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Monday, December 29, 2008

Growers Struggle With Volatility and High Costs

Farmers around the world are experiencing an unprecedented era of volatility in land, seed, fertilizer, pesticide, fuel and equipment costs, not to neglect crop prices. After prices of crops peaked in the summer, bumper crops recently reduced prices, dousing the anger behind riots in nearly 60 countries. But crop reserves remain unusually low while demand continues to grow. That means the slightest disruption -- flooding, drought, disease, or extra-cautious farmers -- could have a much bigger impact on prices than it would have had in recent decades. Demand has grown faster than farmers could increase their production most years of this decade, helping to drain grain reserves. Unusually good weather in most of the world this year is refilling grains stocks once again. But the situation could easily change. Some economists worry that the world will consume more grain than it produces by 2010, particularly if oil prices recover enough to make the production of ethanol from corn more profitable again. The situation is a headache for farmers even though it can mean years of big profits. Commodity prices are changing more quickly than farmers can plan which crops to grow. The price of a bushel of corn rarely varied by more than a dollar in a year's time for most of the 1980s and the 1990s. But this year, many U.S. corn farmers have seen the price of their crop swing by $4 a bushel. More here.

posted by CASFS 2006 @ 7:46 PM

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