Jul 10, 2008
This week, I stood in one of my corn fields barely able to see over the rich green leaves reaching for the sky. We are fortunate. Our crops look good. I drove 50 miles west to the Iowa border to view the depressing sight of 1,000’s of acres destroyed by the raging Mississippi River waters.
It brings to mind the uncertainty and enormous risk in this business of farming.
I have seen the Spoon River flood part of our own corn crop many times over the years.
There is always risk – floods, hail, disease, price collapse.
I think about the changes that I have witnessed – hard to believe. As a little boy, my dad planted corn with two old horses – Burt and Bill – pulling a 2-row corn planter. Corn wasn’t worth $1.00 per bushel. We picked it on the ear and fed it to cattle, hogs, and the chickens.
The price of corn didn’t go up until Secretary Earl Butz sold grain to the Soviet Union in the 70’s. After that, it traded around $2.00 per bushel plus or minus for 30 years. Suddenly, a host of things have happened and corn has rocketed to $7.00 per bushel. Unbelievable!
Now, we hear the voices complaining and whining about the high prices of food. Blame ethanol!
But that’s not the problem. The problem is global demand is growing but the world has not invested in agriculture for decades. Developing countries didn’t try to help their agriculture. Irrigation projects dried up. We enjoyed cheap food – abundance, surplus. No need to invest. But now, the market is screaming for investment. The Middle East countries with loads of oil money are starting to invest in African farms. So is China. The World Bank that had neglected agriculture for 25 years finally woke up and will increase ag investment. Some of the countries that have been fighting against genetic engineering will have no choice but to embrace new technologies if we are to meet the growing global demand for food.
Where do we go from here? The ups and downs and uncertainty will always be with us, but we’re going to make some money for a year or two. Cattle and hog farmers will also make some money after prices adjust to their new reality. Consumers will pay a little more. Still – 10% of family income on food is the best deal in the world.
Until next week, I am John Block from Washington.
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