11-07-2012 08:44 AM
In the Nov issue of Successful Farming, Dan Looker has an article suggesting the benefits of having a national grain reserve. What do you think of that idea?
He says you can't start one now with tight supplies, but if a process is put in place when there is plenty the reserve could be instituted.
I thought we had to grow 300 bushel corn to feed the world in 30 years or so? In other words, my question is, will there ever be enough seed stock (pardon the pun) to start a grain reserve?
I'll admit my initial impression of a grain reserve is it's like Tyson owning fat cattle - you don't have to move many head to take the top off the market for the little guy. The government could kill the excess profit for the grain farmer who was lucky or smart enough to have the right grain on hand when prices went through the roof. Isn't that part of what on-farm storage is about?
I don't know how a grain reserve would go over wtih WTO, who seems to have a say in what we do.
What is the difference between a grain reserve and the current loan program?
And, to me the bottom line, how do you market with a grain reserve? The CBT would use the reserve just like Tyson uses those few thousand head of fats, wouldn't they? As a way to cap the market?
11-07-2012 09:54 AM
Never worked well before. And it will be years before we have the grain to do it the old way. Unless we find a new way to interupt the pricing structure--------------like say a futures reserve.
11-07-2012 10:20 AM
I don't really disagree with what you say, Jim. If we really do need 300 bushel corn and if the market for feed grains is going to be hand-to-mouth forever, the grain reserve, or at least the one being proposed by National Farmers Union, probably would never kick in. That's because prices wouldn't fall enough to allow grain to be entered into a reserve.
I think you're right, too, that any reserve tends to put a ceiling on prices as well as a floor. I'm a big supporter of the renewable fuel standard and what that has done to help support corn prices. But high prices do have a down side if they get too high. They kill demand and they encourage growing corn on more marginal land here and in other countries. When and if we get normal weather, that smaller demand and bigger competition could very well combine to give us the $3.50 a bushel price that would be the trigger for entering corn into the reserve (at least in the study NFU cites--exact triggers would be determined by the ag committees in Congress.)
That said, I don't really expect this idea to go anywhere in Congress right now. And it's a shame, because I believe that all of us need to be more humble about what Mother Nature can throw at us.
11-07-2012 11:26 AM
As you know, I proposed a grain reserve. What I've noticed is that almost every farmer thinks a reserve has to be run as it has been before - which was basically as a price support with very surplus years and as a price killer/emergency supply in the lean years.
It doesn't have to be run using only price parameters. It can be run using supply and demand numbers or S/U. In this way there is more foresight and less guessing. If you believe in demand destruction (meat) then it would help solve that issue - to a point. In the cast of the US, by definition an overproducer/exporter, the supply demand situation on a more global scale can be used which would go a ways to alleviate the feast/famine cycle.
The idea we won't ever have enough grain in the future to even have a reserve is a dead ringer signal that we really need one.
11-07-2012 12:29 PM
I think the best grain reserve would be farmers who store their own grain. If you can afford it build more bins, store that grain until the price is higher. There is no law that say you have to sell your corn every year. I remember back in the 90's seeing neighbors who had the old Behlen buildings plumb full of corn for years untill the high prices came in 95 or 96 then they were busy trucking in all that corn. If a grain reserve is a federal program it will be of no benifit to the farmer.
11-07-2012 12:31 PM
GET OVER IT... been there done that ... didn't work out for the grain guys any better than the milk thing is working for the dairy people now.
You can have these lofty ideas and ideals. Hang any name or mechanism on it you want. It will in the long term and short term be price control. Makes NO difference what the trigger is ... you still get shot.
Until freedom to farm showed up the grain farmer was the "poor relation" in the farming community.
The other little secret you all seem to not know is that IF mother nature would cooperate we would automatically have a grain reserve with out the expense, bureaucracy, and paper work. It is not like the farmers of the world haven't tried to grow one.
Your socialism is showing.
11-07-2012 01:19 PM
When Freedom To Farm showed up?
You mean when they immediately dumped F2F and went socialist as soon as things got a little tough and doubled back down on permanent payments?
Then wrote an ethanol mandate with virtually no elasticity at the outer limit?
You have an interesting take on history.
11-07-2012 02:00 PM
You apparently don't understand the difference between choice, planning, and humanitarianism as compared to socialism.
Socialism by your definition would be planning and helping in a response to something like Sandy or Katrina.
11-07-2012 02:08 PM