Oxfam's reaction to the USDA Crop Report

In reaction to today’s USDA Crop Report, Eric Munoz, senior policy advisor for Oxfam America, made the following statement:

“Today’s gloomy USDA report confirms that the drought across America’s heartland is taking a dramatic toll on corn and soy production, and will have severe impacts on world food prices. The United States is the world’s largest exporter of corn, soybeans and wheat, and likely price spikes will ripple through markets globally, with devastating consequences for those already struggling to get enough food to eat.

“Sharply higher projected wheat prices should be especially alarming for the many countries that depend on this staple for their diets. This includes countries like Yemen, which imports 90% of its wheat and where almost half of the population doesn't have enough to eat.

“Together with yesterday’s FAO food price index, today's crop report should serve as an alarm we simply cannot snooze. This drought, combined with bad policies like ethanol mandates, has put the world's poor on a collision course with a food crisis. Avoiding another disaster like we experienced in 2008 will require real leadership to address the core factors that have left so many people vulnerable to price hikes and price swings.

“Urgent actions, including waiving US mandates for ethanol, could calm markets and ensure that corn is available for food rather than fuel. And current conditions remind us once again that investing in smallholder farmers in developing countries is critical to decreasing vulnerability to shocks that impact production and prices and most importantly the food security of the world's poorest people.”

Notes to editors

• The USDA is projecting sharply lower productivity levels for US corn. In July, the USDA projected an average of 146 bushels per acre. They are now estimating average production will be 123 bushels per acre.; this amounts to a drop of 2.2 billion bushels;
• The total level of production will be the lowest since 06-07, the season that presaged the first food crisis. Soybeans production is also expected to be hit by this drought with an impact on prices.
• USDA has raised their projection for average season soybean prices by $2 to the $15-$17 range.
• Wheat is not anticipated to be as badly hit by the US drought as corn and soybeans, but prices will rise anyway because of poor wheat production in other major production regions.
• USDA is projecting a productivity levels similar to last year (indicating the drought is not affecting wheat planting for the most part) and an increase in planted acres in the US
• Poor growing conditions in other regions is anticipated to lower overall global wheat supply
• Wheat prices are also rising because it can be used as a substitute in feed rations. So, as corn and soybean stocks shrink and become more costly, livestock feeders look for less costly substitutes
• As a result, the USDA is projecting a sharp increase in average seasonal wheat prices

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