Drought in Midwest dries up hopes around the world

Relentless heat and no rain in Illinois is a bane for global food prices, boon for Australian wheat farmers

Jack Rodolico By Jack Rodolico

Drought-damaged ears of corn in varying degrees of development are seen on a farm near Georgetown, Illinois July 24, 2012. (Reuters/Karl Plume)

When a sunken town emerges from the bottom of a lake, you know you’ve got a problem of Biblical proportions.

Monument City, Indiana sunk like Atlantis in 1967, as part of the creation of a reservoir. But after weeks of relentless drought, the reservoir level is so low that the forgotten town is now above water.

Monument City’s reappearance symbolizes the drought, the first major drought in the Midwest since 1988, and the worst since the drought of 1956. Things are bad out there. The U.S Drought Monitor notes:

over 90 percent of the topsoil was short or very short of moisture in Oklahoma, Kansas, Nebraska, Missouri, Iowa, Illinois, Indiana, and Ohio, with virtually all (99 percent) short or very short in Missouri and Illinois….

The implications go far beyond the Midwest. From India to Australia to South Korea, all eyes are on the dry American Midwest.

Low rainfall in Illinois means a sharp rise in global food prices, and no one understands this better than Illinoisans, as Latitude News learned when visiting Champaign, Illinois this week. We asked Sand-hillers to share their thoughts on the local drought that’s causing a global problem.

The World’s Corn Basket

David Hoffman summed up a concern on many people’s minds in Champaign, Illinois.

Although, it’s probably time to rename the Midwest “The Corn Basket.”

Brian Fuchs with the National Drought Mitigation Center in Nebraska tells Latitude News that the Midwest corn crop is under heavy stress, in part because farmers have become more reliant on corn.

“There’s been an absolute shift towards corn in the last few years,” says Fuchs. “Corn is a high-water plant. For many areas in the Corn Belt, [farms] are un-irrigated. There’s no chance to supplement water input.”

Here a drought, there starvation?

As drought grips the Midwest, the value of corn – and soy to a lesser extent – increases, dragging with it the price of other grains like wheat and rice – staples for much of the world’s poor. Corn and wheat prices have risen 50 percent in the last six weeks.

So far, the price increase is not as severe as the 2007-2008 food crises, which caused riots in over 30 countries. But if the price of corn keeps rising, and wheat and rice become unaffordable, food shortages could follow among the world’s most vulnerable populations.

In the meantime, from construction to outdoor movie screenings, no aspect of life in the Midwest is being spared from the hot, dry conditions. American consumers can expect to feel the drought’s bite both at the supermarket and gas pump. And as farmers pray for rain, major corn buyers around the world are increasingly looking to Brazil for corn.

Back in Illinois, Rachel Lutz can’t help but feel a little uppity about the most dire climate change predictions.

Helms may feel vindicated: more Americans now see a link between climate change and extreme weather events like the drought.

From drought to boom times in the Land Down Under

Shibashis Mukherjee – another Champaigner – wonders, though, if the drought stings worse because of a particular federal policy.

As Mukherjee was speaking to our reporter in Champaign, America’s cattle farmers were raising the same concern to the Obama Administration.

In an attempt to decrease American dependence on foreign oil, a Bush-era mandate requires roughly one-third of the U.S. corn crop to be turned into ethanol (which, in turn, is mixed into your gasoline). President Obama supports the mandate. But livestock farmers say it raises the price of corn, which they rely on to fatten cattle before slaughter.

Brian Fuchs with the National Drought Mitigation Center doubts easing the ethanol mandate will offer a quick fix. He thinks the global economy is far too complex.

“Trying to pinpoint one [cause] is probably not the safest thing to do,” says Fuchs.

Corn plants struggle to survive on a drought-stricken farm in Henderson, Kentucky, July 24, 2012. (Reuters/ John Sommers)

Look to Australia, he says. Australia recently emerged from a decade-long drought, and Fuchs says there was no single solution that eased life for Australian farmers. Putting cash in farmer’s pockets, he says, was the only truly helpful solution to the Australian drought.

“They were putting money into the [agricultural] economy trying to replace some of the lost income,” he says.

In the U.S., Fuchs adds, “As far as direct payments [to farmers], you’re not going to see it happen. The government has pushed producers to get crop insurance,” essentially telling farmers that insurance is the best way to hedge their bets.

Farmers do receive some types of direct payments from the federal government, but not as compensation for lost corn. For its part, Congress seems unwilling to move to help farmers. It is an election year, after all.

Down in Australia, the ground is moist and the grains are growing fat and healthy. In fact, as the drought worsens in the Midwest, raising global grain prices, Australian wheat farmers are planning to cash in this year. As one farmer told the Australia Broadcasting Corporation:

[The crops] are lush. They look like a magnificent, overgrown front yard. Actually everything looks like a sea of green at the moment as we drive around. This is a magnificent start for us.

A rather magnificent irony, too.

Audio for this story was recorded by Pamela Dempsey, Project Coordinator, Midwest Center for Investigative Reporting.