The Salt
3:21 am
Fri December 21, 2012

Drought, Economics And Your Holiday Feast

Originally published on Fri December 21, 2012 11:16 am

Nobody really wants to think about economics, the famously dismal science, while sitting down at a table loaded with love and calories. Like it or not, though, supply and demand drive food production and set the price of dinner.

So, in a season of feasts, what are the business stories on your holiday menu?

The big one is last summer's drought and its slow, rolling impact on food prices. If you recall, the Midwest suffered through one of the worst droughts in half a century. Corn yields fell to a level last seen in the mid-1990s. With corn in short supply, prices for animal feed spiked. There were predictions that pork, poultry and beef producers would go out of business, and consumers would see a shortage of meat.

So far, most of those fears have not come true. Poultry and pork producers seem to be riding out the crisis. Data collected by the U.S. Department of Agriculture don't show any major cutback in production, and prices are stable — although that still could change in a few months.

Beef prices, on the other hand, did hit new records in November. But industry economists say you can't blame the great drought of 2012. It's too soon. The cycle of beef production, from breeding to slaughter, takes so long that today's prices reflect decisions that beef producers made a couple of years ago. According to Steve Meyer, president of Paragon Economics, we're paying more for beef today because of two things: a drought in 2011 that hit Texas and Oklahoma, and a long-term rise in corn prices that began back in 2008. Considering these time lags, it's quite likely that this year's drought will influence the supply (and price) of beef for at least another year or two.

If you're pulling out butter and milk for baking, though, or laying out a spread of cheese, you're getting closer to the drought's real impact. High feed prices have hit dairies hard, especially in California. Many milk producers are sending cows to slaughter, milk production is falling, and prices are rising.

Yet even here, economic forces push in complicated ways, and the drought is only part of the picture. Dairy prices aren't actually much higher than last year — but last year's high prices were due to surging demand, in foreign markets, for U.S. cheese. This year, it's because U.S. farmers are going out of business.

It would be too bad to end on such a dreary note, so let's turn our attention briefly to another holiday staple that's making a stirring comeback: sweet potatoes.

U.S. consumption of sweet potatoes hit an all-time high way, way, back in the 1930s, then went into a long, slow decline, bottoming out in the 1980s. But now the sweet potato is back. Americans are eating twice as much of this vegetable as they were 20 years ago. The reason? Sweet potato fries. This vegetable is no longer just a holiday staple; it's claimed a spot in the real centerpiece of the American diet: the snack.

For more on the traditions and costs of our favorite holiday foods, check out my radio story by clicking on the listen link above.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

DAVID GREENE, HOST:

Well, now to those of you doing holiday planning in this country, you might be thinking about the dinner menu, writing out that shopping list. We were actually curious about some of your favorite holiday meals, and hundreds of you told us about them on Facebook. They sound delicious. Sadly, we couldn't cook the dishes, but we did spread out photos and invited NPR's food and agriculture correspondent Dan Charles to the table so we could learn more about some of the ingredients.

DAN CHARLES, BYLINE: There were all kinds of things that people told us they eat on Christmas Eve: BBQ, chili, finger foods. But one thing that came up again and again, people say fish is the big tradition for them. I have to say, it's not for me the feast of the seven fishes, but maybe for you.

GREENE: It is actually for me. My wife is half-Italian, and her Sicilian father makes the feast of the seven fishes every Christmas Eve.

CHARLES: Well, the interesting thing about fish, 90 percent of all the fish that we eat in this country is actually imported, comes to us from foreign countries.

GREENE: It's not American?

CHARLES: No. And of half of that 90 percent is farmed fish, aquaculture, and half of it is wild caught. The thing that's been happening is the price of the farmed fish has been pretty steady. So that's the Atlantic salmon, that's tilapia from Latin America, lots of fish from Asia. The price of the fish that they have to go out and catch in the wild, like cod - which has been the centerpiece of the Christmas Eve meal for a lot of families - that has been going up, because supplies are limited and people will pay extra for it.

GREENE: So people who are looking to save money and make, you know, this Italian feast might want to look for other fishes?

CHARLES: Yeah.

(SOUNDBITE OF SONG, "CHRISTMAS IS A-COMING")

LEADBELLY: (Singing) Christmas is a-coming, and it's a-jumping. Christmas is a-coming, and it's a-jumping. Boy, it won't be long.

GREENE: Let's move on to Christmas Day now. And that seems to be all about meat.

CHARLES: Yeah, you've got your turkey, obviously. There's roasted pork. You have goose. You've got your baked ham, and also tamales, very important in Latino cultures. You know, here's where we pick up the impact of one of the biggest stories of this past year in agriculture. Remember the drought last summer?

GREENE: We talked a lot about that and what impact it might have.

CHARLES: Prices for meat will go up, we said, because the big crops that were affected were the corn and soybeans. The corn and soybeans are mostly fed to animals. They're fed to pigs. They're fed to cattle. They're fed to chickens. And the idea was with feed prices up, those farmers would maybe even go out of business and there would be a shortage of meat. Well, this has not actually happened. The pork and the poultry industry seem to be riding out those high feed prices OK.

GREENE: It's interesting. So fear is not as bad as people expected.

CHARLES: With the exception of beef. Prices of beef are up. They actually hit records. But it's not really because of last summer's droughts. The cycles of the beef industry are so long, that you're actually seeing the effect of a drought that happened in 2011. Maybe next year or even the year after, we'll see more of an impact on some of the other meat.

(SOUNDBITE OF MUSIC)

UNIDENTIFIED WOMAN: (Singing) Sweet potato you're so sweet. You're my favorite thing to eat. Oh, sweet potato.

GREENE: What is the difference between yam and sweet potatoes? Can you finally solve this mystery?

CHARLES: Yeah. The yam-and-sweet-potato question. All the things that we call yams and sweet potatoes, they're really all sweet potatoes.

GREENE: Really?

CHARLES: The yam is a whole different species. It originated in Africa. The sweet potato is native to Latin America. And at some point, decades ago, when people brought in - introduced more of the orange and soft version of the sweet potato, they called it a yam because it looks kind of like a yam that exists somewhere else.

GREENE: Everything that I'm buying in the story here to make my sweet potato, and it's sweet potato, not yams.

CHARLES: It's sweet potatoes. It's sweet potatoes. But if you want to call it a yam, that's fine.

GREENE: You're not going to stop me. No, that's good.

(SOUNDBITE OF MUSIC)

UNIDENTIFIED WOMAN: (Singing) Made a bowl of Jell-O. Poured in the powder, yeah.

GREENE: Can we have dessert?

CHARLES: Absolutely.

(LAUGHTER)

CHARLES: Let's move down here to this end of the table.

GREENE: See what we've got. I guess we have cranberries. We have Jell-O salad, one of those classic Jell-O Salads. It's like a green circle with fruit inside. I mean, are people still eating this?

CHARLES: Why not?

(LAUGHTER)

CHARLES: Yeah, and you got your cranberries. You got your apple pie.

GREENE: I guess those are the things that take some of the staples, like flour and sugar and milk.

CHARLES: All those baking supplies. Now that you mentioned milk, actually, that is one thing where you do see the impact of the drought. Because of those feed prices going up, some big dairy operations in California actually went out of business. So you do see the supply of milk falling a little bit. You see a bit of a shortage developing and prices going up, and you can see the impact of that in the grocery stores in milk products - milk, cheese, such things.

(SOUNDBITE OF SONG, "O CHRISTMAS TREE")

GREENE: OK. So we're staring at this table full of amazing photos of delicious food that we are not eating, because they're just photographs. But if I were to go out to the store and shop and want to build a meal this holiday season, what's the bottom line? Am I - is it going to really hit my wallet harder than other years, or what's the situation?

CHARLES: Well, most of us are fortunate enough that the modest price increases that we're seeing in food is not a real hardship for us. There's a big debate among economists as to whether we've reached a kind of a historic turning point, where the longer decline really, in real terms, of food prices has ended and whether we're heading into an era of gradually rising food prices worldwide.

GREENE: So some people will feel the effects of some prices going up this year. Many won't feel a big hit. But looking into the future, a lot of questions about where we're going.

CHARLES: That's right.

GREENE: Well, Dan Charles, thank you. This has been a lot of fun eating with you.

CHARLES: I'm really hungry for real food now.

GREENE: Likewise. Let's go get some. Have a good holiday.

CHARLES: Thank you.

(SOUNDBITE OF SONG, "CHRISTMAS DINNER)

NITTY GRITTY DIRT BAND: (Singing) I'll say one thing, and you must agree: What a happy, happy time Christmas dinner will be.

GREENE: Bon appetit on MORNING EDITION, from NPR News. Transcript provided by NPR, Copyright NPR.