Russian and US drought sparks fears on a new food crisis + Drought turns half of US into Disaster area

Russian and US drought sparks fears on a new food crisis — RT

Wheat prices have jumped more than 50% and corn prices more than 45% since mid-June as drought in Russia, the US and Australia have partly destroyed crops. Experts warn that a looming food crisis could hit global growth.

Russian grain prices reached record levels last week after the Government cut its 2012 harvest forecast to 86.5 million tons from an earlier estimate of 94 million tons. The move sparked fears the country could impose export restriction as it did in 2010.

Reduced crops could not only hit Russia’s exports, but it also speeds up the inflation rate, which the Russian Central Bank is struggling to bring down, says a report from HSBC. The inflation rate could reach 8% from the currently estimated 3.6%, HSBC analysts warn. It could force RCB to revise its interest rate by 100 points.

Russia, the world's second largest wheat exporter after the United States, plans to export between 13.5 million to 13.8 million tons of wheat for the season 2012-13. That's compared with an estimated 21 million tons in 2011-12, according to the Institute for Agricultural Market Studies (IKAR). Read More: Russian and US drought sparks fears on a new food crisis — RT

• Drought turns half of US into disaster areas

In the midst of one of the worst droughts in history, 218 counties were added to the US government’s list of natural disaster areas, putting nearly half of all counties in a state of agricultural catastrophe.

1,584 counties in 32 states are now designated primary disaster areas, according to the US Department of Agriculture. The department uses a weekly drought monitor to form its list. This week, the USDA found that nearly half of the nation’s corn crop and 37 percent of its soybean crop was rated “poor” or “very poor.”

Three quarters of the country’s cattle are in areas affected by the drought.

Counties that are considered a natural disaster area make its famers and ranchers eligible for federal aid, including low-interest emergency loans, the Associated Press reports. Read More

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