America has always been blessed with a spectacular abundance of food – but this year’s severe drought and record temperatures may contribute to price shocks at the checkout counter, or even shortages of some key commodities:

A dry and mild spring led Don Villwock, like all of Indiana’s corn and soybean farmers, to plant two weeks early this year. He was hopeful for a bountiful Labor Day harvest.

But the rain didn’t fall and June brought blistering heat.

Now, as punishing drought grips the Midwest, Villwock, 61, walks his 4,000 acres in utter dismay.

Where there should have been tall, dark green, leafy plants, there now stand corn stalks that are waist high or, at best, chest high. They are pale in color and spindly. Fragile. Tired.

Pull back an ear’s husk and you find no kernels, he says. With temperatures rising above 95 degrees, the pollen starts to die.

“It’s emotionally draining,” he said. “The crop got out of the ground very well. We were so optimistic. But maybe a few of us were counting our eggs before they were hatched.”

Agweb.com points out that the ongoing Midwest drought could inflict a crippling economic blow to struggling farmers:

With some parts of Indiana now nearing a month without significant rainfall and the critical pollination phase of corn either already started or about to begin, large crop losses appear likely for some farmers. Those losses would be especially painful for farmers who sold a large percentage of their anticipated corn crop this spring in forward cash contracts.

Farmers on “forward cash contracts” aren’t able to supply the promised crops in the promised quantities, they are legally liable to buy back the bushels they can’t supply. Many farmers on contracts of that kind have been consulting with their brokers to make arrangements to deal with reduced yields.

Iowa farmer Dave Miller told CNN that this combination of crop losses and financial disaster for Midwestern farmers has the potential to inflict read pain at the grocery store: “Americans will pay more at the checkout counter. It’s likely that in three to six months from now, you will start seeing an increase in prices in the meat case…. There will be a quicker impact on eggs and poultry because the production cycle is shorter.” Reductions in dairy herds could result in price hike of four to six percent for milk and related products.

The other critical price variable is the relative strength of the U.S. dollar, which has rallied in recent months as investors (both public and private) have sought a refuge from Europe’s economic turmoil. Given the size and continued growth of the federal deficit – and the European-style fiscal disasters proliferating in cities and states across the country – the dollar’s status as a perceived safe haven is dubious and likely to be short-lived. This doesn’t necessary mean Weimar-style hyperinflation, but even a relatively  modest upsurge in price inflation (as if such a thing exists) would be disastrous. This fall and winter might prove to be quite unpleasant for those who haven’t made at least a little effort to ensure their household’s food security.

Read more here.