Sunday, September 30, 2012

Why the USA Corn Belt is so important to food prices

One of the claims to fame one hears growing up in the corn belt is: We Feed the World.   That was always something of an exaggeration and everyone knew it, but it did relate to a real truth which was: Without exports we would drown in food.

I never saw a really good chart of just how reliant USA agriculture is on export markets.  This one is especially telling.  It also points out how serious this summer's drought really was.  I had an extremely reliable report from a farmer who was bragging that because of his no-till methods, he was getting 100 bushels per acre where is neighbor was getting only five.  Couple of points here: A normal good crop is 200, and, Five is effectively zero because it doesn't pay to harvest so little.

This will cause a world of hurt throughout the system.  Yesterday, the Minneapolis Star Tribune had a piece on how high grain prices are just destroying California's milk producers.  I am certain we will soon see a LOT of these sorts of stories.

From Big Picture Agriculture

How rising food prices are impacting the world – High grain costs, caused by severe drought, are hitting dinner tables from Guatemala to China. But the world has learned valuable lessons since the food shocks of 2008. Will it be enough to prevent social unrest? (CSM) more

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