The U.S. drought will soon take its toll on food prices.Analysts with Great American Group, LLC, believe the higher priceswill extend into 2013 because of the impact of drought on the cornsupply. The higher cost of feed will severely impact the meat anddairy industries.

“The drought has caused a state of alarm in the food industry,”said Ken Bloore, chief operating officer of Great American Group’sAdvisory & Valuation Services Division. “A continued lack ofrain in the U.S. will be detrimental to crop development. This willresult in a tightened supply and higher prices for raw materials,livestock, feed and crops, which could impact gross margins forcompanies throughout the industry.”

The drought has affected nearly 60 percent of the continentalU.S., which is the largest drought in the U.S. since the 1930s and1950s.

According to U.S. Department of Agriculture estimates, overallfood prices are expected to increase 2.5 to 3.5 percent throughyear-end, with increases expected in all categories. Grocery storeprices are on track to increase between 2.5 and 3.5 percent aswell, while restaurant prices are predicted to rise by 2 to 3percent. Any increases could be magnified if the drought continuesfor an extended period, the report said.

With cows starving from lack of pasture and farmers now facedwith the additional challenge of increased corn prices, the meatand dairy markets will be particularly impacted. Since corn is aprimary food source for cattle, there is great concern that farmerswill be unable to maintain their animals in the coming months.

Great American Group, LLC, is a leading provider of assetdisposition solutions and valuation and appraisal services to awide range of retail, wholesale and industrial clients, as well aslenders, capital providers, private equity investors andprofessional service firms.