Meat and poultry prices will be more affected than processed food prices because feed prices represent the biggest part of their cost of production. Processed food prices are less affected because corn and other ingredients typically make up just a fraction of their production costs compared with expenses such as transportation and marketing.
Food companies are already reacting, even turning abroad in some cases to blunt the impact of higher corn prices and tight supplies. Smithfield Foods Inc., the world's largest pork producer, has bought corn from Brazil, spokeswoman Keira Lombardo confirmed.
The drought is creating multiple problems for dairy farmers that consumers will eventually feel, said Ed Jesse, an emeritus professor of agricultural economics at the University of Wisconsin-Madison.
Farmers have begun culling their herds, which will mean less milk down the line. Also, cows give less milk in that heat, and the milk they do produce is lower in proteins and butterfat, Jesse said. That means cheese and butter prices are going up because it takes more milk to produce the same amount.
Jesse predicted that milk prices for consumers will rise by 10 percent or more, and he expects those prices to stay high into next year until herds start to recover.
"I don't think farmers are in a very happy state right now," he said.
AP reporter Dinesh Ramde contributed to this story from Milwaukee.
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