With rising food costs, subsidized US corn glutting the market, and the dollar becoming further devalued, we've all been getting a crash course in Economics 101 these past few months. But the New York Times published two articles about farm politics earlier this month that really had scratching our heads in confusion.
The first article, "Food Prices Rise, Farmers Respond," read as a positive report on US farmers reacting to rising food costs by voluntarily planting less corn this summer. A week later, a second article, "As Prices Rise, Farmers Spurn Conservation Programs" reported that farmers are pulling fields from a government conservation program in order to plant more crops.
So were more or less crops being planted? And either way, what does this mean for food prices?
Read side-by-side, both articles seem to boil down to the stark reality of 'show me the money.' And for farmers, the money is not in the corn this summer--or at least that's how it's looking right now.
Instead, many farmers think they can get a much better price for crops like wheat and soybeans. Responding to US demand for wheat and global demand for soybean products (like cooking oil), they're devoting a larger percentage of their fields to non-corn crops.
Some farmers are also pulling fields from conservation programs in order to capitalize on prices that will yield a greater profit than the conservation programs are paying.
After so many years with surplus corn, reducing the amount being grown this year sounds like a good thing. We also know that many farmers are having trouble just scraping by and these good market prices must be a boon for them.
But we wonder if flooding the market with wheat and soy is just going to create a new chain-reaction of problems.
What do you think?
(Image Credit: KB35 via Flickr Creative Commons)