Casino Crops

Thanks to decades of deregulated agriculture, markets for corn, soybeans, wheat, cotton, and other farm commodities have become high-stakes casinos. If family farmers are to be stewards of the land and safe, nutritious local supplies of food are what we want, then we must implement tried and true policies of supply management and conservation.

The nation’s recent agricultural history should compel immediate action.

The 1980s and 1990s were known for low commodity prices that placed economic hardship on family farmers and rural communities around the world. Migration from farms to cities and across national borders created social problems that still scar urban and rural life, with only political rhetoric and demagoguery rising to address such intractable problems. At the same time, cheap commodities created cheap feed for the expanding industrial production of meat, milk, and eggs, and gave rise to cheap processed food and soft drinks that steered consumers away from healthier diets and local food supplies.

The more recent commodity price fluctuation has created a whole new set of problems. The price level of primary commodities including corn, soy, oil and metals, rose 90 percent from January 2003 to June 2008, and then plunged 34 percent in a few months. Commodity prices then rose 60 percent in just two years, and recent farm commodity price volatility dragged corn prices down by more than 20 percent in the last two weeks of June. Furthermore, farm prices may keep dropping without regard to the prices farmers have paid for inputs like seed, fertilizer, and fuel.

The price of oil affects us all, but particularly farmers. Modern U.S. farming requires prodigious amounts of diesel fuel to run tractors and combines. Oil prices also influence the prices of commonly used petrochemical-based fertilizers.

Higher prices are a mixed blessing for family farmers in this free-market situation. Since they can’t know for sure whether prices will actually go up or down in the future, many farmers sell their crops long before the peak prices materialize. That can leave farmers with nothing left to sell when prices actually jump. The peak often comes when news of a crop failure suggests that prices will rise, but financial market forces that have nothing to do with farming — a stronger dollar for instance — are capable of making prices crash.Creative Commons image by Ken Hawkins

When the U.S. housing bubble burst, it caused an economic catastrophe that hasn’t yet abated. We should heed that lesson because a similar situation looms in the global farm economy. Low-interest rates implemented by central banks in the United States, Europe, and Japan, together with the “commodity boom” and a rush to boost the production of ethanol and other biofuels, have made land prices soar. Land speculators and agribusiness interests fuel this explosion, but family farmers, who usually rent most of their land, pay exorbitant rates or else give up on farming.

What’s more, an ecological and social catastrophe is blooming in South America and Africa. International agribusiness firms are buying up millions of acres of pristine natural land there, often dotted by small subsistence farms. Vast tracts of rain forest and savannah ecosystems will be plowed up and destroyed for the industrialized production of crops by hired labor and giant machines. The advent of genetically engineered crops that are resistant to herbicides like Monsanto’s Roundup makes any landscape vulnerable to such unsustainable and irresponsible exploitation.

Many agricultural and economic experts predict that this bubble will burst, too. The potential environmental and social costs of a market crash make government regulation of our global farm economy — through strategic food reserves and fair, stable prices aimed at sustainability and social justice — an urgent requirement.

Free-market demagogues may protest this levelheaded response, but being asleep at the wheel will drive us all into the ditch.

George Naylor, a grain farmer in Churdan, Iowa, belongs to Iowa Citizens for Community Improvement, a member organization of the National Family Farm Coalition.