INDIANAPOLIS, Ind. — It’s an example of the perfect storm in economics: rising demand, shrinking supply.

Rising global demand for corn requires every bit of technology and ingenuity that American farmers possess, along with reasonable cooperation from nature. But despite near-record crops planted in the spring, flooding, drought and extreme heat have taken their toll.

The USDA’s World Agricultural Supply and Demand Estimates (WASDE) projects U.S. corn production for 2011-12 will be 417 million bushels lower, with expected yield down from last month’s estimates, across most of the Corn Belt. The report also forecasts a global decline in corn stocks.

It takes 25 corn plants a day to support the average American’s way of life, with corn showing up in some form in thousands of products including soft drinks, chips, cosmetics, textiles, fuel and plastics. The shortage will likely show up in food prices, though it usually takes about six months for the price hike to hit the grocery aisles.

Food prices are already rising, according to the American Farm Bureau Federation’s Marketbasket Survey for the third quarter of 2011, which cites strong global demand especially for pork and other protein-rich foods.

“Many nations around the world rely on America to provide the food they need to improve their standard of living, particularly through the addition of protein to the diet,” said AFBF economist John Anderson. “Strengthened demand for meats began in 2009, continued through 2010 and remains important as we look ahead to the close of 2011.”

The informal survey shows the total cost of 16 food items that can be used to prepare one or more meals was $53.12, up $1.95 or about 4 percent compared to the second quarter of 2011. Of the 16 items surveyed, 13 increased, two decreased and one remained the same in average price compared to the prior quarter.

The 16 items tracked are bagged salad, orange juice, apples, potatoes, chicken breasts, slide deli ham, bacon, ground chuck, sirloin tip roast, eggs, milk, shredded cheese, bread, flour, toasted oat cereal and vegetable oil.

Other factors that drove up prices are on-farm production costs for energy, fertilizer and fuel, although those costs are mostly absorbed by farmers and ranchers. Then, tally in higher costs for transportation, marketing, processing and storage.

“As long as these costs remain elevated, consumers will continue to feel it in the form of higher food prices at the supermarket,” Anderson explained.

Indiana Farm Bureau Vice President Isabella Chism said food production is no longer a Howard County issue, Indiana issue or even an issue of the United States. “It’s all tied together globally,” she explained. “The petroleum prices affect our input costs on the grain level. This year the weather has affected the corn, which affects the meat and then the ethanol costs.

“I feel we could still see more slight increases in food prices before leveling off.”

The Marketbasket Survey showed meat and dairy products accounted for about 40 percent of the quarter-to-quarter retail price increase. The AFBF has been conducting the informal quarterly survey of retail food price trends since 1989.

American Meat Institute President J. Patrick Boyle sees the global corn shortage as a faceoff between the meat and ethanol producers that will only drive animal feed prices and grocery costs higher. He claims the federal policy of “burning food for fuel” should diminish.

“If the message wasn’t clear already, this latest report puts a bold exclamation point on the need to end national policies that encourage the burning of food for fuel,” Boyle said. “This policy hurts our nation’s livestock and poultry sector and it hurts American consumers.”

According to Boyle, an ethanol blender’s tax credit and tariffs on imported ethanol should not be renewed when they expire at the end of 2011. Government policies concerning corn-based ethanol should be reviewed and addressed, such as the Renewable Fuel Standard (RFS) and efforts to increase ethanol blend levels in gasoline.

Boyle points out for the first time in history, this year the ethanol industry is expected to use more corn than is used for animal feed.