UPDATE 3-US ag secretary tells White House drought getting worse

Wed Jul 18, 2012 5:35pm EDT

Related Topics

* Damaged crops will mean higher food prices

* Urges Congress to improve aid to farmers

* Says conditions not yet as bad as 1988 drought

By Russ Blinch

WASHINGTON, July 18 (Reuters) - The drought in the U.S. Midwest is getting worse for hard-hit farmers and the wilting crops will mean higher food prices, the top U.S. agriculture official told President Barack Obama at the White House on Wednesday.

While USDA Secretary Tom Vilsack said he was praying everyday for rain, he told Obama the drought is not as bad as in the last great drought of 1988.

"I get on my knees everyday and I'm saying an extra prayer right now," Vilsack said. "If I had a rain prayer or a rain dance I could do, I would do it."

In his briefing to President Obama, Vilsack said that the drought of historic proportions will shrink this year's harvest of corn and soybeans. The crops are used for food and feed and because of that Vilsack said meat and poultry prices will be higher this year and next.

Vilsack reiterated he did not see a need right now for a government waiver to reduce production of corn-based ethanol, which critics say is helping to further drive up sky rocketing prices.

But he said the drought footprint was widening with an additional 39 counties designated as primary natural disaster areas for a total of 1,297 counties across 29 states.

The government said this week that the area affected by drought was the largest since 1956, but the 1988 drought is the costliest to date, which devastated farmers and sparked widespread forest fires.

Vilsack said the drought was not yet as severe as the 1988 weather disaster in the Midwest which caused billions of dollars of damage.

"Part of the problem we're facing is that weather conditions were so good at the beginning of the season that farmers got in the field early, and as a result this drought comes at a very difficult and painful time in their ability to have their crops have good yield," he said.

Vilsack urged Congress to work with the Obama Administration to improve aid to farmers who are struggling with a crop that was now affecting 61 percent of the U.S. land mass.

FORECASTS REMAIN HOT AND DRY

There was, however, little relief in sight from the stingy skies across the region. The western Midwest was expected to remain hot and dry for the next week, though there could be cooler temperatures and light rain in the east, an agricultural meteorologist said Wednesday.

"It's a little wetter for next week in the west and southwest," according to Don Keeney, a meteorologist for MDA EarthSat Weather, who said they were expecting only a half inch or less of rain. "So not much relief and confidence is low in that forecast."

The parched lands and predictions of food inflation will be another source of woe for Obama as he battles for reelection in November with an economy already suffering from anemic growth and weak job creation.

While higher feed costs would likely boost meat and poultry prices later this year and next, those prices could drop in the short term as producers slaughter cattle because of high costs, temporarily raising the meat supply, Vilsack said.

He said the USDA would open up more areas in the Conservation Reserve Program to give ranchers access to emergency grazing land.

Corn prices jumped again on Wednesday due to the deteriorating conditions, rising to nearly $8 a bushel to extend a rally that has seen the grain's price jump 50 percent over the past few months.

Hard-hit livestock producers and other groups want the Environmental Protection Agency to give oil refiners a waiver from the mandate to blend ethanol into gasoline, arguing demand for the corn-based fuel was driving up corn prices.

But Vilsack said ethanol demand was not a problem right now.

"There is no need to go to the EPA at this time based on the quantity of ethanol that is in storage," he told a White House briefing.

The U.S. drought is also expected to be felt worldwide as the world's biggest grain exporter struggles to get the crops off the field and to market.

"The dramatic rise in grain prices in the past few weeks is shaping up to be a serious financial blow for wheat importing countries," a German trader said. "African and Middle Eastern countries are now facing painful rises in import bills."

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