US Midwest Floods May Raise Food Prices Worldwide

Heavy rains have triggered massive floods in the upper Midwest, causing widespread damage in cities and towns in Iowa, Illinois and Missouri. But the biggest impact of the flooding may be on world food prices since the area struck produces most of the country's corn and soybeans. VOA's Greg Flakus has more from Houston.

The flooding along the Mississippi river and many of its tributaries is only the latest manifestation of a problem vexing farmers in the region. The heavy rains that produced the flooding began around a month ago, right at the time when most farmers were planting. While rain is necessary for crops to grow, too much rain can destroy crops. Both corn and soybean plants die if left in water for two days.

Roger Elmore, an agronomist at Iowa State University, speaking to VOA by telephone, says there will be a profound impact on this year's crops.

"Yields on both crops will be reduced significantly," he said. "Corn, I am thinking, will have at least a 50 percent reduction in yield."

He says many farmers will have the option of replanting if the flood waters recede and are not replenished by more heavy rain. The high prices will provide farmers with an incentive to plant rather than take payments from crop failure insurance policies.

Elmore says corn prices were already higher than normal before the floods, partly because of demand for the grain by plants that use it to produce ethanol, an alcohol that is used as a fuel additive in gasoline.

"Over half of the corn normally goes into livestock feed; ethanol consumes about 30 percent of the grain, the corn grain, and they are going to be fighting for it because they have these huge facilities, and then the food uses, about eight to 10 percent of the corn grain goes into food [products]. All of those forces are going to be competing to buy corn," he said.

Roger Elmore says market speculators are driving up prices based on the devastation they see in the Midwest fields. He says corn, which went for around four dollars a bushel just a few years ago has nearly doubled in price.

"Futures yesterday, I think, went up to $7 [a bushel] for July futures on corn," said Elmore. "Projections done by one of our economists here indicate it will be up to $11 before this is all said and done."

Elmore says the floods and the use of corn to produce ethanol are only two of the factors driving up corn prices. He says the weakness of the dollar, high prices for fertilizer and, above all, higher energy prices also play a big role. With oil selling for around $140 a barrel, he says, farmers who depend on diesel fuel to run their tractors and other machinery need to get a higher price for what they produce.