Feeling the Heat

The corn-crop outlook shrivels

For years, plentiful harvests have been the grocery shopper's best friend. Thanks to the rich yield of American farms, food prices have risen more slowly than inflation since 1979. But last week the Government disclosed that the combination of bad weather and a controversial farm-subsidy program may augur steeper increases ahead. Based on an Aug. 1 survey, the Department of Agriculture estimated that the 1983 corn crop will be only 5.24 billion bu. That output would be 38% below last year's record level and would represent the smallest harvest since 1974.

Because corn is the main feed for cows, hogs and chickens, the shortfall will probably raise meat prices by the spring of 1984. Government economists estimate that the increases will drive up next year's grocery costs by 5% to 8%. Since such figures are an average for all foods, the prices of beef, pork and poultry are apt to jump even more. In the months immediately ahead, however, those prices may show an interim drop, since farmers anticipating rising grain costs because of the poor harvest will tend to sell off their livestock.

The diminished corn prospects are largely due to the Agriculture Department's payment in kind (PIK) program, which began with this year's crop. PIK is designed to ease the buildup of farm surpluses by giving surplus grain to farmers who idle their land. The program, which some critics label a windfall, brought about a planned 27% drop in the corn acreage planted this year. In July the Government estimated that the reduction would trim the 1983 corn harvest to 6.2 billion bu.

But drought and torrid temperatures quickly threw that forecast off kilter by at least 1 billion bu. The harsh weather arrived just as the corn was entering its crucial tasseling stage and kernels were starting to form. Now cornstalks are dying weeks ahead of schedule, as much of the farm belt's normally rich, brown soil is becoming increasingly yellow and cracked. Says Larry Quandt, who raises corn and soybeans in southern Illinois: "If the drought lasts any longer, it's going to be an extremely rough year."

Some economists are already predicting that this year's crop may be even smaller than the 4.7 billion bu. harvested 1974. Nevertheless, many farmers stand to gain from the shortfall. Corn now sells for some $3.50 per bu., up more than $1 from last year. In part because of such prices, the Government currently forecasts that overall U.S. farm income could reach some $27 billion this year, compared with $22.1 billion in 1982. This file is automatically generated by a robot program, so viewer discretion is required.