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OCTOBER 10, 2007
FARM BILL IGNORES
DIRE NEED FOR A GRAIN RESERVE – by George Naylor
You can’t pick up a
newspaper these days without confronting anxious headlines blaring about
the rising crisis in food costs. From Mexicans protesting sky-high
tortilla prices to Italians boycotting pasta, the entire planet faces a
growing dilemma of how to adequately feed its growing populations. The
U.S. Department of Agriculture projects that world grain supply will
plunge to a 53-day equivalent by the end of this crop year, the lowest
level since 1960. But you wouldn’t even know there was an emerging
global food crisis if you listened to the United States Congress.
As the Senate finally
considers the Farm Bill, virtually absent from the discussion is the
need to have strategic food reserves, akin to the Strategic Petroleum
Reserve. Portuguese Farm Minister Jaime Silva, whose country chairs the
European Union, said the EU needed to consider the issue of strategic
stocks after seeing food protests rock Italy. As a matter of national
security, our government should recognize its responsibility to provide
a stable market for food in an era of unprecedented risk. Now should be
the time to consider the issue, not after a calamity has occurred that
could have easily been prevented with better planning.
The idea of a grain
reserve to protect societies from starvation and food shortages has
Biblical roots, as the Pharoah counseled Joseph to implement a grain
storage program that set aside one-fifth of production to account for
seven fat years followed by seven lean years. The Chinese started a
grain reserve program under the Qing Dynasty in 54 B.C., and operated it
for 1400 years. The U.S. finally put in place a national reserve after
the devastation of the Great Depression, which was eliminated under the
1996 Freedom to Farm Act.
Right now, countries
around the world are grappling with the increased demand for grain, in
part driven by ethanol and biofuels. However, commodity prices are only
one factor impacting food prices. Energy costs account for far more of
the cost in producing food. In a $4 box of cereal, there is less than 7
cents worth of corn. Marketing, handling and transportation all comprise
a far greater share of the retail price. Food processing is also
controlled by a handful of corporations as is the food retailing sector,
who have much more power in setting the price of food than farmers.
However, without any
sort of grain reserve, we are one drought away from possibly seeing $8
per bushel corn prices (as opposed to the current $3), which could have
truly destabilizing effects. Agribusiness companies would quickly urge
more corn production. Farmers would plant more corn, causing even worse
ecological damage, and an inevitable price crash when the surplus hit
the market, even in an era of biofuel demand.
A grain reserve not
only helps consumers by stabilizing prices for food, it also protects
farmers from facing depressed prices and could alleviate the need for
costly taxpayer bailouts. Allowing farmers to store their own grain, as
was done in the previous Farmer-Owned Reserve, lets farmers ride out
inevitable price swings. While some may think farmers are getting rich
off the current commodity prices, just last year, I was still selling my
corn for under $2 as my fertilizer and fuel costs were exploding! There
are many folks assuming that the current high commodity prices will go
on forever. Those of us who have lived through the 1970s export boom and
the 1980s farm depression know better. As farmers around the world plant
more corn, soybeans and wheat to take advantage of the current gold
rush, a price bust is inevitable. According to a banker, a return to $2
corn would cause farm foreclosures that could be even worse than the
1980s Farm Crisis due to farmers taking on more debt by updating their
machinery and paying higher cash rents.
A Strategic Grain
Reserve is now just as vital as a Strategic Petroleum reserve. It is not
too late for Congress to put in place a sane policy that will benefit
both consumers and farmers instead of leaving our fates to the whims and
dictates of unstable, globalized markets.
--
George Naylor is an Iowa corn and soybean farmer. He serves as President
of the National Family Farm Coalition -- www.nffc.net
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