of both Minnesota and Wisconsin.
Nationally, nearly 80 percent of the contiguous U.S. is experiencing some level of drought, with nearly 40 percent of that considered “severe to exceptional.” USDA’s July 8 crop progress report added to the speculation, showing that just 48 percent of the corn crop was in good or excellent condition, compared to about 69 percent at this time in 2011.
And officials just can’t help but to compare what is unfolding now, to earlier, severe droughts, and speculate on the size of the resulting crop insurance indemnities if the rains fail to come. Glauber commented on AgriPulse’s July 16 Open-Mic, “if you have a loss like what we saw in ’93 or 1988, you could really be talking about $20 billion or somewhere in there.”
Prior’s to the bill’s mark-up a coalition of more than 75 farm groups sent a letter to House Agriculture Committee Chair Frank Lucas and Ranking Member Collin Peterson, to thank them for their support in moving the Farm Bill forward, and urge them to continue momentum.
“Farmers need certainty about farm policy as they make annual operating decisions,” the letter read, “so it is important we get a farm bill done this year.”
The letter pointed out that the Farm Bill’s importance goes beyond farmers and ranchers and affects all Americans. “In addition to helping farmers plan ahead and mitigate risk to survive the tough times, the bill provides critical investment in rural communities, conserves precious natural resources like soil and water, provides food for those less fortunate, and creates new sources of energy made here at home.”
Current farm policies are set to expire on September 30, 2012 if a new Farm Bill is not passed and signed into law by the President.