|Even before the ink had dried on last week’s column, members of the House Agriculture Committee were listening to testimony that urged a raid on the Conservation Reserve Program (CRP) funding to fuel the ethanol boom.
Last week, I gave a detailed report that, at least to me, made an ironclad case not to raid the CRP to fuel the anticipated ethanol boom.
The hand wringing this time came from the National Grain and Feed Association (NGFA), an agbiz group “comprised of 900 grain, feed, processing, exporting and other grain-related companies” around the U.S. and globe, noted their testimony reader.
The NGFA’s chief worry, the reader read, is the chance that “a substantially higher proportion of the corn crop (will) be directed to ethanol during the life of the next farm bill” which “could very well” cause “supply disruptions to other users of corn,” i.e. NGFA members.
“Make no mistake,” he continued, “if current biofuel investment trends continue, the United States will experience lower average stocks for grain and comparatively higher prices for corn and for other grains as crops compete for available resources.”
While his “if” is far from fact, lower average grain stocks and comparatively higher prices for corn is, of course, a good thing if you grow corn.
It’s a very bad thing, however, if you are any of the 900 grain, feed, processing, exporting and other grain-related companies needing to tap the working assets and sweat of farmers to buy your main input from those dwindling stocks at higher prices.
After all, if the nickel’s worth of wheat in a loaf of bread climbs 40 percent - oh my, 40 percent - to seven cents the sky will fall on processors and consumers alike.
The nonsense gets worse.
“Over the life of the next farm bill,” the NGFA spokesperson went on, “it is entirely conceivable that the United States will require an additional 8 million to 10 million planted acres of corn to avoid triggering: 1) sharp declines in livestock profitability; 2) supply interruptions to long-term export markets; and 3) supply shortages that could hamper ethanol profitability.”
Whoa, partner. Are you saying corn farmers, because of ethanol’s recent success, are now responsible for future livestock profitability, possible shortfalls in export supplies and the quickly-overbuilding ethanol industry as well as their own farms’ rising production costs, weather and bouncing market prices?
No, no and no.
Good grief, $12-billion-a-year, one-million-sow Smithfield Foods and $75 billion-a-year Cargill will not be victims of a Nebraska farmer who simply wants a whiff of $3 corn before 10 million acres of CRP land gets unleashed.
Indeed, if any of the big boys fail it will be by their own hand and not by any corn grower. Ford and GM aren’t failing because consumers won’t buy their cars. Ford and GM are failing because management didn’t deliver - despite years of warnings - cars consumers now want.
Moreover, agbiz’s current Chicken Little act is more proof that 1996’s Freedom to Farm and its 2002 update, F2F Lite, were anything but free market Farm Bills. Clearly, both have underwritten cheap grain prices at enormous taxpayer expense and both fueled the corporate takeover of the American meat sector by giant agribusiness.
But now, with the giants’ meat model about to stumble on $3 or, hopefully, $4 corn in a demand-led market, they want the rules changed so they can continue to prosper while corn growers continue to live hand-to-mouth on government handouts.
Sadly, some shortsighted farm groups are offering them cover.
Recently, the Iowa Farm Bureau voted to end new CRP enrollments. Should that idea be seen for what it really is, eliminating re-enrollment of expiring CRP contracts, most of the under-contract 16 million acres set to expire in 2006 and 2007 will be back in crops by early 2008.
That market-killing event would deliver exactly what agbiz now advocates and exactly what independent American grain producers and hard-pressed American taxpayers do not need.
But the agbiz big boys and some of their partner farm organizations will continue to talk up CRP’s demise because talk is cheap and soon corn will not be.
This farm news was published in the Sept. 27, 2006 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.