By ANN HINCH
Assistant Editor

INDIANAPOLIS, Ind. — More government funding for research to improve productivity of crops and to find efficient end uses for them – that’s Dr. Robert Thompson’s prescription for cutting down on world hunger and curbing rising commodity prices.

This is a long-term solution, explained the University of Illinois Gardner Endowed Chair in Agricultural Policy professor. Figuring out how to double the productivity of staple crops such as corn, soybeans, rice, wheat and the like isn’t going to happen tomorrow – and doubled food consumption worldwide is what Thompson said experts predict by 2050.

He estimates there is about 12 percent more land globally that isn’t being farmed that could be without danger of deforestation, erosion and desertification. Even including this, only about one-tenth of the world’s land is arable, according to Thompson.

Hoarding and artificially depressing market prices for food doesn’t help anyone, he added.

“When government tries to regulate the markets, they always screw it up,” he said, adding that reported hoarding leads to panic – such as recent stories about rationing of rice by major U.S. retail chains – and forcibly lowering prices removes incentive for farmers to … well, farm, and continue to improve their output.

Instead of renewing commodity subsidies for only certain farmers, counter-cyclical payments, disaster loan and other similar programs USDA oversees, Thompson believes Congress should eliminate all these and put that money “in one pot,” require all types of farmers to purchase revenue insurance and let the pot make up what insurance won’t cover in the wake of crop and livestock losses.

Sen. Richard Lugar (R-Ind.), who also spoke at the conference, agreed he would like to end all crop subsidies and encourage a crop insurance program to help all growers, not just those of particular commodities. He said problems in farm bill negotiations stem from ag organizations not wanting to see a lowered cap on any subsidies and from the fact most federal legislators don’t understand well enough the farm programs they’re voting upon.
It isn’t just the U.S. legislature that needs to change how it does business with farmers and consumers, in Thompson’s opinion. Other countries’ governments ought to use their money to create a better environment for enabling higher production: better research, communications, road systems and more favorable business climates in-country, to name a few.

He also pointed out that farmers use 70 percent of the available fresh water on Earth and don’t pay much for it, if anything – as cities grow, their dwellers will be willing and able to bid for that water, and governments and farmers need to be prepared for that.

It’s not just ethanol

Thompson laid out most of this during his presentation to the Rotary International District 6560 conference on May 3 in Indianapolis.

Rotary is made up of business and government leaders, and like the general U.S. population, many at this conference were not farmers and had questions that reflect recent news coverage about the U.S. and world food situation; in addition, Thompson anticipated some concerns for his talk.

For example: Ethanol and other biofuel are not solely responsible for higher commodity prices. He said global demand for staples such as corn and soybeans was increasing before ethanol became a major player, because of successful efforts to cut down poverty in other parts of the world – this gave more people more disposable income to be spent on more and a better quality of food.

If anything, he said ethanol added to an existing situation by providing growers an attractive reason to pull acres out of wheat and soybean production and over into corn; less wheat and soybeans helped drive up those prices. He is in favor of slowing corn-based ethanol research in favor of research to encourage cellulosic ethanol production. Thompson pointed out, however, that biofuel has also spurred a great deal of funding for research into yield that had previously been lacking, especially from governmental sectors.

His big message of the day was that continuous research to increase productivity on existing farmland will be humanity’s best chance to reduce hunger, and that good commodities prices will spur farmers to keep growing.

“Food has been relatively cheap in the world, and there simply has not been the incentive to encourage development,” he said, adding grain prices were on a 150-year downward trend – until recently.
In the same vein, he does not believe organic farming is the best way to feed the world. He called it “a fad” among upper-niche consumers and said it would be “a cruel hoax” to deny poorer countries high-yield crops on the basis that they are less desirable or dangerous.

Thompson also said the high-yield and trait-resistant seeds and processes used in agriculture are subject to as much testing as pharmaceuticals – certainly more than “natural” and herbal medical remedies on the market today that are not subject to government approval.

“Americans have been eating genetically modified organisms for over 10 years, and there has not yet been one single case of health problems” stemming from that, he said.

Educating consumers

Thompson acknowledged resentments among consumers regarding farmers – namely, the food and conservation subsidies they are paid and how commodities prices are affecting what they pay at the grocery store.

Easily more than half of the more than 30 million Conservation Reserve Program (CRP) acres in the United States are fragile lands that deserve the designation, he explained. He said while the selection process has improved since Congress first authorized the CRP, some acres are in the program for political reasons not related to conservation.

As for commodities prices, he said consumers should not confuse these with store prices. Only six percent of the cost of baked goods go to farmers; with meat, eggs and milk, a higher percentage does go to the farmer, but he pointed out the cost of grain has driven that higher by necessity so livestock producers can recover their investment in feed. “The message I would say to the general (non-ag) reader is to look at other factors for cost,” Thompson said – especially transportation, given the sharp increases for diesel fuel, and oil overall.

His prediction is that worldwide commodities prices will stay high long enough to induce Brazil and Argentina to produce enough of those staple crops to “backfill the demand” for the soybeans and corn the U.S. is unable to export to meet global demand. Finally, he urged everyone to pray for rain – “If (the U.S. has) a drought this summer, we haven’t seen anything yet in the price of grain.”

This farm news was published in the May 7, 2008 issue of the Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.