Farmers’ Fields of Gold Tarnish

Articles
November 30, 2008

Farmers’ Fields of Gold Tarnish

For much of the past two years, America’s farmers were basking in their fields of gold. Prices of wheat, corn and other commodities were kept aloft by an oil price panic which set off harvesting strategies to produce ethanol instead of food products. But prices that reached $12 a bushel for wheat, for example, were unsustainable. Farmers who didn’t sell their crops early got whipsawed once it became clear that food price inflation was headed to the sky, and oil prices were about to fall from their peak of $147 per barrel. Those fields of gold grew muddied and tarnished. Instead of tending their crops to a Sting melody, our nation’s growers were stung. They still feel the economic pain today of market forces they have historically been poor at forecasting. Wheat, for example, is back to $5 a bushel—that’s $1 less than it costs in fuel, seed and fertilizer to plant the crop (land rents excluded), according to a New York Times report. Corn sold for more than $7 a bushel, but is now closer to $3. The land investors who were populous at the peak have gone home now.

For much of the past two years, America’s farmers were basking in their fields of gold. Prices of wheat, corn and other commodities were kept aloft by an oil price panic which set off harvesting strategies to produce ethanol instead of food products.

But prices that reached $12 a bushel for wheat, for example, were unsustainable. Farmers who didn’t sell their crops early got whipsawed once it became clear that food price inflation was headed to the sky, and oil prices were about to fall from their peak of $147 per barrel.

Those fields of gold grew muddied and tarnished. Instead of tending their crops to a Sting melody, our nation’s growers were stung. They still feel the economic pain today of market forces they have historically been poor at forecasting.

Wheat, for example, is back to $5 a bushel—that’s $1 less than it costs in fuel, seed and fertilizer to plant the crop (land rents excluded), according to a New York Times report. Corn sold for more than $7 a bushel, but is now closer to $3. The land investors who were populous at the peak have gone home now.

While farmers toss and turn over commodity and currency price swings, and the health of their banks, they wonder who will love them next. A country with a failed crop in need of U.S. exports, despite currency exchange rate? Or domestic food processors who are benefiting from today’s eat-at-home-more routine? Perhaps alternative energy producers who might catch a second wind under the Obama Administration?

Farming times are tight now, for sure. It would behoove the nation, and the food supply, if the people we entrust to provide our sustenance (and much of the world’s) could be somehow better protected and made less vulnerable to economic turbulence. These growers face Nature for all of us every season, and face plenty of risk along the way.