The Drought of 2012 will have wide-ranging consequences, from the prices at your local bakery now to the meat you buy for grilling next summer, says the economist in charge of the Omaha branch of the Federal Reserve Bank of Kansas City, Mo.

Jason Henderson's new analysis of the rural economy focuses on the drought, which he says "will be forever engraved into the annals of agricultural history." Some excerpts of Friday's report:

How bad is it?

With 1,300 counties called disaster areas, two-thirds of U.S. corn, soybean and livestock production is sweltering in drought conditions. Predictions this spring of a bumper crop have shriveled to a 12 percent decline for corn and an 8 percent drop for soybeans. Estimates are steadily falling.

Will farmers lose?

Surprisingly, overall U.S. crop income could match last year's record because surviving crops will bring high prices.

Farmers who lose crops to the drought could collect as much as $300 per acre from crop insurance, and most farmers bought at least some insurance.