Food prices expected to rise in wake of drought

Elizabeth Polsdofer

People around the country watching their televisions probably laughed when Stephen Colbert, in a worried voice, said: “No one warned me about receding cheese lines on my pizza!” with an image of the edges of cheese on a pizza receding to a small circle in the center of a pizza.

During this segment, Colbert discussed with Bruce Babcock, ISU professor of agricultural economics, how the drought in the Midwest would affect the price of food.

However, when considering the bids for food providers for campus dining, Nancy Levandowski, director of ISU Dining, is far from laughing.

This summer, while the ISU community was focused on seeking shade from the sweltering sun, farmers all around the Midwest felt the hurt of a drought. Due to lack of rainfall this summer, farmers were unable to produce the crop yield seen in previous years and as a result, food prices are expected to rise.

“I’ll be talking with the Inter-Residence Hall Association, when we talk about the meal plan rate and what impact we’re seeing for this next year. We estimated that it would go up 2.4 percent,” Levandowski said. “Our food purchases are $10 million, so 2.4 percent on that is a pretty big number to me, especially when I have to take that and then charge that back to people in prices and/or retail or on the meal plan rate.”

At a glance, the connection between the drought and corn prices seems confusing; after all, Iowans produce more corn than any other state in the United States, but many Iowans do not love corn enough to have it for every meal.

“If the drought impacts rice or wheat, then products we actually consume directly — bread, rice — they go up for obvious reasons. It’s a little bit more complicated with corn and soybeans because we feed those to animals,” said Dermot Hayes, professor of economics and finance at Iowa State.

“What’s happening right now is the livestock producers have looked at these record prices, and they’re culling their breeding herds,” he said. “They’re reticent about feeding $8 corn. The cull in the breeding stock will cause an increase in meat prices next year. I think it will be substantial; we’ve had about a 50 percent increase in feed prices in the past two months.”

Those with current meal plans can relax as the current meal plan is not affected by the increase in pricing.

“We’re starting to see some increases, but because our purchases are longer contracts, we haven’t seen as much as what other people would expect,” Levandowski said. “But we do expect with the bids that are out right now, that we’ll start seeing rising prices.”

“Industries that are especially hard hit are the hog industries,” Hayes said. Hayes expressed deep concern over the economic impact on the hog industry in Iowa.

“I’m going to assume we get good weather again,” Hayes said when asked how long he estimated it would take for corn prices to be lowered to the price they were two months ago. “It’ll take us a couple years to get over it, but in the meantime we’ll have high prices. Unfortunately, the livestock industry is being hit hard, and Iowa is a major livestock producer. We produce a third of all the hogs in the U.S.”

Levandowski gave her input on what the near future might look like. 

“It’s been a drizzle down to us,” Levandowski said. “We’ll be seeing it in the next few months.