Wacky Weather Wreaks Havoc on Food Prices

To describe how this year's dry weather has affected the Texas cattle industry, Wes Bonner needs only one word.

"Disaster," says the general manager of Veribest Cattle Feeders in Veribest, Texas. And he is not exaggerating. Out in the scrub-brush ranches of west Texas, grass pastures have been nibbled down to red dust, hay and sorghum crops have mostly died in the fields, and many ranchers are taking bargain-basement prices for their cattle.

"The only thing we're looking at is survival," Mr. Bonner sighs.

Whether you blame this year's weather on El Nino or not, there's no mistaking the effect on America's top agricultural states. Scorching temperatures and little rainfall have brought droughtlike conditions to the South, while excessive rain and cooler temperatures in California have delayed the Golden State's fruit and vegetable season by nearly two months. The effect varies from crop to crop and region to region, but the overall result is likely to be another bad year for America's already troubled farmers, and a turbulent year for consumers at the grocery checkout line.

"It's going to be a tough year for fruit and vegetable growers, and most of those come from Texas, California, and Florida," says Keith Collins, chief economist for the US Department of Agriculture in Washington. But "the jury is still out on what that means for the consumer," he adds, noting that some prices will rise while others fall.

Fluctuating prices

Vegetable prices, for instance, have already risen nearly 15 percent over the first six months of this year compared with last year, with lettuce up nearly 70 percent in May alone. The prices for ice cream and other dairy products will also go up, as El Nino's winter storms disrupted milk production at dairy farms in California, adding to a host of other problems and cutting into already low butterfat reserves.

Beef prices, however, will remain low - and may even fall further. The net effect for a major agricultural state can be huge. California projects a $422 million hit this year; Texas losses could reach $517 million.

Here in Texas, the largest cattle-producing state, this means hard times on the range. Many ranchers had counted on this year to pull them out of a three-year down cycle that began with the drought of 1996. During that dry spell, ranchers across the country flooded the market with cattle that they couldn't afford to feed. This year's feed prices are much lower than two years ago, but many cattle producers are liquidating their herds nonetheless.

"When you're faced with a drought, you only have two choices: You can either haul feed to the cattle, or load them on a truck and ship them to market," says Bill O'Brien, managing partner of Texas Beef Producers, a ranching and feedlot operation based in Amarillo. "This year, every animal we own, we've lost money."

For the carnivorous consumer, this could mean cheap barbecue for months to come. "For the next little while, it'll be very good for consumers," says Burt Rutherford, spokesman for the Texas Cattle Feeders Association in Amarillo, adding that beef prices are unlikely to rebound until at least next fall. Of course, from ranchers' perspective, the news is less positive: Nearly 25 percent of Texas cattle feeders may go bankrupt this year.

Rain, rain go away

Out in California, the story has been too much rain, not too little, but the net effect has been equally difficult. Cotton crops are stunted in the cooler temperatures, vegetable crops have been delayed, and the summer crop of peaches, plums, and nectarines are nearly half the tonnage of last year.

Later crops may mean less fruit to market, and higher prices for a certain time, says Bob Krauter, spokesman for the California Farm Bureau Federation in Sacramento. "Once we get to market, we'll see those prices come down, but for [now] the volumes will be much lower than last year."

Of course, Micky George, manager of a tree-fruit operation in Sultana, Calif., has a much more immediate concern. Several weeks ago, hailstorms reduced much of the area's peach crop to mush.

"For the fresh-fruit market, hailstorms are absolutely deadly," says Mr. George, manager of George Brothers, Inc. In addition, the cooler weather is likely to put George's peaches in competition with midsummer Georgia varieties, meaning that he may have to lower his prices to fight for supermarket shelf space. "Our profit margins are minuscule. It doesn't take a very big hit to put us in the red."

Down in the Rio Grande Valley, Frank Russell's family plantation has been able to beat the triple-digit temperatures by using water pumped directly out of the Rio Grande River several miles south. But the Russells' water rights ended June 29, meaning that 1,000 acres of cotton, 545 acres of corn, and 100 acres of sugarcane will have to face the rest of the summer on their own.

"Dryland farmers are doing the worst right now," says Mr. Russell, referring to farmers who rely entirely on rainfall for their crops. "There's going to be a lot of farmers going out of business this year."