Food prices soar in wake of mid-western floods

Devastation to farms caused by week-long flooding in America's farm belt is threatening to push up already soaring food prices. The cost of corn and soybean has reached record highs on the US market amid concern of a shortfall in production. The mid-west, one of the biggest corn-growing regions of the world, has been hit by the worst flooding in 15 years. An estimated 16% of farms in Iowa, one of the most badly hit states, have been destroyed and lost their crops. Five other states have been hit, with residents along the Mississippi in Illinois and Missouri frantically building up sandbag barriers to prevent further losses. President Bush flew to Cedar Rapids, Iowa, which has suffered its worst ever flooding after the Cedar River overflowed, and then planned to continue by helicopter to view the farmland and small towns still under water. Twenty-four people have been killed and 148 injured. There have been at least two dozen breaches of the levees intended to prevent such flooding. The Army Corps of Engineers, which is responsible for the levees, predicted waters could flow over 20 or more levees over the next few days. LeRoy Lippert, mayor of Danville, Iowa, said that after the floodwater recedes, stricken farmers will have to work through to the autumn to clear silt, tree limbs and other debris before they can plant next year. "There's going to be absolutely no farming this year," he said. "They've lost it. It's gone. Nothing at all. No beans, no corn this year." Dave Miller, a grain farmer and director of the Iowa Farm Bureau, an insurance company, estimated that as much as 16% of Iowa's grain crop was destroyed. The prospects of smaller crops jolted the markets. Corn prices in the mid-west have crept closer to an unprecedented $8 a bushel, a four-fold increase. World corn prices have risen to record highs and are 90% higher than they were a year ago. Estimates are that 5 million acres across the mid-west have been ruined and will not produce a crop this year. Farmers outside the effected areas, said the traders were panicking and that, as long as there was no more heavy rains, 90% of them will deliver their crops. Corn and soybean are used in processed food and are fed to cattle for meat production. Some analysts said the reduction in grain output could force food prices even higher -- or at least lock them in -- at a time when many countries around the world are already struggling with the rising cost of basic foods. Vic Lespinasse, a grain analyst at the Chicago Mercantile Exchange who produces a daily blog, said much depended on what happened next with the weather. "If the weather continues to be a problem, we could see nine or even $10 a bushel corn, we could see $20 a bushel soybeans, so it all depends upon the weather." Lespinasse also blames the weak dollar for pushing up the price of corn because other countries have more spending power in the international markets.