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07-30-2012 10:12 AM
In My opinion it makes sense that a productive nation should apply a food safety net for its people. The question is how it would be used. To feed starving people? Or to depress prices so that endusers will not have the risk of excessive grain costs?
Those of us "mature" remember the last grain reserve that was supposed remain in tact until corn reached a target price. Then policy changed to empty the grain bins with PIK certificates. Government subsidizing wheat exports so that foreign buyers got preferential treatment over domestic buyers.
A philosophical difference between food safety and emptying the bins at any price. Endusers particularly pained that they couldn't buy reserve grain at a discount.
That is one thing about government solutions. There are only dependable until the next election. A new congress can vacate the wisdom of those before them
07-30-2012 10:35 AM
GIVE IT UP;
We have had a grain reserve till this record setting world wide drought, it is called carry out.
We have also been running flat out on trying to produce our way out of high prices and prosperity and have only been able to do that in Dairy and to a lesser manner poultry and pork.
With the exception of the CRP program taking some of the better acres out of production in the western states it has removed 1 to2% of the supply right here in the US. DSI are the initials for this boondoggle. The farmers of the world are running flat out. Use has finally caught up with our ability to exploit our environment.
07-30-2012 10:51 AM
The last reserve WAS about supporting domestic prices and the rural economy. It did a pretty good job of that. The grain was mainly moved abroad to compete in foreign markets where we battled other subsidized players for market share. Europe and others had ginned up their production using subsidies that were higher and aggressive. US farmers did well as there was a safety net. That was jerked with F2F and the grain was shipped out. A lot of pain. A lot of misguided and greedy interests – including ag economists and agribiz who told us how it would be and how it would work and they were both wrong and intentionally wrong.
Markets have changed. We need a grain reserve with a different purpose. There are no longer mountains of grain and hugely subsidized exports, though there are protected markets maintaining high domestic prices to encourage production (India and China mainly). There is no reason to believe that mountains of grain will exist again as there doesn't seem to be any major breakthroughs in production occurring. There is definitely the threat of market disruptions due to lack of supply because of developing economies. Ethanol is a part of it as a result of market disruptions of oil. We do have a petroleum reserve for that reason.
A future reserve should be tied to ending inventories – NOT price. And it should be a distributed effort on a global basis – NOT just the US. It should be for preventing market disruptions due to what I call 'Natural Production Variation'. This would protect all grain uses and people as it would reduce the peaks and valleys of availability.
07-30-2012 11:01 AM
We have not begun to produce what we could in this world. We are at the end of the easy production maybe. Even at that we could do a lot of small things to increase production. Since the 1985 farm bill the US gov has done about everything it can to slow down the American farmer. If the American farmer wasn't a capitalist this country wouldn't be able to feed itself.
Change laws so that farmable wet lands could be improved. Put the SCS back into helping the American farmer instead of a regulatory agency. Put the COE directive back to flood control and keeping river channels open for navigation and maybe even helping to provide irrigation water. These are very small thing that would help. Beyond that all sorts of land development projects could be done if more food was needed.
07-30-2012 12:44 PM
In times of reasonable or lower prices you can buy and build your own reserve, Particularly if you are a livestock producer by trade. There is nothing that says a livestock feeder can't have a 100k grain bin on his farm to take advantage of what the market offers.
I suppose you can hedge feed costs in other ways, but physical control ends the risk of basis change and market variation.
07-30-2012 01:18 PM
all i know is the response from renewable fuels ceo makes common sense.
unless i'm just plain dumb, irradicating part or all of the mandate doesn't necessarily restrict their production.
do i understand this correctly?
07-30-2012 01:30 PM
What is J.K. Alexander talking about with ethanol subsidies? I thought the subsidies ended quite a while ago. Maybe Ray Jenkens can tell me what subsidies are still in place for ethanol. I might be misinformed on the subject and I am sure Ray would know more about ethanol than I will ever know. I meant that as a compliment to Ray.
After walking my fields today in Northeast Nebraska, dryland I came up with 12, 42, 78 and maybe 110 for the yield averages of 4 fields that I walked. Each field 155 acres. I have 2 fields to go. Beans, could be 30 -40 if it would rain 3-4 inches here within a week. This right now will be worse than 1988, have to go back to 74 or 54 for comparsison on our farms.