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November 27, 2012

Fed says drought is worst in 56 years

The Norman Transcript

NORMAN — The Federal Reserve Bank of Kansas City usually concerns itself with high-minded financial intricacies. This quarter’s magazine, Ten, focuses on the drought of 2012 and its impact on the nation’s heartland.

It is considered the worst drought in 56 years and evokes memories of the late 1980s and the 1950s. Those eras saw a drastic decline in crop production and soaring food prices. By September, according to the magazine, more than 1,900 U.S. counties were listed as drought disaster declarations.

In the district that includes the Tenth District Federal Reserve, (Colorado, Kansas, western Missouri, Nebraska, northern New Mexico, Wyoming and Oklahoma) states recorded the highest consecutive temperatures in 50 years. In the Tenth District, more than 90 percent of the area experienced drought or severe drought.

As a nation, according to the Federal Reserve, July was the hottest month since the government began keeping records in 1895, with many areas averaging four to six degrees higher than normal for 30 consecutive days without rain.

Crop insurance will help most farmers. Bankers surveyed think insured farmers are in good financial shape. Ranchers don’t fare as well, with hay prices rising and cattle prices falling.

Consumer prices are expected to increase 4 to 6 percent, initially with cereal and bakery products. Meat prices should decline a bit due to the large number of cows sold. Feedlot operations are expected to lose more than $200 a head this fall.

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