Iowans to see drought-induced rise in food costs in 2013 - KWWL - Eastern Iowa Breaking News, Weather, Closings

Iowans to see drought-induced rise in food costs in 2013


Experts say a multi-factor rise in the price of corn and soybeans will likely lead to an increase in food prices in early 2013.

Low levels on the Mississippi River in Louisiana prompted the US Army Corps of Engineers to dredge the main channel Monday in order to keep barge traffic flowing.

However, experts say, the upper Mississippi River is in no danger of closing to barge traffic. That's due to the locks and dams along the river, which are stationed periodically from Minnesota to just outside St. Louis, Mo.

Still, slowed barge traffic down south could eventually lead to an impact on Iowans' pocketbooks.

Lock and Dam 11 in Dubuque, like all the locks and dams along the upper Mississippi River, ensures the main channel of the river maintains a depth of at least nine feet, which allows barge tows to pass through without issue.

Jim Piper, Lock and Dam 11's lockmaster, said since the lock and dam system's inception less than a century ago, the upper Mississippi River has not shut down barge traffic.

"In 80 years, we have not been affected by any droughts or low waters or anything else," Piper said. "Navigation continues."

Iowa State University economist Chad Hart said impending economic impact in the Midwest may originate farther down the Mississippi, where low river levels threaten to slow barges carrying cargo such as fertilizer.

"As farmers get ready to think about 2013, planting a lot of that fertilizer we do like to bring up here in the fall, and that's likely going to push those prices a little higher," Hart said. "The Mississippi River is still the lifeblood of trade when you look at anything up here in the upper Midwest."

Barge shipping is cost- and space-effective. According to the Iowa Department of Transportation, the amount of cargo one barge can carry would fit into 15 jumbo hopper cars or 58 large semi trucks.

The drought's impact on barge traffic down south, plus bad growing conditions this summer, create what Hart calls an Echo Effect.

"We see it in the commodity prices -- the corn and soybeans -- now, and then that echo tends to occur six to nine months out at the retail counters," he said.

Taking the drought into consideration, the US Department of Agriculture is forecasting a three to four percent increase in food prices in 2013.

"It's going to show up at the meat counter," Hart said. "That's where we see the drought having pushed corn and soybean prices up, mean higher feed costs for the animals, which tends to mean higher meat prices when you get to the counter six to nine months from now."

While barge traffic is flowing find up north, experts say the trickle-down effect will impact Iowans' pocketbooks by early 2013.

Hart said economists are not seeing slowed barge traffic impact energy costs like it once did. He attributes that to the decrease in the amount of coal shipments due to the uptick in the use of natural gas.

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