Here’s some good news for the public: A record surplus of grains such as corn, soybeans and wheat is expected to continue into its third year this fall. This should translate into lower prices at grocery stores.
Good news for food buyers, of course, means bad news for sellers. When it comes to agriculture, the sellers are farmers, and many of them have chosen to store their surplus grain rather than sell it for less than it cost them to produce it.
It’s routine for a farmer to put his excess product in storage. But three years of a grain glut have overwhelmed storage capacity around the world. In Iowa, for example, the Reuters news service reports that corn farmers are keeping their extra grain in 6-foot-tall, 300-foot-long plastic tubes that snake across fields and look like “monstrous white caterpillars.”
The amount of excess grain is mind-boggling. Permanent storage facilities in the United States can hold 24.3 billion bushels. But last fall, the country had 1.6 billion more bushels than that.
Thus the U.S. Department of Agriculture has been approving permits for temporary storage — in some cases open-air mounds, tarp-covered piles and even in containers on old airport runways.
A bushel is about 60 pounds, so you’re talking about 90 billion pounds of grain in temporary storage.
The USDA says there is no sign of slowdown in grain production around the world. Russia and China have started to sell some of their stored grain, which may drive prices even lower.
It’s a shame for the farmers, who now must decide whether to hold on to their excess product or sell it for less than its $4 per bushel production cost. Its pretty clear, though, that farmers around the world will have to cut back or shift their production. Reports are that Mississippi farmers will be planting less corn and rice and more cotton and soybeans this year.
That’s not such a terrible thing, particularly when it comes to additional cotton acreage. Since cotton has more inputs than grains and is ginned in the state, it has a broader beneficial impact on the overall economy.
Also the continuing oversupply proves that the world has the ability to produce enough food to feed its growing population.
But the situation also begs the question: With so much surplus grain in the world, why is anybody going hungry at all?
No doubt the U.S. government already spends plenty of money buying surplus farm production. It has done that for the dairy industry, which resulted in some fine free cheese for the poor and elderly. Could there be a way for governments around the world or non-profits to buy more of this extra grain?
Admittedly, this would be a challenge. The United States government already spends $500 billion more per year than it takes in. The finances of many other governments around the world are even worse. Expanding farm surplus programs would only add to the excess spending.
But the benefits are obvious for both the famished and the farmers.
