U.S. drought could harm N.S. consumers

The current drought in the United States Midwest will have wide-ranging effects on the agriculture industry in Nova Scotia.

The drought is predicted to decrease the U.S. corn harvest by two billion bushels and soybeans by 200 million bushels. Half of what dairy cows eat is corn and soybeans.

"Certainly dairy farmers are going to see a pretty nasty increase in their cost of production," said cattle nutritionist Daniel Scathorn.

Much of our food chain is based on corn and soybeans. Jonathan MacLellan of WestNova Commodities says grain growers he works with in the Annapolis Valley will probably benefit. But not livestock producers.

"That's going to hurt the large feed lot operators," he said.

Also, the U.S. government requires automotive fuel to be mixed with ethanol, which is made primarily from corn.  And corn is becoming too expensive to use as a fuel additive.

The byproduct of ethanol production is a high-protein animal feed.

"If there is a decline in ethanol production, there will also be a decline in the protein supply which will put more pressure on the soybean market," said MacLellan.

It's difficult to predict exactly what will be affected. There is only about five cents' worth of corn in a box of corn flakes, so how much should they increase? If beef herds get smaller to save on feed, does the price go down while farmers shed animals, then go back up when supplies are short? The winners in this market could win big, but the consumers might be among the losers.