CLUNETTE, Ind. – Ask Craig Ganshorn how his corn crop is faring and he winces before replying. “Basically, it’s burnt up,” he says.

Ganshorn, 62, who has farmed 500 acres of corn and soybeans here since 1976, is confronting the grim realities of a drought that he says is worse “by far” than the one in 1988 that’s remembered as among the worst in U.S. history.

Ganshorn’s farm is in Kosciusko County, which is in extreme drought. He figures he won’t get much return on his corn crop but hopes his soybeans, which are hardier and pollinate later than corn, will survive.

• STORY: Lower corn crop yields could mean higher food prices

He’s already calculated what this hot, dry summer means to his bottom line. “It just cancels any idea” of buying a newer used combine to replace his rickety old one, he says, and “there will be no trip to Colorado this year.”

Searing temperatures and below-normal rainfall across a broad swath of the USA have created a drought that is killing crops and drying up streams. More than 1,000 counties have been declared natural disaster areas, giving farmers access to low-interest loans. Mississippi River water levels in some areas are nearing record lows. The conditions have prompted water-use restrictions in Illinois, Indiana and elsewhere, increased risk of wildfires and a marketplace domino effect that could mean more expensive groceries.

The U.S. Department of Agriculture (USDA) last week dropped the estimated average corn yield by 12%. That means higher prices for corn, which forces livestock producers to liquidate herds because feed is too expensive. That, in turn, could mean higher prices for meat and dairy products next year because there will be fewer cattle, hogs and cows.

Food prices already are ticking upward. The Labor Department said Tuesday that food costs rose 0.2% in June from a month earlier and are up 2.7% from June 2011.

The culprit is a weather pattern that produced dry conditions in the middle of the country starting last fall, says Brian Fuchs, a climatologist at the National Drought Mitigation Center. Those conditions were exacerbated by a winter that was warmer and drier than normal, he says.

“Currently, almost 61% of the country (not including Alaska and Hawaii) is in drought, compared to 29% a year ago,” Fuchs says. “Even though it is part of the natural variability of climate, this is a rare event.” About 78% of the country’s corn-growing regions are in drought, he says.

The Palmer Drought Severity Indexsays this drought covers the largest percentage of the contiguous USA since December 1956.

There isn’t much good news in long-term weather forecasts. “Over the next several weeks to even the next month or so, we’re not really anticipating any changes to the pattern,” Fuchs says.

Crops are withering

In the Clunette area, some of the drought’s effects are obvious. Corn stalks are 4 or 5 feet high, about half what they should be at this point in the summer, and nobody has to mow their lawn anymore. Grass is brown and dead, and farmers are conserving water for irrigating their fields — though even some watered corn is struggling.

The drought’s effects are causing alarm across the Midwest:

•The Arkansas River near Syracuse, Kan., last week had less than 1 cubic foot per second of water flowing in it. The historical mean flow: 394 cubic feet per second. The flow was the lowest recorded for this time of year since records began in 1902, says Brian Loving, a U.S. Geological Survey hydrologist in Lawrence, Kan.

The temperature of the water flowing in the Wakarusa River, southeast of Topeka, reached 103 degrees on July 7, Loving says. High water temperatures reduce the amount of oxygen available in the stream to fish and other aquatic life.

“This could be the worst drought for our streams since we started keeping records a little over 100 years ago,” he says.

•Randy Miles, a soil scientist at the University of Missouri-Columbia, stuck a probe into a farm field on Monday and found no moisture more than 5 feet deep. In a normal year, he would expect only the top 12-16 inches to be dry.

Current conditions, he says, mean that “crops won’t thrive.” The drought, Miles says, affects everything from earthworms, which must bore deeper to find moisture, to nutrients in the soil.

•Kent Lorens, who raises livestock, wheat and corn on a 3,400-acre farm near Stratton, Neb., is giving his cows and calves protein supplements because the dry grass they’re eating doesn’t provide enough nutrition. They’re drinking 20 or 30 gallons of water daily instead of the usual 10, he says.

•At Honker Hill Winery near Carbondale, Ill., “Some of the plants are beginning to shed their leaves like they’re dying. A lot of the grapes are drying up, too,” says manager Stan South. Wine is still being made from last year’s excellent crop, he says, but he thinks “it’s very possibly time to invest in an irrigation system.”

•Salesman Mark Holzum says foot traffic at Heuer Sons Implement Co. in Cape Girardeau, Mo., is “a fourth of what it normally would be” as farmers scrap or postpone equipment purchases. “They’re not in a good mood,” he says.

Close to ‘total failure’

Iowa and Illinois are the top corn-producing states, according to the USDA, and usually account for about one-third of the U.S. crop. Indiana typically ranks fifth, says Chris Hurt, an agricultural economist at Purdue University. Much of Iowa is abnormally dry or in moderate drought, but its situation is not as bad as the one in Illinois and Indiana.

About 61% of Indiana’s corn crop is rated poor or very poor — the worst of any major corn-producing state, Hurt says.

“Those crops are getting close to having total failure,” he says.

At this point in 1988, 90% of Indiana’s corn was rated in those two bottom categories. “This one is not yet as intense and horrible as 1988,” he says, “but it’s the only one that’s close to comparable.”

Tell that to Bruce Ferguson, who walked into the Clunette Elevator Co. — which helps manage and stores crops — one day last week with a 6-inch ear of corn with silk hanging from it. The corn had not pollinated, which means that it would never produce full rows of kernels.

Multiply that one ear by all the unirrigated corn planted on Ferguson’s 1,400-acre farm for a sense of what the drought means to him. Only about 150 acres are irrigated, he says. “You have to be prepared for a pretty complete failure this year,” says Ferguson, 60, who has farmed here since 1978.

Only a “minimal amount” of his crop was insured, and Ferguson estimates his eventual losses at about $500,000 unless conditions change. “If we get 2 or 3 inches of rain soon and 1 inch every week after that, the corn could rebound,” he says.

John Anglin, the elevator’s co-owner, doesn’t expect a reprieve. “We can already identify some (corn) fields that will have zero yields,” he says. Although some farmers will recoup most of their losses through insurance, that’s no consolation, he says. “It is hard for the farmers to accept” a failed crop, Anglin says. “They would rather have a good crop than the dollars.”

Meredith Powell, the Clunette Elevator’s entomologist, says the drought is creating expensive problems that go beyond dryness. “Insects thrive in this environment,” she says. Dry soil encourages Goss’s bacterial wilt, which affects corn, she says, and the elevator is doing aerial spraying to try to eradicate adult corn rootworm beetles and spider mites, which attack soybeans.

John Powell, 55, who farms 2,000 acres here, faces a couple of big decisions in the next few days. “Right now we have to decide whether we’re going to put more money into the corn crop,” he says. Fungicides and herbicides that would help keep surviving corn healthy would set him back another $13-$15 an acre, he says.

Powell raises ducks with his brother-in-law and already has taken a big hit on that venture because of the drought. A couple of weekends ago when the temperature hit 104 degrees, 1,700 ducks died in a single day, he says.

Miles, the soil scientist, says the drought is so widespread and severe that even a return of regular rainfall through fall won’t be enough to end it. “It would be nice,” he says, “to have a winter … with plenty of snow and rain.”