Agriculture Secretary Tom Vilsack said the drought -- which affects 1,297 counties in 29 states -- is the "most serious situation we've had probably in 25 years."
Vilsack said 78 percent of the country's corn crop is in designated drought areas and noted a 38-percent increase in corn prices since June 1.
Mississippi River barge companies are getting hit two ways by the drought -- lower corn yields mean less to haul, and lower river levels mean smaller loads.
The U.S. Army Corps of Engineers reported the river gauge in St. Louis was at 3 feet Tuesday, down from the normal 15 feet at this time of year, and is expected to fall another couple of feet during the summer, the Belleville (Ill.) News-Democrat reported. The gauge measures the river level, with zero being an average point established in the 1860s.
"The water is getting low. That is definitely affecting our ability to allow for the level of traffic we're used to having," said Mark Mestemacher, owner of Ceres Barge Line in Fairmont City, Ill. "More importantly, the drought is affecting corn crops and unfortunately affecting what we will end up with. We're seeing lower and lower yields."
This is likely to add up to higher food prices, with products directly based on corn going up first. Dairy products may soon become more expensive as farmers cut the size of their herds.
Bill Tentinger, president of the Iowa Pork Producers Association, told the Milwaukee Journal Sentinel meat prices could drop at first because hard-pressed farmers will send animals to the slaughterhouse to save on high-priced feed. But that will mean less supply next year, with higher meat prices as a result.
"This is your last chance to get cheap beef," Walter Breitinger, a commodities futures trader in Valparaiso, Ind., told the newspaper.
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