High Prices a Problem for Corporations, Consumers Alike

Everyone from the CEOs of huge corporations to stay-at-home moms are feeling the squeeze of the high cost of living. Soaring food and fuel prices are leaving their mark in grocery stores, on the roads and in homes across the United States.

The U.S. Department of Agriculture recently estimated that food prices will climb 4.5 to 5.5 percent this year and another 4 to 5 percent in 2009. Many are scrambling to find new ways to survive in this volatile economy. The “trickle-down” effect has become obvious.

With the increased cost of living, many farmers are losing money with each chicken and cow they sell. Grain farmers are hurting from rising fertilizer and fuel prices as well. When those at the source of our food supply are hurting, the high cost of inputs are sure to be passed on to the consumer.

“It costs $1,000 to fill up some farm tractors every time they pull up to the diesel pump with an empty tank,” said Mark Schneidewind, Illinois Farm Bureau manager for Will County. In an Aug. 22 article in the Morris Daily Herald, he explained that anhydrous ammonia, a common fertilizer, has risen from $200 per ton to more than $1,000 in the past two years.

Like farmers, food manufacturers also must tighten their belts. Though often seen as responsible for hiking prices, companies like General Mills are suffering, too. According to an Aug. 8 Wall Street Journal article, to save dwindling profits, General Mills and other companies like Pilgrim’s Pride, Sara Lee and Tyson Foods have been forced to charge more for smaller boxes of cereal, cartons of ice cream and jars of mayonnaise.

The next place increased prices have a significant impact is in the grocery aisles and the wallets of families across the U.S. Already driving less, opting out of their usual activities and switching to more fuel-efficient cars, moms and dads are watching their food purchases closely. Even children at school can feel the effects of the market. Schools in many states are being forced to raise the price of all lunches, including their “low-cost” meals and are reducing the variety of foods they offer.

“We were so used to getting into the car and going places, trying new things,” said Jennine, a suburban New York mother of two. “I try to drive only as necessary so I can make a tank of gas stretch for two weeks. You have to think about how you do food shopping and where you are taking the kids.”

On the upside, makers of items like bicycles and wood-burning stoves are enjoying increased sales. Online and bulk shopping are also on the rise.

“High energy prices are forcing consumers and businesses to reconsider both short-term and long-term decisions, from where to go on vacation to where and how to organize product lines,” said Scott Horsley in his Aug. 13 NPR article. “Some of these changes will be long-lasting.”

The endless cycle of finger pointing is obviously not helping anyone solve the problem of higher prices. What is the solution? Are these market conditions here to stay? Let me know what you think.

Biofuels: Finding an Answer to the Energy Problem

The search for alternative fuels and energy sources has moved from a unique scientific pursuit to an economic and global necessity in the last decade. Immersed in controversy due to the soaring costs of fuel, food and other living expenses, the biofuel and ethanol industries are scrambling to find new and better ways to power our homes, cars and tractors.

Currently, the most common and widely produced biofuel is corn-based ethanol. However, even supporters of the industry realize that it is not the final answer to our energy needs. Corn ethanol is helping us reduce dependence on oil, but most agree that the future lies in using cheaper non-food material.

There are dozens of solutions in the works, but one of the most promising sources of cellulosic ethanol is switchgrass, a perennial that can thrive on poor soil with little water, fertilizer or pesticides.

Jeffrey Bennetzen, a professor of molecular genetics at Franklin College studying biomass energy, said that the advantages of using a cellulosic approach are that switchgrass captures carbon dioxide very effectively. It also reduces runoff from fields and does not take valuable acreage away from food production.

Sunflower stalks, sugar cane and sweet sorghum are all being studied for their use in creating cleaner and more efficient bioenergy. Their ability to grow quickly in conditions where corn and soybeans cannot, allows these energy sources to yield 250 percent more ethanol per acre than corn.

Other creative sources of fuel are pond algae, certain fruits and animal food wastes.

“Any kind of relief or help we can get from a cheaper source of oil could impact the agriculture industry tremendously throughout the country, throughout the world,” said Florida citrus farmer Bryan Beer. During peak harvesting, his tractors consume 120 gallons of fuel a day.

Many of America’s best minds are working to create what many believe will be one of the keys to a truly renewable energy system in this country and around the globe. It is projected that the impact of these research developments won’t be seen for about five to 10 years, but we do know that whatever the solution, farmers will have major roles to play.

There are still many questions that need to be answered, and many seem to directly influence the American farmer. Do you believe that cellulosic fuel is the answer? Is moving away from corn and soy-based fuel – products that many in the industry are finally catching up with – a wise decision? Could you see yourself growing these new crops? Let me know your thoughts. Please comment below.

High-tech Tools Transform Farms

From tractors that drive themselves to “remote” cow herding, technology is quickly changing the way farmers operate in the U.S. and around the globe.

Though humans have been growing crops and raising animals for centuries, the techniques for producing food has changed so drastically only recently. Touching almost every aspect of the family farm, new technology is keeping food safe, environmentally friendly, abundant and profitable.

Starting with the seeds they plant, farmers are using technology each and every day. Intensive breeding research is now being conducted to increase yields and to improve stress tolerance, drought and heat protection and increase seed size. According to an article in the Western Farm Press on July 8, technology-led innovations have increased U.S. corn yields by 60 to 70 percent since 1996.

“Not only do farmers have to adapt to new technology to stay profitable, they also must embrace it in order to feed a growing global population,” said Tamara Kass, director for agricultural products for DTN, an electronic information service. “It’s apparent how successful technology is in farming today, as we are producing more every year.”

Farming machinery has also seen many new improvements in the past decade. Fuel efficiency and precision are vital to keep costs low and productivity high. Global positioning systems (GPS) help farmers plot their fields to the inch, control distribution of seed and fertilizers and eliminate waste from crooked rows and overlaps. Durable computers, text-message market alerts and up-to-the-minute weather tracking are also making life easier for savvy farmers.

“All the technology has changed so much just over the past 10 years,” said Greg Place, a Wisconsin farmer who attended a recent “Farm Technology Days” event in his hometown. “I never thought I’d see this in my day.”

Crops and machinery are not the only areas of agriculture riding the technology wave. Those who raise livestock are finding new inventions useful as well. A manufacturer in the Netherlands recently introduced a rotating milking parlor, perfect for increasing profits for U.S. dairies that need to milk more cows per hour.

For ranchers, U.S. Department of Agriculture researcher Dan Anderson unveiled the “Ear-A-Round,” a device that can corral cattle remotely by funneling sounds directly to the animals. Eliminating the need for fences and allowing for better use of grazing land, this device could change the age-old role of the American cowboy.

According to an Aug. 10 Associated Press article, ranchers and cowhands will no longer have to spend time building and repairing fences. Instead, “they’ll devote more time to leading animals to areas for better nutrition while protecting natural resources.”

Anderson said that this device, which works by using sound to create a “virtual paddock” through GPS technology, could take the mundane physical labor inherent in herding cattle and help farmers and ranchers focus more on management.

“It’s looking for the best management with the best skills that technology can provide,” he said.

There is no question that technology positively impacts the American farmer, but do you think that there is a flip side to these advancements? Let me know your thoughts. Please comment below.

Doha Talks: Dead Trade Deal Could Be a Sign of the Times

The Doha trade talks, once heralded as a solution to many global market problems, collapsed last week after nine days of negotiations. As expected, fingers are pointing in every direction, and speculation on the impact of the failed negotiations is running rampant.

The reasons for failure seem to boil down to a single word “protectionism.” Thrown around by leaders of both “rich” and “poor” nations, it seems as though everyone, even the most global-minded, were caught up in looking after their own interests.

Representatives from India and China, called the “biggest villains” of the talks by economist C. Fred Bergsten, refused to give up trade barriers that protect their agricultural products. On the other hand, nations like the United States were criticized for unwillingness to cut agricultural subsidies, while trying to “pry open” the markets of other countries.

What Pascal Lamy, the director general of the World Trade Organization (WTO), called a “massive blow to confidence in the global economy,” the ending of the talks marks the first failure of a major international trade negotiation since the 1930s.

Some speculate that post-WWII free-market trends and the effectiveness of the WTO should be questioned. Seen as taking place in a unique window of opportunity with high food prices and a weak U.S. dollar making exports viable, the Doha talks and the era of major multinational trade may be at an end. Regional and bi-lateral trades, much easier to negotiate and tailor, may be the trend of the future. According to a Wall Street Journal article, the real battles will now be between those who want to expand the era of global trade and those who want to carve out their own “protected niches.”

According to a New York Times article published July 30, economists and trade experts predicted that “negotiators, having come this close, might not find the conditions for a broad deal among the 153 members of the trade organization for years, if ever again.” While some, including Brazil’s President Luiz Inacio Lula da Silva, still hope that an agreement will occur, most agree that the talks are finished, especially with the U.S. election on the horizon.

Bob Stallman, president of the American Farm Bureau Federation, issued a statement on July 29 expressing his disappointment at the opportunities lost at the conclusion of the talks.

“The United States made a significant offer to reduce domestic support levels contingent on an offer of commercially meaningful reductions in tariffs and other barriers from the developing countries,” Stallman said. “It is regrettable that India and China were not prepared to negotiate improvements in agricultural trade for themselves and other developing nations.”

Stallman went on to thank U.S. Trade Representative Susan Schwab for her efforts at the talks and made clear the Farm Bureau’s support of the WTO and its global efforts.

Will the rocky conclusion of the Doha negotiations truly signal the end of 70 years of increased global trade? How could this future shift of the world markets impact U.S. farmers? Let me know your thoughts. Please comment below.