America's grain stocks running short (food security and export control?)

The Grand Island Independent ^ | 02/24/08 | By Robert Pore

[TigerLikesRooster]

America's grain stocks running short

By Robert Pore robert.pore@theindependent.com

Print Story | e-mail Story | Visit Forums

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.

[chuckles]

Relief is on the way!!

(cut and paste)

http://blogs.wsj.com/environmentalcapital/2008/02/25/opening-the-ethanol-floodgates-here-comes-brazil/?mod=yahoo_hs

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.

[Balding_Eagle]

Right. Consumers benefit by paying much higher taxes. I'm glad you recognize that consumers are net losers in that equation.

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.

[Toddsterpatriot]

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.

[Balding_Eagle]

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?

[Balding_Eagle]

It's not a benefit if the lower price is more than offset by the higher tax dollars spent

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.

[Toddsterpatriot]

while I don't know for certain, I would guess that's what's really happening.

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?

[Balding_Eagle]

Turned into a socialist by "free" money.

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.

[Balding_Eagle]

You would guess? LOL!

If you can give some substance to that statement, it would help.

[Toddsterpatriot]

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.

[upcountryhorseman]

Are you implying that “capitalism” (capital is not an “ism”)
is immoral? Capitalism has produced the greatest good for
the largest number of people in the world’s history!

[Wallace T.]

The only workable and reasonable solution to the problems of agriculture is to get the government entirely out of it. End the crop subsidies, the ethanol program, the CRP program, and all the other subsidies and regulations from the Feds. Land in the national forests and under BLM management should be sold to the highest bidder in the private sector. Ditto for the states. Arguably, the Feds could impose tariffs to protect domestic producers from foreign competition, but anything beyond that point oversteps the Constitutional bounds of the Federal government.

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.

[businessprofessor]

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.

[Gabz]

This market distortion will have severe repurcussions for the US economy in the long term.

Deserves being repeated.

[Toddsterpatriot]

Oil is also enhanced with subsidies, and they help keep the price down at the pump.

This one still makes me laugh.

[Etoo]

[Capitalism has produced the greatest good for the largest number of people in the world’s history!]

 

Keep on repeating that mantra. 

 

Meanwhile the Chinese communist hive utilizes capitalism as a means to propagate its collective genome.

 

That's not surprising...

 

"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]

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.

Got Baal?

 

[Balding_Eagle]

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.

[chuckles]

I understand feed lot soy and corn, but it seems more profitable to feed them dumpster food from restaurants or food businesses.

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.

[Wallace T.]

The different treatment of rice vs. corn originates in two factors: (1) Corn growers have more political clout, as the Corn Belt extends from Ohio to Nebraska and is the chief field crop in several states. Rice is not as dominant a crop in states like Texas and Louisiana. (2) Japan has more influence in international affairs than does Brazil. Japanese bankers and investors purchase great quantities of our public and private debt. Brazilians do not.

Any time government exceeds the role of a peacekeeper by regulating and intervening, there will be market distortions and winners and losers.

[chuckles]

You mean.......you mean....., it's .....it's all political?

Great points.

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.

[M. Espinola]

Wheat and the rest of the grain group -- up, up & away!