MacRaven - Dave Haxton's Weblog

Mon, 16 Jan 2006

Corn Farmers Smile as Ethanol Prices Rise, but Experts on Food Supplies Worry

Oh, the joys of trying to thrive in a commodity market! These poor bastards will crank up production so much that the price will fall off a cliff, and bunches of them will lose their butts. And of course, the price of soybeans will rise, because less of them will be planted, and next year the cycle will repeat itself.

This is the crux of the problem with the Law of Supply and Demand - and no, I don't think that state planning would solve it or make it better. In practice socialism makes it worse. But on the scale as they exist today, commodity markets and future pricing are driving more and more producers out of business, and eventually that's going to produce some real problems - which we will undoubtedly try to solve by the application of a little state planning. Which will start a second level cycle all over again.

There has to be a better way, but damned if I know what it is.

High oil prices have increased the value of ethanol, and the price of corn, from which it is made. As a result, many farmers are altering their planting decisions.

(link) [New York Times]

/Agriculture | 3 writebacks | permanent link

On 1/17/2006 07:20:29
Arwin wrote

Buck the trend

Maybe the successful farmer would do what the Fidelity Contra fund Mutual fund does. The contra fund bucks the current market trend in hopes of buying bargains. In other words if everyone else is planting corn, plant beans and vice versa.

On 1/17/2006 08:09:36
Dave H wrote

Information

is the problem here. How do they know what "everyone else" is going to plant? They depend on statistics reported by USDA. But those stats are unreliable, as the reporting farmers may either a.)lie or b.)be waiting for the stats to come out before making a final decision themselves. Imperfect information is the motor of the market - in a perfect world, with perfect knowledge, prices would always be in equilibrium. One key difference about agriculture is that knowledge of your fellow producers actions is not the only knowledge lacking - weather plays a huge role in production. And who can accurately forecast that? And since capitalism rewards specialization by way of rewarding efficiency, this can lead to some serious failures on the farm, often through no failure at all on the farmers part other than lack of knowledge. The cycles of "boom and bust" in this sector are far shorter and more violent than in any other sector of the economy. It's an interesting problem, to be sure. But just going "contra" won't fix it. Be well, Dave H.

On 1/17/2006 15:43:55
Arwin wrote

You can make $$$$

My suggestion wasn't to "fix" the problem, but a suggestion to you based on your prediction of flooding the market with corn due to the perceived pot of gold caused by ethanol from grain production. Put your money where your mouth is :-) Demand always fluctates. The only way to "fix" it is to pay more for stuff in short supply. We truly live in a land of plenty. Even energy isn't that expensive in constant dollars. So in this country shortages always seem to be short lived. In December it was tough to get the new Xbox, but less so today only a few weeks later. I expect by June the price will drop.

:: Categories ::

agriculture
asatru
copywrongs
humor
musings
politics
technology
index
haxton.org

:: Search ::

:: Blogroll ::

A Mindful Life
The Accidental Smallholder
Austro-Athenian Empire
Cauldron Born
Center for a Stateless Society
Dances with Ewes
Dispatches
egregores
Hardscrabble Creek
Honk & Helen
In Siberia
Laudator Temporis Acti
Lorrie's Livejournal
Masson's Blog
MyAppleMenu
NoNAIS
Notes on Religion
Numenous Thoughts
OrangeGuru
Overlawyered
Prophet or Madman
rogueclassicism
Sugar Mountain Farm
Thud Factor
Universe of Discourse
Wildhunt Blog
within the crainium

:: Archives ::

←January→
Sun	Mon	Tue	Wed	Thu	Fri	Sat
			1	2	3	4
5	6	7	8	9	10	11
12	13	14	15	16	17	18
19	20	21	22	23	24	25
26	27	28	29	30	31

:: Site ::

Contact Me

MacRaven
Dave Haxton's Weblog
Musings, Reflections, Rants and Comments from a Hoosier Heathen husband, father, grandfather, farmer and software engineer. There's really only one of me ...

lunar phases

Unless otherwise noted, all original
work on this site is licensed under a

comment...


Notes: If you put a <mailto:> link in the URL field your address will not be mangled: this could be a bad idea as your email address could be easily harvested by bots designed for SPAM. The comments field should now format correctly for line feeds and carriage returns: when you hit the 'Enter' or 'Return' keys in your comment it should break to a new line. The text should wrap cleanly. Please let me know if it doesn't. No HTML tags will pass through - entering links seems to be the main cause of comment SPAM. Also, please be sure that Javascript is enabled in your browser before attempting to post a writeback. Sorry for any inconvenience, but this really helps cut down on the amount of comment SPAM I have to deal with.

Name:
URL:	(optional)
Title:	(optional)
Comments:
Save my Name and URL/Email for next time