World Grain Stock at a 35 Year Low
The price of food is on the rise. As a story and charts from the Wall Street Journal show, rice (prices up a whopping 134 percent), wheat, corn, and soy are all above a 60 percent increase over the last 52 weeks.
Cargill, a large international provider of food, agricultural and risk management products and services, saw a Chevron-like return in their last quarter with $1.03B in revenue. When I read the CEO’s comments in the WSJ, I couldn’t help but ask myself if large corporate farms control supply driving prices to their favor. While he says that they’re “doing an exceptional job,” my thought is this is an answer to shareholders, not the rest of the world who require the commodities Cargill, ADM, and others provide.
Cargill’s chairman and CEO, Greg Page, said earlier this month [April 2008] that “the dimensions of change in global agriculture are striking” and that the Minneapolis company is doing “an exceptional job measuring and assessing price risk.” He said world grain stocks are at their lowest level in 35 years.
(emphasis added)
My Farm Country Roots
I grew up in a farming community in Rexburg, Idaho where the proceeds from the sale of cattle, milk, potato, barley, and wheat became the lifeblood of the local economy. While I was in high school (80s), the number of family-run farms was shrinking as the rising generation (including my friends) decided that farming wasn’t for them — and it’s hard not to blame them since the work is hard, the days long, and the stress mother nature added makes farming a hard career. Corporate farms were growing acreage through buying up family farms.
I quick search directed me to the United States Department of Agriculture’s (USDA) National Agricultural Statistics Service (NASS). As you can see from the NASS’s data, the number of farms have been on a steady decline over the past 50 years. Sure I expect some of this as the result of technology and machines that allow for management on a larger scale. However, seeing all my friends moving from the community still said a lot about the power of corporate farms.
Charting Bonus Material
We’ve truly moved production and consumption of our foods to extremes. I can’t help but think of some of those Sundance Channel shows that talk about how important it is to have local production, distribution, and consumption of goods. This is really coming onto the radar as the price of distribution is impacting the price at the market. I found the charts below on the NASS site showing the number of dairy operations from 1988 to 2007. This is amazing.
