Cropping choice imbalance

[craig]

I am becoming increasingly concerned about the imbalance in opportunities and pricing for our crop choices. With the seeming slow down in interest in ethanol and the moving forward with bio diesel plants, it looks like we are increasing demand for our current best cash crop. At the same time it would seem that our livestock industry is in trouble and we will likely see lower demand for cereals from that sector in the domestic market. We are also hamstruck by poor pricing opportunities in the export cereal sector. It would seem that domestic consumption of lower value, higher volume crops is a more logical long term strategy. If the imbalance between cereals and broadleaf crops widens we only encourage poor rotation and increasing disease and insect problems. It would seem the cereal sector is in big trouble. Unless we can create a better environment for both farmers and support industries in both producing and marketing of these crops, we risk the consequence.

[Kodiak]

You’re absolutely right Craig. The problem has been around for a long time, but is magnified with current market conditions. Some of it may re-align before seeding time, but the distortions you point out will be with us until markets for all crops can fully arbitrage with world values on a daily basis. That can only happen in a fully commercial system, where regulatory influences are as equal as possible between crops. The only regulations we really need are ones governing anti-competitive behavior and bio-safety matters, but so long as they are implemented evenly across the board they shouldn’t be distorting.

Once again, the problem is rooted in a regulated single desk system for wheat and barley, which ripples to other crops as farmers unnaturally adjust their production - to offset the negative impacts (from mandatory price pooling, poor sales performance, inefficient handling, arbitrary actions on PPO’s, etc etc) of the single desk to their farms - and around and around and around we go.

[parsley]

...and the consequences are huge, craig.

Parsley