Rising Crop Prices Come With Risk of Scams

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COLUMBIA - It is no surprise that farmers have been hit harder than just about anybody else during this year's drought. The heat has dried up ponds and destroyed crop yields. Some farmers have even had to start selling off cattle because they either can't provide enough water or can't keep up with rising feed prices. All of that will mean higher grocery bills, and a hit to consumers' wallets...eventually.

In the short term food prices at grocery stores and farmer's markets have not drastically increased, and probably won't until close to the end of the year, even if crop prices go up.

Said Director at the Farmer and Agriculture Policy Research Institute Pat Westhoff, "Even if the price of corn, the price of soybeans goes up very dramatically, the net effect on what people will pay at the grocery store for food is going to be relatively small proportionally."

Farmers like Mark Mahnken, owner of Missouri Legacy Beef, have had to cope with the effects of the drought on their livestock. Mahnken has been lucky however. His Salisbury based operation has had more rainfall than other parts of the state and he hasn't had to sell off members of his herd or raise his beef prices. But not all farmers were as fortunate.

Said Mahnken, "There are certain counties in the state of Missouri that are definitely devastated, and as a result many of our cattlemen are having to liquidate their cow-herds."

Since many farmers are selling off cattle, that will create a surplus of beef on the market, which means lower prices for consumers, at least temporarily.

"We could see beef prices stabilize, if not drop here in the next...four...five...six months...", said Mahnken.

However that means there will be a shortage once 2013 comes, and a possible increase in beef prices, especially in speciality beef. For most foods, prices won't increase until late 2012 or even into 2013. For consumers right now the danger is that some stores may increase prices anyways, and claim it's because of the drought. 

According to Westhoff,  "What people pay for food at the grocery store, only a small share of that goes back to the farmer."

If you see a store drastically increase prices, be wary, it may just be trying to squeeze extra money out of you. Earlier this week Agriculture Secretary Tom Vilsack warned consumers about stores trying to take advantage of the drought. Expect prices to increase, but not until later in the year, and be on the lookout until then.