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So Far - Bumper Crop Specter Lurks

by nb41 Mon Jun 2nd, 2008 at 10:35:39 AM EST

So far, 2008 looks like it will be a year of plentiful rainfall across North America, though the season is still young. Once this cool patch in May is done with, more or less normal rainfall is expected for June and July, but with August likely to be drier (see http://www.oregon.gov/ODA/NRD/docs/pdf/dlongrange.pdf). We can also expect a somewhat active hurricane season, especially if dust storms floating off of Africa aren't as severe as last year. While ball-busting supercanes are obviously not welcome events, hurricanes can purge any drought conditions from large parts of North America, especially the southeast (Alabama, Georgia, Carolinas), which have very large agricultural outputs. The official view through August can be seen here:
Thus, potentially huge crops of wheat, corn, soybeans, oilseeds, other grains, and maybe even barley and hops - perhaps beer prices might even get more reasonable (ya sure, you betcha, eh?).

Of course, agriculture is a tricky business, and weather vagaries are just one of many FUBARing possibilities. But weather is one of the biggies affecting the crop yields, and so far, so good. Perhaps this will calm down the speculation a bit, or perhaps not. After all, a lot of the hot money sloshing through the financial speculation zones will be looking to make some fast and easy money (it certain beats making money the "old fashioned way" - by making things useful to customers, like wind turbines and fuel efficient automobiles and mass transit systems - perish the thought!!!!!). It seems that perhaps the speculation in real estate, residential or commercial, mergers and acquisitions won't be able to migrate to food futures for 2008-2009 to a sufficient extent to make up for the massive real estate losses. Oh well, there is always oil and Ngas futures, as well as metals prices that can be gambled with.

In fact, in a normal year, all this potentially good weather would spell disaster for a very large percentage of farmers, starting with U.S. farmers, as it would raise the dreaded specter of "bumper crops". All those megatons of food, especially grain crops, would depress prices below the cost of production for most, and then would come the cantankerous resorts to the U.S. government to buy up the excess at a price sufficient to cover costs and pay for a living wage equivalent. That would mean squeezing more money from Congress in an era when a semblance of a balanced budget is nowhere in sight. And another admission that the free market alone cannot set agricultural prices correctly and in a way that admits that food is required by humans to live - no food, no life. But, let's assume that this would be done. Then it's time for Second, Third and Fourth World farmers to get the shaft, again. All the excess cropage from the U.S. would then get dumped onto the markets of countries where large percentages of people make a living or a subsistence by farming, depressing crop prices in these countries, and forcing millions of people from their land when the money they would get for their crops would also be less than the cost of producing that food. Then, its either suicide, starvation, refugee camps or off to a life of sex slavery, a career in "recycling" (scrounging for food and sellable items at the garbage dump), or immigration attempts to get into countries where there are already too many unemployed people. Like the U.S., with our more than 10 million unemployed people......or Europe, where this would be used to put downward pressure on the wages of most people, but never the wages of the executive "class", just like in the U.S.

But, perhaps the biofuels industries actually will be able to soak up these bumper crops, or at least the starchy and oily portions of these crops, since the protein parts of these crops really have little value with respect to biofuels. And those high crude and refined (well eventually high refined oil prices) oil prices do provide a lot of incentive for this, and its where the money is, and without money, there is no commercial crop production, = no food for anything more than subsistence, and certainly no food for the urban masses. So this biofuels production doesn't lower oil prices...lower oil prices are not really a good thing in these peak and post peak oil days, after all. Maybe it just puts a damper on the rate of increase in oil prices, while recycling money that would have otherwise been exported to various oil despots, and those few oil democracies like Norway. Geez, it could even result in lower starch/fat/oil/sugar contents in the average diet...could that be allowed? These could keep prices up enough so that "other world" farmers might actually get decent prices in their domestic markets. What a concept...As for the thought that there might not be sufficient fried corn chip to keep the fat layers maintained for the vast legions of overweight people in the U.S....forget about it. I'll bet that the obesity trend still continues, as starchy, sugary, oily fast food/packaged "food" is still cheap entertainment, even when that 7 oz (198 grams) bag of corn chips goes for $2.50, at least, with a corn content of less than 10 cents.

So perhaps the Specter of Bumper Crops might have to hibernate for this year. But it will lie in wait, lurking for an opportune time to pop up and throw still more people off of farms and out of rural regions, where they are no longer economically viable, and into urban areas where they are also no longer economically viable. Peak Oil or no Peak Oil. This Specter seems to be completely integrated into the concept of "free markets" for agriculture, where food is just a means of transferring money around the Monopoly board game. And the idea that the mountains of cash thrown at the oil despots could be used to buy some down and out people some food at prices that would allow farmers to make a living....well that seems to be the epitome of wishful thinking. After all, winners get to win, and they get to watch the losers starve to death.....otherwise, what's the joy to winning all that oil and/or metals wealth? Given time, that may even start happening in the so called "first world", too, or at least those first world countries without oil and with "excess" population, and a religion not to the liking of whoever has the oil money. And in many cases, no tears will be shed, as the leaders of those first worlders (or FFW's - formerly first worlders) really did little to engender themselves to the rest of the world. Probably the one thing that will be in short supply for some time is sympathy or empathy for the FFW's, as so many have had it worse for so long. Talk about a bitter harvest.....


it's often better to embed links rhather than have them typed out on the page.

It's an "a href" statement explained here

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Mon Jun 2nd, 2008 at 11:45:48 AM EST
thanks, I hadn't been aware that things looked quite so good.

course it all depends, I don't know when harvest happens in the Mid-West but in the UK any reasonable bout of rain (even a day) can ruin a crop if the farmer can't harvest it. And this year a wet summer is predicted here.

But at least world starvation is deferred a year.

But china is far too busy destroying it's land to feel comfortable about the long term situation..

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Mon Jun 2nd, 2008 at 11:49:25 AM EST
So how would you organize the agricultural economy to prevent all these ill effects of bumper crops?

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Carrie (migeru at eurotrib dot com) on Mon Jun 2nd, 2008 at 03:49:28 PM EST

I notice you also have a Keynes saying, with this one pertaining to casinos. Well, in big agriculture, there is casino financing, futures markets (not for the faint of heart or strapped for cash types), variable crop pricing and things like weather, pestilence and other things. Things like world hunger or environmental devastation are rarely considered. It's a strange world, and way to make a living.

For certain big crops, what would be needed by farmers with farms of some maximum size would be the likelihood of crop prices. Such income supports would be a function of farm size - the bigger the farm, the less the price buffering/income buffering. The government would set a price for certain crops and in effect, act as the crop bank, for some significant portion of the crops. In effect, it would almost be like paying a salary for farmers, in a way somewhat analogous to how Germany does things for it renewable electricity. This would help stabilize rural economics and populations. The drawback is that food prices would not be as potentially cheap in times of crop gluts, and governments would need to limit this to domestically consumed products - otherwise this would get into the "dumping" problems.

Along with this stabilizing effect would come some need to control the amount of food grown, and the need to be able to pay farmers for "land banking" - growing things which replenish the soils, like alfalfa, for example, or for reforesting certain areas. What the biomass industry has done is to create this huge increase in the need for carbohydrates and oils - ones which were traditionally low value added, and which are of limited use to a nation riddled with an obesity epidemic.

Things like this have been tried in the past, and they generally get real expensive - though a pittance compared to the military excess, or for oil and gas tax benefits. And if all the excess crops made are owned by the government and then dumped overseas, that definitely does not help matters. In general, this does offer the potential of rewarding farmers who use less fossil fuel inputs, less mono-culture, different breeds of the same crops, etc and who sacrifice some crop productivity or short-term profitability for eco-system services. And there is always this pressure to fund up corporate owned mega farms, or just mega farms, which must be avoided.

Anyway, that would be the plan. With biofuels of various sorts, an expanding market for crops is possible and this can soak up lots of high productivity farm output, and even more farms can "jump in". Until these became commercial, crop productivity was greater than the ability of the U.S. population to consume this food - even with obesity factored in. The excess was typically dumped overseas, which threw millions of people out of work - not good. As for the starving poor - until someone allocates money for them (oil despots, UN, tax on worldwide financial speculation?), it's tough for them to buy ANY food at just about any price. Modern ag in first world countries is not necessarily cheap to do, and it should not be used to to thow peasants out of work/off the farm.

So, I would propose buffering farm income as a function of farm size and crop type, with a goal of satisfying only the domestic markets. For those wanting to gamble on supplying overseas markets, well, there would be a lot less buffering, if any. Domestic demand can be maintained by energy crops and energy + food crops, and thus, there is not the huge need for earning export income for most farmers. In fact, biofuels provides quite the huge demand. And we can limit the pull on world prices by putting variable, graduated tariffs on imported bulk energy crops, where tariff rates go up as imports go up.


by nb41 on Tue Jun 3rd, 2008 at 04:36:41 PM EST
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