US drought set to hit Aussie price of bread, chicken, corn

Sarah Michael
July 20, 2012
news.com.au

PRICES of bread and chicken are set to go up in Australia as the US faces its worst drought in more than 50 years.

Corn and soyabean prices surged to record highs overnight, with large agricultural regions of US declared “a disaster zone” after weeks of scorching temperatures and low rainfall.

The rise in wheat prices – which have surged more than 50 per cent in five weeks – is the biggest worry for Australians, Profarmer senior commodities analyst Malcolm Bartholomaeus said.

“Anything that uses flour will go up,” Mr Bartholomaeus said.

“And the price of chicken is likely to go up because feed grain has gone up and [producers] are likely to pass those costs on.”

The drought also spells bad news for any products made with corn or soyabeans, Mr Bartholomaeus said.

He added that the price rises will hit products in Australia toward the end of the year, when the higher priced commodities come into production lines.

America’s top agriculture official Tom Vilsack has admitted he gets on his knees and prays for an end to the severe drought.

“If I had a rain prayer or rain dance I could do, I would do it,” said Mr Vilsack, who is President Barack Obama’s Agriculture Secretary.

The cost of corn and soyabeans has now exceeded the 2007-08 highs that sparked food riots across more than 30 countries.

The situation could spell disaster for the world’s poorest nations, Mr Bartholomaeus said.

“We are approaching the levels for grain and wheat in particular where a large number of developing countries find it’s pushing the price of food too high,” he said.

UN Food and Agriculture Organisation José Graziano da Silva told the Financial Times he would set up an international summit before the end of the year if the crop situation deteriorated further.

“I am certainly concerned about the recent rises in food commodity prices, given their potential implications especially for the vulnerable and the poor, who spend as much as 75 per cent of their income on food,” Mr Graziano da Silva said.