Drought Worsens In Plains

While other corn growers already have knocked down their drought-ravaged crops to feed them to livestock, Nebraska farmer Doug Nelson still waits for his maize to mature, well aware it won’t be a banner year.

On the day a new report suggested the nation’s worst dry spell in at least a generation is deepening in America’s breadbasket, Nelson said Thursday he expects to harvest anywhere from nothing to 43 bushels per acre on his unirrigated acreage, a far cry from the 120 to 140 bushels he'd typically get. On the irrigated land, he could see 150 to 200 bushels an acre; in previous years, Nelson would see a minimum of 180 bushels.

‘‘For the most part, we haven’t seen a hit like this since 1974, as far as my career goes,’’ said the 61-year-old Nelson, who farms some 5,000 acres near Wayne. ‘‘But we'll have the combines going here in probably another month, and then we'll know for sure.

‘‘You can walk these fields and run into good spots, then walk another part where there’s a different soil and have nothing.’’

That’s part of the growing frustration with an increasing drought in Nebraska and several other farming states, despite recently cooler temperatures that have, at the very least, given people a break from this summer’s stifling heat.

The U.S. Drought Monitor’s weekly map showed that, as of Tuesday, just over two-thirds of Iowa, the nation’s biggest corn producer, was in extreme or exceptional drought — the worst two classifications. That’s up more than 5 percentage points, to 67.5 percent, from the previous week.

Nearly all of Nebraska, Kansas, Missouri and Illinois are in extreme or exceptional drought, with Illinois showing the most dramatic climb, spiking 17 percentage points in one week to 96.72 percent, according to the map.

In neighboring Indiana, where 5 inches of rain fell in some parts over the past week or so, the area in exceptional or extreme drought fell 9 percentage points, to 37.09 percent.

Conditions cooled in the region, but little or no meaningful rain fell, said Mike Brewer, a National Climatic Data Center scientist who put together the latest map, which is released by the National Drought Mitigation Center at the University of Nebraska in Lincoln.

The lack of rain allowed exceptional and extreme drought conditions to continue expanding in the area from northern Missouri and into Kansas and Nebraska, he said.

On Wednesday, the USDA added 33 counties from eight drought-stricken states to its list of natural disaster areas, bringing that tally to 1,821 counties in 35 states over the past six weeks. That’s more than half of all U.S. counties, and the vast majority received the designation because of drought.

Plains farmers have begun harvesting what corn managed to survive, although many growers cut their fields weeks ago, chalking the year up as a loss. Some ranchers have sold livestock because they had no grass for grazing or money to buy feed, the price of which has soared.

In the lower 48 states, there was a subtle increase in the overall area experiencing at least some drought, from 61.77 percent last week to 63.2 percent. There was little change in the overall area seeing exceptional or extreme drought, which went from 6.26 percent last week to 6.31 percent this week.

Rain is expected in the northern Plains in coming days, though it may be too late to save many withered crops.

The U.S. Agriculture Department twice has slashed its forecast for this year’s corn and soybean output because of the drought. In the spring, it forecast the nation’s biggest harvest, as farmers planted 96.4 million acres of corn — the most since 1937. But the agency now expects the nation to produce 10.8 billion bushels, the fewest since 2006.

If that estimate holds, the federal government says it will be enough to meet the world’s needs and ensure there are no shortages. But experts say food prices will almost certainly climb — corn is widely used in products ranging from cosmetics to cereal, colas to candy bars.

While just 1 percent of the nation’s corn crop is brought in from the fields by this time of year, the USDA said Monday in its weekly crop progress report that 4 percent of the harvest is complete. The reaping is farther along in Kansas, Missouri, South Dakota, Kentucky and Tennessee.

In an occupation that’s at nature’s mercy, ‘‘we've got to calculate we’re gonna lose a crop once in a while and calculate that into our expenses,’’ said Nelson, whose northeastern Nebraska farmland is about 60 percent corn, the rest soybeans. ‘‘Sometimes it’s heat, drought, excessive rains, bugs, winds. I guess that’s what keeps us coming back for next year.’’

© Copyright 2012 Globe Newspaper Company.

Drought Hits Mighty Mississippi

As if high temperatures, wildfires, and dried up crops weren't enough, the drought plaguing the US is now crippling the nation's largest river.

The Mississippi River is one of the nation's main arteries of commerce. More than 500 tons of grain, coal, and other goods pass along its banks every year. With water levels on the Mississippi so low, barges are having trouble getting through creating delays in shipping crucial goods can costing hundreds of millions a day.

The drought of 2012 is shrinking the river. In some places, it's been reduced to half its size. The Army Corp of Engineers is struggling to keep water levels at nine feet, the legal level to keep the Mississippi open for traffic. River levels haven't been this low since the late 1980s, and they're getting dangerously close to breaking the all-time low record.

In one stretch of the Mississippi, several barges got stuck. The situation prompted the U.S. Coast Guard to close an 11-mile section of the river, stranding 97 boats and barges. Dredge operators are hard at work trying to make the water deep enough for the barges to pass through. Barges carrying lighter loads to help navigate the shallow waters. But the less they carry, the more consumers pay. More than 400,000 jobs depend on the flow of traffic in the Mississippi River.

If the Mississippi is forced to close, it will cost the U.S. economy $300 million a day and food prices will soar. Corn and soybean prices are at record highs. The price of corn is up 68 percent from June and soybean prices are up 39 percent.

Drought 2012 Costs Crop Insurers $5 Billion

Private crop insurers may face losses exceeding $5 billion if this year’s U.S. drought is worse than one in 1988, according to Standard & Poor’s.

Hot, dry weather across much of the Midwest has damaged crops, led to a rally in corn and soybean futures, and boosted insurance loss estimates. The U.S. subsidizes farmers’ premiums for so-called multiperil coverage, which protects against a loss of revenue or production as a result of drought, hail, wind, frost or other natural causes. Private insurers sell and administer the coverage in the U.S. In return, the federal government backstops the firms with payments and reinsurance.

Losses among crop insurers will vary depending on how much government and private reinsurance they use, S&P said. The companies can withstand the losses because of capital levels and revenue from other businesses, according to the ratings firm.

American Financial Group Inc., which sells crop insurance along with property, casualty and supplemental health protection, last month reduced its earnings projection for the year, saying the drought will weigh on results.

Soybeans climbed to an all-time high today, and corn reached a record $8.49 a bushel on Aug. 10 on the Chicago Board of Trade. The Department of Agriculture has slashed its corn harvest forecast by 27 percent since June, after declaring more than half of U.S. counties as disaster areas amid drought conditions that stretched from California to New York.

Losses this year may rival costs from the 1988 drought and a 1993 flood, Tom Zacharias, the president of National Crop Insurance Services, an industry group, said last month.

Federal crop insurance dates to the Dust Bowl droughts of the 1930s. The program and subsidies were boosted in 2000 as lawmakers sought to use it as a way to avoid what by the 1980s had become near-annual disaster payouts.

Governments And Big Banks Preparing For Financial Collapse

All over the world, governments and big banks are preparing for imminent financial collapse. Hushed conversations are taking place in corporate boardrooms and in the halls of power in places such as Washington D.C. and London. The clues are all around us. 


It is now known that the U.S. government has been secretly directing five of the biggest banks in America "to develop plans for staving off collapse" since 2010.  

U.S. regulators directed five of the country's biggest banks, including Bank of America Corp and Goldman Sachs Group Inc, to develop plans for staving off collapse if they faced serious problems, emphasizing that the banks could not count on government help.

The two-year-old program, which has been largely secret until now, is in addition to the "living wills" the banks crafted to help regulators dismantle them if they actually do fail. It shows how hard regulators are working to ensure that banks have plans for worst-case scenarios and can act rationally in times of distress.

When combined with the dozens of other clues of imminent collapse, a very troubling picture begins to emerge.  Over the past 12 months, hundreds of banking executives have been resigning, corporate insiders have been selling off enormous amounts of stock, and a significant number of Wall Street bankers have been shopping for properties in rural areas this summer to escape urban war zones.


The U.S. government has been stockpiling food and ammunition. President Obama has signed executive orders that would potentially be implemented in the event of a major meltdown of society.  

So what does all of this mean?  That a financial collapse is coming. Over the past 40 years, the total amount of all debt in the United States has grown from about 2 trillion dollars to nearly 55 trillion dollars.  That is a recipe for financial armageddon, and it is inevitable that this gigantic bubble of debt is going to burst at some point.


The situation in Europe continues to get worse and worse.  The authorities in Europe have come out with "solution" after "solution", and yet unemployment continues to skyrocket and economic conditions in the EU have deteriorated very steadily over the past 12 months.

Of course the historic drought that is ravaging food production in the United States this summer is not helping matters either.  Another summer or two like this one and we could be looking at a return of Dust Bowl conditions.

Our resources are dwindling, war in the Middle East could erupt at any moment and our planet is becoming increasingly unstable.  The following is from a recent article by Paul B. Farrell on Marketwatch.com....

Fasten your seat belts, soon we’ll all be shocked out of denial. Some unpredictable black swan. A global wake-up call will trigger the Pentagon’s prediction in Fortune a decade ago at the launch of the Iraq War: “By 2020 ... an ancient pattern of desperate, all-out wars over food, water, and energy supplies is emerging ... warfare defining human life.”

A "perfect storm" is brewing. Prepare yourself.

Drought 2012: Stokes the Food As Fuel Debate

The U.S. government requires about 13 billion gallons of ethanol to be used in the nation's gasoline. To achieve this, nearly half of the nation's corn crops go to not feeding people but to powering motor vehicles.

Since 2005, the U.S. government has mandated that gasoline contain ethanol, mostly derived from corn. The policy intent was to reduce dependency on foreign oil imports and improve air quality. It has also been a boon for corn farmers.

But in the midst of the worst drought since 1934, the faults of this policy that forces nearly half the U.S. corn harvest into fuel production. And with corn prices at record highs, the ethanol requirements are fueling increased food costs and spreading it to the price of gasoline, which is up almost 40 cents a gallon since early July.

Beef and pork ranchers are slaughtering their herds at a record rate to cut their corn feed costs which have gone up more than 30% in three months. As a result, U.S. cattle herds next year are projected to be the smallest since 1952, a guarantee of more expensive food in years to come.

Th drought exposes the notion of trying to expand an industry where the economics of it don't make sense. Based on its energy content, ethanol is approximately 50% more expensive than gasoline and the acreage required to produce it distorts land prices.

Tractors run on diesel fuel that plow the fields, plant seed, harvest the crop and haul it to refining plants. Ethanol is also highly corrosive and can’t be transported by pipeline, unlike oil. Trucks or trains must carry the finished product to gasoline blenders. In short, ethanol requires more energy to produce than it actually yields, negating the environmental benefits.

Earlier this month the United Nations Food and Agriculture Organization issued a statement urging "an immediate, temporary suspension" of America's use of corn to produce ethanol, in order to "allow more of the crop to be channelled toward food and feed uses."

Natural disasters can't be controlled, but ethanol is a man-made disaster that needs to be stopped.

Drought 2012: Food Prices to Surge Higher - USDA

The drought of 2012 has sent corn, wheat and other commodity prices soaring to record or near record levels in recent weeks as U.S. crops continue to dry out.

The record drought gripping half the US will help push food prices up by 3% to 4% next year, according to the Department of Agriculture.

"In 2013 as a result of this drought we are looking at above-normal food price inflation. Consumers are certainly going to feel it," USDA economist Richard Volpe said.

Milk, eggs, beef, poultry and pork prices will all be affected by the drought, which has pushed up prices for feed.

• Beef prices are expected to see the biggest jump at 5% to 7%.
• Dairy product prices are forecast to climb 5% to 6%.
• Poultry and egg prices are projected to rise 4% to 5%.
• Pork prices are expected to rise 4% to 5%.

With farmers and others warning that prices will rise, the drought has sent corn, soybean and other commodity prices soaring in recent weeks as fields wither under the heat across much of the Midwest.

The drought is not expected to affect prices for fruits and vegetables as most of those crops are irrigated. However, the USDA is forecasting a 2% to 3% for all fruits and vegetables in 2013.

Drought 2012: Global Impact of Wilting U.S. Crops - Video

 

At least 32 states are feeling the effects of the drought as the unrelenting heat has pushed grain prices to record levels.

Corn is the major U.S. crop and a bad year drives the price up on everything from beef to cereal to fuel. As crops continue to wilt, farmers and consumers around the world are looking towards the sky, hoping for rain.

Drought 2012: Food Shortages and Global Unrest Possible

Worst Drought Since Dust Bowl

With more than half the US in the grips of the worst drought since the 1934 Dust Bowl, shortages and rising global prices which on corn, wheat and soybeans, which America is the world’s largest exporter, could lead to global unrest.

World prices for corn, wheat and soybeans have already reached record levels, and will continue to affect developing countries that rely on on agricultural imports for food.

“The drought is clearly going to kick prices up. It already has,” said NECSI president Yaneer Bar-Yam. “We’ve created an unstable system. Globally, we are very vulnerable.”

Deregulation has not help the situation. In the late 1990s, food markets were deregulated, allowing hedge funds and investments banks to speculate on prices, making markets susceptible to sudden, sometimes massive, price fluctuations.

“The drought may trigger the third massive price spike to occur earlier than otherwise expected, beginning immediately,” wrote the NECSI team. Price hikes have been credited as the cause of the Yemeni uprising in 2008 that led to food riots and widespread violence. During that same year, killings occurred in Haiti over the doubling of the price of rice, resulting in government rice warehouses being looted.

The 1934 drought and dust storms millions of acres of crops and left 80% of America experiencing food shortages. At a time when much of the world relies on the US for food staples like corn, wheat and soybean, the impact of the 2012 drought could lead to increased global hunger and violence.

Drought 2012: Nearly 1,600 Counties Declared Disaster Areas

218 Counties Added in 32 States

As one of the worst droughts in U.S. history continues, an additional 218 counties have been added to the US government’s list of natural disaster areas bring the total to 1,584 counties in 32 states that have been designated primary disaster areas, according to the USDA.

The USDA utilizes a weekly drought monitor to form its list and this week they found that nearly half of the nation’s corn crop and 37% of its soybean crop was rated “poor” or “very poor.”

Farmers and ranchers in counties considered natural disaster areas are eligible for federal aid, including low-interest emergency loans, in addition to access to 3.8 million acres of conservation land to feed their animals. Three quarters of the country’s cattle are in areas affected by the drought.

Farmers are being paid to take land out of production to prevent erosion and create wildlife habitat and are also receiving a penalty-free, 30-day grace period on their crop insurance premiums this year.

With confidence in the economy at its lowest level since the recession combined with US export orders at there lowest level in three years, food shortages and rising food prices could drive the country into another recession with impact felt worldwide.