Drought forces US to take emergency action
With over 61% of US land mass having been impacted by the drought, as of 25 July, the government has implemented a disaster relief system to help farmers and livestock producers, with aid tactics including greater access to low-interest loans.
“The President instructed us to reduce the interest rate on [low-interest] loans from 3.75% to 2.25%,” Vilsack said in a communiqué. “He also instructed us to open up new opportunities for haying and grazing – our livestock producers are in deep trouble because of the drought. They don’t have any place for their cattle. They are looking at very high feed costs.”
In addition, the government has also opened up access to emergency haying and grazing areas under the USDA’s Conservation Reserve Program (CRP), which allows farmers to convert highly erodible cropland that is normally off-limits due to environmental concerns. In the past, livestock producers were expected to return a portion of the CRP payment that they received through selling hay, but because of the industry’s desperate situation, the government has reduced that portion from 25% to 10%.
Despite emergency aid efforts, American Meat Institute spokeswoman Janet Riley said the US government has not responded quickly enough to the drought: “One industry leader called this a ‘government mandated disaster’ – we couldn’t agree more,” she said. AMI is urging the government to waive the national ethanol policy, which, along with the drought is affecting feed prices.
With the US government working with producers to help alleviate the current crisis, however, Vilsack forecasts an increase in livestock exports, as owners attempt to reduce their herds due to a shortage of feed, dramatically altering food prices in the short- and long-term market.
“As herds are liquidated, it could provide opportunities with lower costs for us to be more competitive than we already are in that export market,” said Vilsack, warning however, that as the drought continues, food prices are expected to increase later this year, and into next year.
