Tuesday, February 12, 2013

AG boom and bust

On my return from New York City, that most un-rural of places, I needed some entertainment for the long flight back to California. So I grabbed a copy of The Economist (and a copy of Maxim. Stop judging me; it is a long flight and one magazine isn't enough) to re-tune with the political and economic world after being in a month and a half long cocoon of moot courting.

In the agricultural economics section was an article about the boom of agriculture in the United States. Last years drought might have destroyed whole fields of corn and soy, but in the cold hard world of economics scarcity means profit.

Corn and soy prices have skyrocketed in the post-drought year, because there is so "little" available. That isn't really true, there is still plenty of corn and soy to feed us, but markets see such fluctuations as being cost altering.

The article crowed about how this was causing a sharp rise in agricultural profits. Investors were being encouraged to buy up futures in crops now as prices will only climb in the short term due to climate change. This was all to the benefit of the investors, but no one in the article seemed too concerned with the small farmers.

Perhaps The Economist can be forgiven for forgetting the little farmer. Does that little farmer even really exist anymore? It seems corporate farms have taken over America's food production. In a situation where big corporations and investors want to corner the market on each other, I say go for it. Yet there still have to be some small farmers out there that will be hurt by this.

High profits mean more corporate farms are going to look for a bigger piece of the economic pie. So will the little guy and gal be faced with mounting pressure to get out from under the bank and sell their land to the big guys?

If farm land is going to be subject to investors, speculators and mega farm corporations, I'm scared for the future of the little guys that are trying to eek out a living growing crops. Ag land has always been subject to wild fluctuations in value, but this seems like the first time all but a few players have millions to go land hunting.

We might be inching even closer to the end of the family farm if these high, high prices keeping encouraging non-farmers to get into the Ag game.

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