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August 20, 2008 3:56:48 PM CDT

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Corn May Be Recipe for Disaster

Posted Mar 3, 08 12:05 PM CST in US,  Business 

(Newser) – The US is becoming so dependent on corn that a drought would have catastrophic effects that would ripple throughout the economy, reports the LA Times. Corn is essential as staple livestock feed, artificial sweetener, and a basic component of ethanol. A "corn shock" could lead to $5 gas and $3.50 eggs, economists warn. "We are replacing price volatility from the Middle East with Midwestern weather price volatility," said one analyst.

 A drought could "raise prices so much in so many places that it could tip the US into a recession," said another observer. The demand for corn, which has driven up prices 20% this year, is also pushing up the cost of other crops. As US farmers switch fields to corn to reap the profits, the supply of other crops dwindles. Wheat prices are up 21% and soy prices 25% this year.

Source Los Angeles Times

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Corn stalks are seen near New Berlin, Ill., in this Tuesday, June 19, 2007 file photo. U.S. farmers planted 19 percent more corn in 2007 than in 2006, outpacing already high expectations for the crop....   (Associated Press)
A handful of corn is shown before it is processed at the Tall Corn Ethanol plant in Coon Rapids, Iowa. Corn is becoming increasingly important to the Us economy - making a drought more potentially catastrophic....   (Associated Press)
A central Illinois farmer plows under a freshly harvested cornfield at sunset near Chatham, Ill., Thursday, Sept. 27, 2007.The US economy has become so dependent on corn production, a drought could have...   (Associated Press)
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US economy  • ethanol  • corn  • wheat  • grain  • corn shock  • corn belt  • Earth Policy Institute  • Soy  • corn syrup


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