A fourth-generation dairy farmer has warned that America’s food insecurity crisis could only worsen in the New Year amid extended droughts, supply chain shortages and high interest rates.
Stephanie Nash, a Tennessee farmer and agricultural advocate, told FOX News, “I definitely think we have a food security threat.
“I think 2023 is going to be tough,” she added. ‘Worse than this year.’
Food prices have already outpaced inflation, Labor Department data shows, with food prices rising 10.6 percent in November from the same period in 2021, while headline inflation hit 7.1 percent.
The most notable difference was in egg prices, which rose more than 30 percent this year due to a devastating bird flu that killed 40 million chickens.
Now, with ongoing fertilizer and fuel shortages, extreme weather in the United States, and rising interest rates, Nash says the situation could only get worse.
Stephanie Nash, a Tennessee farmer and agricultural advocate, told FOX News, “I definitely think we have a food security threat.”
Food prices have outpaced inflation, data from the Bureau of Labor Statistics shows
“2022 has been a really tough year,” said the 29-year-old dairy farmer, although she added, “I think there’s going to be a lot of bottlenecks for sure next year.
“We’re going to have a bottleneck in the supply chain, we’re going to have an increase in our food [prices] at the grocery store,” she continued.
“I don’t think it’s going to go down anytime soon, and I think Americans are going to really hurt their wallets.”
Supply chain issues have already gripped American consumers during the global pandemic, as prices for exporting and transporting goods rose.
Farmers had problems exporting their goods to other countries, forcing them to lose valuable income or pay higher prices for shipping their goods, such as the prices of crop protection products, fertilizers, tires and parts for farm equipment, and computer chips for tractors and the price of gas rose exponentially.
At the same time, these struggling farmers are being squeezed by rising interest rates as the Federal Reserve tries to avoid a recession.
According to Portal, most American farmers take out short-term, adjustable-rate loans each year to pay for everything from seeds and fertilizer to livestock and machinery.
These loans offer lower interest rates but expose borrowers to the risk of higher costs if interest rates rise – something the Federal Reserve has consistently voted to do in recent months.
Its latest hike on Dec. 14 raised the Fed’s interest rate by half a percentage point, double what it normally sets but not nearly as much as the last four hikes it’s made, all of which were three-quarters of a percentage point.
The central bank’s policy rate is between 4 and 4.5 percent – the highest in 15 years.
But interest rates on farm machinery are even higher. Portal reports that interest rates in November rose 7.65 percent year-on-year at John Deere, 7.8 percent at CNH Industrial, 8.14 percent at AGCO and 8.24 percent at Ag Direct.
The industry average, meanwhile, remains at 5.86 percent.
American consumers are already seeing fewer products in store as farmers struggle to meet demand amid high interest rates
Year-on-year inflation rose to 7.1% in November after peaking at 9.1% in June
The most notable difference was in egg prices, which rose more than 30 percent this year due to a devastating bird flu that killed 40 million chickens
As a result, Portal reports, the average bank loan required to run a farm has risen to nearly five-decade high levels, while average farmer interest rates are at their highest levels since 2019.
And with widespread droughts impacting how many crops farmers can plant, farmers are struggling to keep up with that debt.
The agricultural sector’s total interest expense — the cost of the debt it carries — is expected to reach $26.5 billion by the end of this year, up nearly 32 percent year-on-year and the highest since 1990, adjusted for inflation.
“You have family farmers and ranchers who can’t pay their bills,” Nash said.
“You talk about credit – that’s a big deal. “Food costs are increasing, the overall production of our farm is increasing.
“We have to be able to get paid more to do it.”
Farmers must now decide whether to reduce their crops and livestock as they try to pay off these larger loans.
“We’re seeing product growing in the grocery store and I think a lot of people don’t understand that,” Nash said. “We’re not the ones pushing for an increase, we’re earning less than ever.”
The ongoing drought continues to impact how many crops farmers in the US could produce, as more than half of the continental US is still affected by drought conditions
Grocery prices have risen as struggling farmers pass the cost of expensive raw materials on to consumers
Many farmers have already been forced to sell their livestock and destroy some of their existing crops amid the ongoing drought.
In August, the American Farm Bureau Federation reported that 37 percent of farmers from the Great Plains to California destroyed crops that didn’t ripen — a 13 percent increase from a year earlier.
A third of farmers also reported destroying or removing fruit trees and other perennial crops, up from 17 percent the previous year, while two-thirds of respondents said they had sold parts of their flock or flock.
Herds are down 50 percent in Texas, where one rancher said, “We have sold half our herd and may not be able to support the rest.”
And in New Mexico and Oregon, herds declined 43 percent and 41 percent, respectively.
Farmers there said they were forced to do so by the ongoing drought conditions that continue to ravage the United States, with 53.2 percent of the lower 48 states still mired in drought as of Tuesday.
Zippy Duvall, the president of the Farm Bureau Federation, told CNN at the time that Americans could feel the effects of this drought “for years to come.”
He explained that US consumers now need to spend even more on certain meats and grains as they consider “relying in part on foreign supplies or reducing the variety of items they buy in-store.”
The American Farm Bureau Federation survey found that one-third of farmers reported destroying or removing fruit trees and other perennial crops
It was also found that two-thirds of respondents had to sell part of their herd or herds during the drought
“I think that’s a big threat to the United States: weather, drought and water,” Nash said.
“We really haven’t created any new programs to help farmers across America with the devastation,” she said of the federal government, noting, “There are a lot of great programs out there that are trying to help farmers when they’re sick become or maybe [there’s] a death in the family, but the government doesn’t really benefit from the devastation.’
Nash added, “We have to be Ale to get paid more to do it and stay in the family farming and ranching community.”