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Food production is front and centerIf wheat farmers ever wanted to be the most important players in a hungry world, this is the time! A number of "firsts" happened in the past year that could yield great economic benefits to grain farmers, but there will be social and political consequences if supply and demand can't be balanced in the near-term future. Last year wheat farmers, literally around the world, produced a short crop. The demand from a rising middle class in Asia and India exacerbated the problem and the result was spectacularly higher prices. (Supply and demand still work: Odds are you've sold very little wheat at $10 but you will always have plenty to sell at $3 per bushel.) As foreign buyers exhausted their traditional sources, they laid down their politics and turned to the United States to fulfill their needs-another example of economic need transcending political ideology. Finally, food politics entered the fray as the poor, who usually get a small amount of wheat or bread, got none. This triggered accusations, opportunism and fear that are still afoot as the beginning of this year's wheat harvest starts to materialize. The USDA crop production report on May 9 would not be important or surprising except for the current level of stocks on hand. There is anxiety and desperation that have not been seen in living memory and the wheat and rice farmers worldwide hold the fate of many in their hands. Doesn't feel as good as you thought it would, does it? For the first time since I've been reporting agriculture, higher food prices in the United States have become a political issue. The shortage of wheat caused American bakers to go to Washington, D.C. and highlight the cost, and limited availability, of flour. (Their own inaction while worldwide buyers were securing supplies wasn't discussed.) The use of corn for ethanol, at a time of rising energy and food prices, has drawn criticism from food advocates, from the food processing industry and from the oil companies-most of it questioning the wisdom of converting a food resource to fuel. Only a few agricultural interests have countered that consumers are paying more for food because of the cost of fuel and that fuel would be more expensive if ethanol and biodiesel weren't being produced. Try to sort that one out with a consumer in Los Angeles who drives an SUV to the supermarket. Farmers are a year behind in all of this rhetoric. The reason for some of the shortage of wheat was the decision to reduce harvested acres in past years. When the destructive drought in Australia started the decline in supply, the initial thought was that North American and European harvests would be normal. When those were reduced by frost or extended periods of wet weather, the reality set in that there would be a severe shortage. Farmers across the Plains, Corn Belt and Southeast increased their seedings last fall, but had attractive futures prices for corn and soybeans which limited wheat acres. No such thing for the spring wheat producers who saw their dwindling supplies go to as much as $25 per bushel. This year they are planting 54 percent more acres to grab record high prices for an expected harvest this fall. The result of high prices will be larger supplies. The result of larger supplies will be lower prices. The result of lower prices, due to larger supplies, will be that food falls off the political radar and office seekers turn to other issues with more juice in them. A poor harvest of any crop in the United States in this election year will be amplified by all candidates-to the long-term detriment of the farmer. We need to not take food for granted. When it becomes expensive to us, it is unavailable to others and it creates divisive behavior. When people are hungry, they respond aggressively and that leads to political instability. Farmers are easy to blame and slow to react, as last year's shortage can't be alleviated until this year's harvest. Those who have the resources will be at the front of the line to buy up their needs and those at the end of the line will scream that the system is unfair. So, welcome to the big time of food and politics. This could be a very profitable year for farmers blessed with a large crop, but political unrest is already undermining traditional farm legislation. A presidential veto of the pending farm bill could result in an extension of the current farm law for one more year and place it in a Congress that sees no need to incentivize or subsidize producers, even in bad times. The free market may arrive sooner than you had planned. Editor's Note: This is Ken Root's 34th year as an agricultural reporter. He grew up on a small farm in central Oklahoma and started his career as a vocational agriculture teacher. He worked in Oklahoma, Kansas and Missouri as a broadcaster and was the original host of AgriTalk. He has also been the executive director of the National AgriChemical Retailers Association in Washington, D.C. and the National Association of Farm Broadcasters in Kansas City. Ken is now the lead farm broadcaster at WHO and WMT Radio based in Des Moines, Iowa. He has been a columnist for HPJ and Midwest Ag Journal for seven years. 5/19/08 Date: 5/13/08 Advertisement
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