U.S. drought drives up food prices worldwide

Thursday, August 9, 2012
By Paul Martin

By Aaron Smith
CNNMoney.com
8-9-1012

The drought that’s drying up the Heartland isn’t just an American problem. It’s causing food prices to surge worldwide.

And it could get worse.

“This is not some gentle monthly wake-up call, it’s the same global alarm that’s been screaming at us since 2008,” said Colin Roche of Oxfam, noting that the drought could lead to food shortages for millions of people worldwide.

Food is a major U.S. export, so the drought affects prices around the globe.

“World leaders must snap out of their lazy complacency and realize the time of cheap food has long gone,” Roche said.

In July, food prices jumped 6%, after three months of declines, according to the United Nations’ monthly Food Price Index released Thursday. The main drivers behind the increase? Grain prices. And more specifically, corn prices, which have hit record highs in recent weeks.

According to the U.N. report, global corn prices surged nearly 23% in July, exacerbated by “the severe deterioration of maize crop prospects in the United States, following drought conditions and excessive heat during critical stages of the crop development.”

“It’s going to have a big impact [on consumers],” said Sam Zippin, an analyst at financial information firm Sageworks. “Corn is in almost everything.”

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