The latest estimates of the nation's crop production show a rough harvest for America's corn farmers, a slightly better-than-expected soybean crop, and a good reason to go vegetarian.
The U.S. Department of Agriculture forecasts a corn crop of 10.7 billion bushels, slightly below the September forecast and 13 percent smaller than last year due in large part to this summer's historic drought, according to data released from the USDA today. Meanwhile, the soybean crop is expected to be around 2.86 billion bushels, 9 percent higher than September, but still 8 percent lower than last year.
"The hottest and driest weather came in the most critical stages for corn production," explains Gary Schnitkey, a specialist in farm management at the University of Illinois. "Soybeans weren't as bad because we began getting later rains in August," when soybeans still have room to grow, he says.
But the drought's effects weren't the same everywhere.
While Illinois' total corn production is expected to be nearly 38 percent lower than in 2011, for example, Minnesota is projected to produce nearly 1.39 billion bushels of corn, 15 percent more corn than last year and a potential record for that state. Likewise, North Dakota — thought not a corn producer on the scale of Iowa or Illinois — is also expected to have higher production than last year.
Overall, the nation is projected to post a more than 13 percent decline in corn production and a 7.5 percent drop in soybean production. That reduction in supply has sent prices skyrocketing. That means that farmers in places spared by the worst of the drought, like Minnesota, could stand to make excellent profits this year. And even farms with moderately smaller yields than usual could still avoid a disastrous year, says Schnitkey.
"We're having a reduction in yields, but prices have more than offset those yields. Farms that had any sort of yield will do okay," he says.
He also adds that a majority of crop farmers, whether hard-hit by the drought or not, will weather the paltry harvest largely unscathed due to crop insurance.
"Most of them will come out of this from a financial standpoint okay," Schnitkey says.
However, because those crops are used for livestock feed, they have raised costs for livestock producers, who are also largely uninsured. That means a tougher time for those farmers, not to mention higher food prices.
Indeed, though grain prices have grown, higher food prices will show up more in meat and dairy products than in grain-based foods, says Art Barnaby, a crop insurance expert at Kansas State University.
He uses the example of wheat. Even if wheat were at $14 per bushel, much higher than current prices, there would only be around 20 cents of wheat in a $3 loaf of bread, Barnaby says. However, grains as inputs for meat production raise those prices much more, though with more of a time lag.
"It'll show up as higher prices in food prices and dairy prices probably out in the future, within the next year or so," says Barnaby. So while there may not exactly be a bacon shortage on the horizon, a BLT may still cost a pretty penny come next year.
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Danielle Kurtzleben is a business and economics reporter for U.S. News & World Report. Connect with her on Twitter @titonka or via E-mail at email@example.com.