What were beautiful golden fields of soybeans last week are now dried out brown fields ready for harvest. Although I've not seen anyone picking beans yet (its probably too wet to get the equipment in the fields) I've been reading the preditions for this year's harvest and it's looking more than good. The US Department of Agriculture is prediting a smaller than expected harvest but the value of that harvest is way beyond anything we've ever seen before. The USDA's Economic Research Service projects that the total United States farm income will be $103.6 billion dollars up 31% from last year's total. That's basically income from corn and soy beans - those two staples of midwest agriculture. The corn is going to ethanol production and the beans to China. This will be the best year in the history of the United States for farm income. The best year previously was 2004 at $84.7 billion.
It's not all wine and roses however. The cost of inputs (seed, fertilizer, etc) has gone up 20% this year and is predicted to go higher still. 2012 will be a fairly flat year because of those increases.
Beef, pork and poultry prices will stay pretty steady because of the draught which is causing western farmers to slaughter their herds. But you may already be seeing the effect of high grain prices in the cost of milk. I paid $2.89 for a gallon yesterday. Last week I paid $2.39, the week before that $1.79. I have been seeing the effects of demand for corn and soybeans in the high price of chicken and cattle feed - both of which have more than doubled in the last year. The beef I send to slaughter this fall will have eaten more grass and less grain than any animals I've previously raised for freezer beef.
I'm glad that our agriculture imports are helping with the balance of trade to China, but once again the American people (that's you and me) will pay the price for China's prosperity with higher food prices. Somewhere I hope this all balances out.
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