Drought Conditions Worsen, Damage Estimate Tops $12 Billion

The latest report on the US drought increases slightly the area affected by “moderate” drought conditions or worse, but the footprint has widened to include every state, including Alaska and Hawaii. From the report:

We’ve seen tremendous intensification of drought through Illinois, Iowa, Missouri, Indiana, Arkansas, Kansas and Nebraska, and into part of Wyoming and South Dakota in the last week. [A]s of the July 24 U.S. Drought Monitor, every state in the country had at least a small area shown as abnormally dry or worse.

A report in USA Today cites a meteorologist from Aon Benfield, a global reinsurance company:

There does seem to be near-unanimous agreement from industry experts that this year’s drought losses will surpass the $12 billion recorded in 2011. Right now, it is difficult to say whether we end up reaching the loss levels of 1988 ($40 billion) and 1980 ($20 billion), given that it will be several months for agricultural industries to fully assess the total extent of their losses.

The US Department of Agriculture will not have an estimate of the damage until next month’s crop report, which is due on August 10th.

The USDA yesterday estimated that food prices would rise 2.5% to 3.5% in 2012 and 3% to 4% in 2013. Beef prices lead the hikes with an estimated jump of 4% to 5% next year.

Paul Ausick