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8 THE RURAL VOICE
Robert Mercer
What f grain prices double?
Projections of world famine have
been around since the 1700s but as
we enter the 21st century the
population pressure is beginning to
outstrip the globe's carrying capacity.
Population is
now increasing
faster than
agricultural
production gains
as no new green
revolutions have
produced food
production gains
like those in the
last 30 years.
The world is also
facing cropland
losses to
industrial uses,
soil is being
eroded, the
climate is changing, water is scarce
and affluent people are consuming
more per capita as they eat higher up
the food chain.
A recent global study by the
government of Japan, (which imports
70 per cent of its wheat needs)
suggests that wheat and rice prices
could double by the year 2010 — just
12 years away. The World Bank in its
report sees no such price rise.
Such a price rise, if it comes,
could easily happen but not for
economic reasons. It would be
because of crop failures that are
weather related.
A doubling of corn price in
Ontario for instance, would jack the
price from $150 per tonne to $300
per tonne. This, if sustained, would
give the system enough financial
incentive, (if the suppliers didn't
simultaneously raise their prices) to
produce greater volumes of grain off
the same acreage.
This would not be the same as the
annual average production gains that
have risen about two per cent a year
for the last three decades, but gains
from tightening up the controls to
save what is already there. Cut losses
from transportation, cut losses in
elevation and handling, cut losses by
incorrect settings on combines, make
the most of every foot at the edge of
the fields, use the right inputs at tie
right time in the right quantities and
use correct planting rates. This is all
technology that is available now.
With higher prices the incentive to
save is greater, the opportunity to hire
:.dditional help is available, and there
will be more time to manage rather
than operate the farm.
On one farm where I was recently,
they were producing small square hay
bales for sale to the horse trade at $6
a bale. Here the farm had a full-time
water resources technician as
production was dependent on
irrigation. If grain prices rise I would
expect to see a greater use made of
off -farm specialists to help maximize
production and minimize costs.
Should grain prices rise fast
enough to double by 2010, I foresee
the major change will not be at the
farm but at the trade level.
A doubling of world grain prices
will, as one research organization has
said, "impoverish more people in a
shorter period of time than any event
in history."
As the world moves from grain
surplus to grain scarcity, grain
exporters face a dilemma of who to
sell to. Is price more important than
need? Will governments let prices
rise? In fact, will governments
intervene as they did with the
soybean embargo to protect their own
supplies? Or will they ration out
supplies so the less fortunate also get
fed?
In Canada we are one of the most
fortunate countries agriculturally in
the world. We have a large land base,
a good supply of fresh water, a high
level of technology, a reasonable
climate and a small population.
The world is not so lucky. We are
just one poor crop away from
potential chaos in grain markets. If
the old saying is correct the future
may be closer at hand than 2010.
"Seven good years in farming are
followed by seven bad years."0
Robert Mercer was editor of the
Broadwater Market Letter and alarm
commentator in Ontario for 25 years.