25 Jul '12, 1pm
Drumbeat: July 25, 2012
But while everyone from restaurateurs struggling with higher prices to the global poor paying more for their daily bread will absorb a hit from the drought, the Midwestern farmers whose crops are wilting in the fields will likely weather the weather far better than you might expect. That's because price increases from dwindling yields boost farmers' per-bushel income, perhaps significantly. The price of corn in the spring — when farmers would have begun planting — was close to $5 a bushel, so there's plenty of room for profit if prices remain above $8. Of course, high prices at the market will help farmers only if they have any crop to harvest — and plenty of farmers in the hardest-hit states, like Indiana and Illinois, have been all but wiped out. But that's where crop insurance comes in. This year, 85% of all planted acres in the U.S. — up from 75% a decade ago — are cov...