Listen up: Plow up your crop
A guest editorial on an American agricultural internet magazine site last week featured an intriguing idea of farmers manipulating the grain market.
Farmer Marty Schott suggested that all farmers should pick a date, say Aug. 1, to plow down five percent of their production.
Such dramatic action would shock commodity futures traders into pushing up prices more than five percent, he said.
If that wasn’t enough, then plow down another five percent the next week.
Of course, this is just talk. There isn’t enough unity or time in the farm community to organize such an action, if indeed it is worthy of support.
Read Also
Vegetable oil stocks are expected to tighten this year
Global vegetable oil stocks are forecast to tighten in the 2025-26 crop year, this should bode well for canola demand.
But it serves to illustrate the frustration of many farmers, on both sides of the border, when the build up of a modest stockpile of grain and oilseeds is seen as a terrible burden by the commodity markets.
Put in terms of days of food supply, the unsold surplus at the end of this crop year is only about 11 days more than it was in the mid 1990s when prices were soaring.
In a simpler time, the build up of food supply would be a comfort. But today, we are no longer dependent on the grain we produce in our community or even one country.
Food is a global commodity traded and shipped around the world. Harvest is always in progress somewhere.
So a buildup of supply in one place becomes a problem because before it can be sold, production from a harvest somewhere else will hit the market in competition.
This summer, the markets are focused on the good weather in the United States Midwest and the expected large carryover of soybeans there.
That has depressed oilseed prices to such an extent that farmers in Argentina and Australia, who are seeding winter crops, are putting in more wheat because it is the lesser of two evils.
That potential production threatens the modest drawdown of global wheat stocks projected for the end of the 1999-2000 crop year.
It’s not an optimistic outlook.
And it should reinforce the message to governments in grain exporting countries that the need for farmer support is as important today, or even more so than last year.
As governments look at support packages, they should include ways to limit production, at least until the economies of Asia rebound and the demand side of the market equation recovers.
