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U.S. ag secretary on the drought's effect on food prices

Dust rises as a farmer plows a field in Mendota, Calif., in the state's San Joaquin Valley on March 11, 2009. Due to drought conditions many farmers the San Joaquin Valley, Calif.'s agricultural center, do not have enough water to plant their fields.

Kai Ryssdal: At the risk of repeating myself: Man, it's hot out there. Hot and dry. Bone dry.

If you go to the Department of Agriculture's website, they've got a map there of drought disaster areas. Thirty-three states are colored red. Something like two-thirds of the country that hasn't had enough rain. Bad for crops, bad for farmers and eventually not so great for consumers either.

It's a problem that lands squarely in the lap of Agriculture Secretary Tom Vilsack. He's with us now. Mr. Secretary, welcome to the program.

Tom Vilsack: Good to be with you.

Ryssdal: So we're going to get a key crop report in the morning: corn and soybeans, I think it is. How bad is it going to be, sir?

Vilsack: I don't think anybody knows for sure.

Ryssdal: You don't get a sneak peek?

Vilsack: No. I get a chance to see this at the same time that everybody else does. And I will tell you that regardless of whatever the report says, we still won't know for sure what these yields will be until the crop's actually harvested.

Ryssdal: We spoke to a rancher out in Missouri a couple of weeks ago, and he said he hasn't seen rain in 103-something days, and if gets to the point where it's probably September or so, he's going to start selling off these cattle, these bulls that he's been breeding for most of his life. There are real things happening out there.

Vilsack: There are to livestock producers, and especially crop producers, because they don't have crop insurance. What we are attempting to do for those livestock guys is to basically open up public lands, open up lands that previously were not available for haying and grazing, and make them available. We've just announced a $30 million effort to try to promote more access to water and fords.

Ryssdal: You know, drought's one of those things, Mr. Secretary, that the rest of us farther along the food chain don't really think about it until it starts showing up in prices at the grocery store. And the United Nations said this morning global food prices were up 6 percent last month.

Vilsack: Well I think it's important to distinguish between commodity prices and food prices. What the United Nations was reporting on were commodity prices.

Ryssdal: Which is going to hit consumers eventually, right?

Vilsack: Well, that's the interesting thing about this. The farmer only gets, in the United States, only gets 14 cents of every food dollar that's spent in the grocery store. So when commodity prices go up, they can go up dramatically. In fact, they can double. And the impact on food prices is very, very marginal. We would expect to see somewhere between a half a percent to a percent increase in food inflation as a result, or food prices, as a result of the drought. One-half percent to a percent increase. We normally see 3 percent food inflation; we're expecting 3 to 4 percent next year. In fact, we'll probably likely see a decline in some food prices for the short term, as folks are liquidating their herds. There may be beef, poultry and pork opportunities where prices go down just a bit.

Ryssdal: This has been, as you know, the hottest summer on record in a lot places in this country. Is it enough for you and the Obama administration to start rethinking food security in this country -- how we plant, what we plant, how we do agriculture?

Vilsack: We've basically seen the United States go from the 1930s, where we were struggling to meet our food needs, to being the largest producer or one of the largest producers of food in the world, able to meet our own needs and able to also export. We had a record year of exports last year, we're going to continue to have a strong year this year. And that's important because it provides additional job opportunities as well as additional income opportunities.

You know, this is serious, I don't want to downplay it, but the level and severity of it is mitigated by things like crop insurance, by new technologies that might make the yields a little bit better than anticipated, by not having as much factored into food price increases as one might think.

Ryssdal: At the end of the day, sir, you're still praying for rain?

Vilsack: Absolutely, absolutely.

Ryssdal: Tom Vilsack, the secretary of agriculture. Thank you very much, sir.

Vilsack: Thank you.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

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