Skip to comments.America's grain stocks running short (food security and export control?)
Posted on 02/25/2008 5:08:27 AM PST by TigerLikesRooster
America's grain stocks running short
By Robert Pore email@example.com
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Global demand for grain and oilseeds is at record levels, causing the nation's grain stocks to reach critically low levels, according to Purdue University agricultural economist Chris Hurt.
With a weak U.S. dollar and global demand so high, foreign buyers are outbidding domestic buyers for American grain, Hurt said.
"Food consumers worldwide are going to have to pay more," Hurt said. "We ended 2007 with our monthly inflation rate on food nearly 5 percent higher. I think we'll see times in 2008 where the food inflation rate might be as much as 6 percent."
Increasing food costs will ignite the debate on food security this year, Hurt said.
"We'll have discussions about whether we should allow the foreign sector to buy our food," he said. "Is food a strategic item that we need to keep in our country?"
The USDA recently released a revised forecast for agricultural exports, predicting a record of $101 billion for fiscal year 2008.
According to the U.S. Grains Council, a significant increase in feed grain exports buoyed the forecasts. Specifically, the forecast for coarse grain exports is raised to 70 million tons, up 2 million tons since November. Corn and sorghum exports are up $2.4 billion from November. Coarse grain exports are forecast at $14.1 billion, $4.3 billion above last year's level.
Hurt said the 2007 U.S. wheat crop is virtually sold out, while domestic soybean stocks soon will fall below a 20-day supply. Corn inventories are stronger, but with demand from export markets, the livestock industry and ethanol plants, supplies also could be just as scarce for the 2008 crop.
More than 70 percent of Nebraska corn crop this year could go to ethanol production.
But what concerns Hurt the most is weather. Adverse weather could trim crop yields this year and cause crop prices to skyrocket even further.
Last year, Nebraska had a record corn crop of nearly 1.5 billion bushels. But rainfall was exceptional last year, especially during the growing season, which helped increase crop yields.
He said recent cash prices for wheat, soybeans and corn are up dramatically from two years ago. Wheat prices have been near $10 a bushel, more than $6 a bushel higher. Cash prices for soybeans are about $13 a bushel, up more than $7 a bushel. Corn is pricing at almost $5 a bushel, an increase of greater than $3 a bushel.
Will this corporation send someone over to break the ice out of my water tank in the morning? To clean off my feed lot while the weather is warm enough that the mix of manure and urine doesn't freeze solid, but still cold enough to run the spreader over my 2008 corn ground? Maybe the corporation could run down to Portland and sit in line all day to pick up a load of DDG's or at least pay the fine if DOT notices that one of the marker lights is the wrong color. Certainly the corporation will stop by this summer and drive the haybine, and help with prayers that the rain holds off until after baling is finished. And what if Mrs. Lucky bales another rattlesnake this summer? She says she's gettin a job in town if that happens again; does the corporation have someone else they could send over to be by business partner and nurse and spiritual adviser and cook for the last couple of decades of my life? Could the corporation at least send somebody over to help with the first calf heifers?
You seem to know that this farming for a profit is all pretty easy after all, no more difficult, in your opinion, than becoming a junkie.
OK, I readily admit that this is unfair, as you have been very candid with me, but I've trapped you a bit.
I'm sure you remember Gulf War I. That war was fought for the express purpose of insuring the free flow of oil. It was a justified war, one that most patriotic Americans supported, including both you and me I'm sure.
That was a subsidy to the oil companies. Imagine for a moment if we had left it to the oil companies to figure out what and how to deal with Sadam. They may very well have come to some terms, but probably not the terms we have today.
Really? Which oil companies benefited?
Thanks for that, now that you remind me, I do remember those things.
Something similar happened in the 90’s (I think that was the time, I had already left farming) but hogs went down to 10 cent lb. It was caused by over production, the ever-present nemesis of the farmer.
That meant you could buy an entire market hog for $20. Having raised over 200,000 hogs myself, I know that those guys had at least $80 in each animal. That lead to bankruptcy for a lot of hog farmers, opening the door for the mega hog farms that raise several hundred thousand market animals each year.
The companies who were in the oil business in that part of the world.
I don’t know their names, but your question made me realize that it may not have even been American companies who were benefiting from our subsidies.
Wouldn't oil companies benefit more from their oil going up to $200 a barrel? I think maybe the oil consumers benefit from that subsidy.
Maybe. Call it an unwanted subsidy.
The same is true for the money going to the famrers.
I was opposed to the farm programs even when I began farming in 1969. I probably inherited that dislike from my father.
Nevertheless, we were both enrolled.
Although the paperwork was long, it basically asked: Do you want to farm? YES, or NO.
If YES, sign up.
Just as the consumers benefit from the subsidies paid to farmers. The farmers ended up in a financial trap, the consumers ended up with cheap food.
No doubt, but you havent the insight of what makes a farmer a farmer. That's where the real difference and motivation is.
The recent jump in prices has whetted the appetites of farmers who have never had the opportunity to do what they have yearned to do since they were little boys, grow the biggest damn crop that piece of ground has ever produced.
There are but a handful of farmers who know what its like to farm without some government official telling them they are raising too big of a crop.
98% of farmers today have only farmed under the thumb of the government. Those chains may be falling away, and the results will be crops the likes of which the world has never seen before.
We have never had fuel mandates, especially the huge size of these mandates.
We have had similar fuel mandates since the early 80s. At that time the mandate was MTBE or Ethanol. Most companies, unsurprisingly chose their own MTBE over ethanol.
. The increase in future corn production is heavily driven by ethanol mandates and subsidies.
The subsidies are useless at this point, there isnt enough money in subsidies for farmers to use them.
I find the ethanol mandates and subsidies ironic. I have never read anything that indicates corn-based ethanol will ever be a viable alternative to petroleum.
They will lead to other crops that will produce ethanol more efficiently than corn does, or strains of corn will be engineered to produce ethanol more efficiently, or corn will be grown more efficiently than it currently is. In the short term, my bet is on the latter.
Although weve seen big increases in yields, the increases in the next years will dwarf everything thats happened so far. We are commonly seeing 200+ bushel corn today. That was rare only 15 years ago. Soon even that will be history. Farmers, feeling their freedom will be blowing by 300 bushels in no time (Its already occurred, it just isnt common) and 400 bushels is only a short time behind that.
Demands by farmers for genetically engineered corn with a focus on ethanol production has been heard by the seed companies, and corn with better ethanol yields is already entering the system.
...which, of course, is how yuppies view folks who work for a living.
I don’t know if this is it but I’ve always known there would come a day when America would have to pay the Piper when it comes to food and food security.
Even with what most conservatives called “Welfare for Farmers”, farmers have been retiring with no-one to take their place, going broke or just quitting before they went broke.
Even if we stop the corn for ethanol and take some farms out of CRP we are going to have shortages. Where are we going to find the farmers to farm the land? I don’t think there is any way to train young people to farm much less get them the financing to do it.
But even without shortages food prices are rising if only because the middlemen are paying higher fuel costs.
Farmers can’t win can they? If they are busting their arses and collecting the pittance you all call “welfare” while losing their butts, everyone hates them, but just let reality hit the common man and the farmer see some hope down the road and everybody starts whining. Americans haven’t paid realistic prices for food and fiber for a long time.
I'm interested in what an actual farmer thinks rather than all the talking heads on TV. Some say it's trade agreements, and other say it's Chinese internal politics. Many people in Ohio seem to think NAFTA is a deal with the devil. Trade agreements have brought us $29 DVD players, but have also opened markets overseas. I have to also think it makes it possible for them to need more food and buy Chevy's and Harley's. We may have trouble over here, but it seems it might be worse if we couldn't sell overseas.
It seems to be an argument over the chicken or the egg came first.
I tell you what, farmers won’t like it at all, we’ve (and most farmers) have been operating on the margins for years and this looks wonderful to me. We’ve been waiting for an upturn for years, we’ve remortgaged countless times to keep going and you get your way and if we can’t make the Cash Flow, flow, it would be better not to farm at all.
I don’t think we stand alone in this. Farmers could choose to cut back or not farm at all, I know a lot who have already made this decision. So beware of what you advocate and ask for. It is past time for the price of food to get more realistic.
First of all the acreage that isn’t being farmed is marginal land, that is why it is in the CRP program in the first place and second, who are you going to get to farm them? Less than 5% of farmers are under 35 and the majority of them are retirement age with no-one to take their place.
LOL, we’re farmers and we’re going to have a full garden this year for the first time in a long time. For the last few years I figured food was so cheap why put the expense and work into gardening and canning. We’re feeding a couple of calves too and you can bet we’ll be buying the grandkids 4H animals if they don’t make the sale this year.
I can’t answer your question, but I have a call into to someone who may know. I’ll let you know.
I sold out in 1986 and moved to CO, but have maintained my interest in farming.
Hope that grandkids raise some prize-winning critters! I miss those days.
“There are but a handful of farmers who know what its like to farm without some government official telling them they are raising too big of a crop.’
The demand for the large crop is primarily driven by ethanol mandates. Remove the mandates and the demand will fall substantially. Any corn farmer who thinks he is farming without government intervention is deluded.
“We have had similar fuel mandates since the early 80s. At that time the mandate was MTBE or Ethanol. Most companies, unsurprisingly chose their own MTBE over ethanol.”
The oxyenate mandates are dwarfed by the mandates in the 2007 energy act. There is no comparison. Otherwise, why have the new mandates in the bill?
“The subsidies are useless at this point, there isnt enough money in subsidies for farmers to use them.”
I am talking about the ethanol subsidies and mandates not farm support payments. The ethanol subsidy (0.51 per gallon) and mandated usage of ethanol are enormous.
“Farmers, feeling their freedom will be blowing by 300 bushels in no time (Its already occurred, it just isnt common) and 400 bushels is only a short time behind that.”
Farmers are not feeling their freedom. They are feeling the wind of government mandates and subsidies for ethanol. Your freedom is everyone else’s yoke. The public does not want corn-based ethanol.
“Demands by farmers for genetically engineered corn with a focus on ethanol production has been heard by the seed companies, and corn with better ethanol yields is already entering the system.”
Unfortunately, the demands are artificially driven. The government could do the same for any good or service. Industry would respond to the mandated usage by increasing production levels to satisfy the mandate.
You need to realize that although the farm states are relishing in this government largesse, the rest of the country is suffering. If that makes you feel good, perhaps you can identify other goods or services that the government should mandate. Corn based ethanol will only lead to high fuel prices relative to the rest of the world. In addition, world food prices are being driven higher by mandates to grow fuel.
Let the rest of the world starve while the corn belt celebrates! Let’s see what happens to these fantastik yields when the next major drought hits the corn belt.
Let the rest of the world starve while the corn belt celebrates!
I've said much the same many a time on FR.
We are such a wealthy nation, and have such a wealth of food that we can even provide as much 'organic' food as people want to buy, even though it's terribly wasteful, taking twice the food producing resources to produce the same amount quantity of low quality food.
We are so wealthy, we can also 'burn' our food to fuel our SUV's.
There is a reason for that wealth. Rather than go into detail, I'll just sum it up, our Forefathers were wise enough to use the incentives that capitalism provides to motivate everyone to produce as much as they can.
Nowhere is that more true than in farming.
Yet, for all the examples we have shown the world, for all the 'missionaries' we have sent out to teach others how it's done, they have chosen to continue to use methods that keep them one crop away from starvation.
They have chosen to behave in a stupid, irresponsible fashion with one of the most basic of human needs, food.
Who are we to interfere with their choice?
Meanwhile, let's celebrate by eating our 'organic' foods (OK, truth be told, I'll stick with my 'inorganic' steaks) and drive our SUVs to the station and fill up with food we've 'burnt'.
There is a price for ignorance and stupidity, sometimes that price is starvation.
Right. Consumers benefit by paying much higher taxes. I'm glad you recognize that consumers are net losers in that equation.
Sounds like a good conservative.
Nevertheless, we were both enrolled.
Turned into a socialist by "free" money.
Keep ignoring the tax dollars we pay for those "unrealistic" prices.
Corn growing requires a tremendous amount of water....just when we seem to be having shortages.
Pretty much says it all.
Well, with a Bush in office anyway. Compassionate conservative-- you bet.
(cut and paste)
Brazil is going to lower its ethanol price to force the corn burners out of bidness. They will lower the price by the tariff amount so we will buy.
Chuckle, oh come on, respond to what I really said, not to what you wish I said.
Here's what I really said, as it relates to the consumer:
Just as the consumers benefit from the subsidies paid to farmers......... the consumers ended up with cheap food.
It's not a benefit if the lower price is more than offset by the higher tax dollars spent.
Your response is focused on subsidies, and yes, the ethanol program is enhanced with these subsidies.
Oil is also enhanced with subsidies, and they help keep the price down at the pump.
Should subsidies to big oil be ended also?
That's true, and while I don't know for certain, I would guess that's what's really happening.
a lot of that money doen't even get to the farmer. We know for example, that only about 35% of the money in the welfare programs actually gets to the recipent, the rest goes to government employees and buildings.
The Cheap Food programs were concocted in the late 40's, early 50's to keep the price of food at the grocery store out of the politics of re-election. They have been very successful at that.
They are tweaked annually, just before planting season begins, to provide plentiful amounts of food at reasonable prices, and at the same time, not such a large crop as to drive too many farmers out of business.
If the crop is too large, government price supports are rushed in to 'pay' for the excess, usually somewhere just above the cost of production. The result leaves most farmers, and certainly all 'family' farmers just on this side of poverty.
It also leaves enormous stockpiles of grain in storage, depressing crop prices even further.
You would guess? LOL!
a lot of that money doen't even get to the farmer.
So you'd agree that wasteful subsidies that are used to buy votes in the Iowa caucuses don't make economic sense and end up raising total costs to consumers? And that they distort the markets and should be ended?
My father resisted the farm programs for as long as he could, but in the early 60's he was faced with bankruptcy or the programs.
Even though he was very successful at raising crops, cattle, and turkeys, by then the programs had put a ceiling on grain prices, and though those ceilings, the ceiling on the profits of cattle and turkeys were established.
He chose the programs over bankruptcy.
When I began, all I want to do was raise crops and animals. I was willing to humiliate myself by enrolling, as long as I could farm.
I suppose I should not have farmed, or quit. After all, here I am today saying that school teachers should quit their jobs rather than participate in the evil that our school systems have become.
If I were do it over, I would be raising organic. Growing up on the farm, I never imagined consumers would be so stupid as to pay those enormous prices for such crappy foods, but they do. I could raise that stuff>
I have a cousin that does. They don't need any farm program, and financially they're able to run new equipment, buy the neighbours land, and vacation every year. that's something very few farmers enrolled in the cheap food program are able to do.
The benefits of hindsight.
If you can give some substance to that statement, it would help.
You would guess that an expensive, wasteful government program doesn't really save consumers (at least the taxpaying ones) money? Come on, you were a farmer, you're smarter than that.
The original impetus for regulation of agriculture stemmed from (1)exorbitant shipping rates of railroads that were granted monopoly status by state and Federal governments and (2)the effects of market and weather shifts on the once enormous population of farmers. Only 108 years ago, almost 40% of the American population lived on farms. As of 2000, the percentage was less than 2%. Huge swaths of rural America now covered with second growth forest, used as pasture, or urbanized were once filled with subsistence farmers. These conditions have changed. All of the various regulations, however good their intent, have failed.
The free market is the only solution that will benefit both farmer and consumer.
You understate the role of subsidies for ethanol. Without the massive subsidies, mandates, and import quotas, ethanol would barely exist commercially. Ethanol owes its entire existence to subsidies of some form.
When all else fails, ethanol boosters result to the “oil is subsidized” line. Any number of left wing websites and ethanol boosting websites tout the idea of subsidies to big oil.
This line about oil subsidies is false. The oil industry is heavily taxed at every stage of production. Some of the taxes are indirect as barriers to development. As a comparison, you should note the difficulty of building new oil refineries as compared to building new ethanol plants. The heavy taxation increases, not decreases the price of petroleum products.
The oil industry like other industries receives investment tax credits. The ethanol industry receives the same tax credits. I would be happy to see the corporate tax rate drop to 0.
The defense budget is not a subsidy to the oil industry as many left wing websites claim. We have a large defense budget because the world is a dangerous place. Terrorists and rogue states would like to attack us in many ways. Government policy has long existed to protect the free flow of trade. This policy was first instituted against the Barbary pirates 200 years ago.
The rats claim that oil leasing policies are subsidies to the oil industry. In the late 90s, the Clinton adminstration lowered the lease cost to encourage oil exploration. This action was taken due to the lack of development. The same rats are now trying to invalidate those leases, effectively breaking legal contracts. Leases on federal land should be auctioned to remove it from the political process.
Bottom line: ethanol boosters are falsely claiming that the ethanol boom is evidence of market forces. The ethanol boom is strong evidence of massive involvement of government to manipulate markets. This market distortion will have severe repurcussions for the US economy in the long term.
Deserves being repeated.
This one still makes me laugh.
"I also made it quite clear that Socialism means equality of income or nothing, and that under Socialism you would not be allowed to be poor. You would be forcibly fed, clothed, lodged, taught, and employed whether you liked it or not. If it were discovered that you had not character and industry enough to be worth all this trouble, you might possibly be executed in a kindly manner; but whilst you were permitted to live you would have to live well."
-George Bernard Shaw
49, George Bernard Shaw, An Intelligent Woman's Guide to Socialism and Capitalism, p. 470.
Capitalism does not guarantee morality; It's simply a tool, and like any other tool - can be used for either good or evil.
I got an email from someone who visted some hog famers in China some years back. At that time the average hog farmer was earning about twice what the average city worker earned.
About 15 years ago a number of hog breeders began sending breeding stock over there, along with training about proper nutrition. Until then, the chinese didn’t use any soybean meal for a protein supplement for their hogs. That has all changed in the past 15 years or so, which accounts for the higher demand for soybean meal (that meal is usually 44 to 48% protein, and an excellant supplement)
He didn’t answer the question about selling pork to China. I think we can, but I’m not sure.
The reason I asked the question is I would be quite upset if our trade agreements were still slanted against US benefit. We should at least have the ability to market pork to China if we have to buy their crap. I heard pork inflation was rampant in China, so I assumed they would look at outside sources.
I was raised in Texas and rice was big business here. When barriers started falling years ago, we bought Honda's and Toyota's, but Japan blocked imports of rice to protect their farmers. They said our rice wasn't "equivalent" or as good as theirs. I can't seem to follow day by day agreements with other countries, so I depend on talking heads to tell me FACTS. Of course it depends on whose spin you get as to what you believe. If "Free Trade" isn't Free Trade, then I want to know. I'm for Fair Trade, but its hard to find out the truth. Depending on whose ox is being gored, the "facts" seem to change.
Just on ethanol itself, we are making corn farmers rich, but won't buy from Brazil. The US has a 57cent tariff on "Caribbean" ethanol. Well instead of sending aid to Haiti, why not buy cane from them, or even the finished product? The ethanol plants here are getting squeezed because of the margin for corn, but if they moved a plant to Haiti, or Puerto Rico, or The Dom Republic, we could probably import ethanol for $1 a gallon and give them some help without just writing welfare checks. It would pi$$ off the corn farmers, but I think they can sell all they grow now all over the world. By destroying ethanol for fuel because we won't use anything but Iowa corn, we destroy our whole economy with food inflation and fuel prices. When the US ethanol bidness crashes, then they will say, "Been there, done that", so we can move on to mopeds and bicycles. The obsession over hydrogen won't happen soon if ever. By buying ethanol from other sources, we may get it to work without destroying our economy. If the government touts free trade but won't buy from Brazil, then what's up with that? I know China needs pork, so get the boats going.
Any time government exceeds the role of a peacekeeper by regulating and intervening, there will be market distortions and winners and losers.
I hate McPain being the Repub candidate, but at least he might tell the corn lobby to pipe down. A few more cents per bushel, and they will be on par with OPEC in my opinion of them.
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