Monday, August 19, 2013

Success Can Really Bite

As the long hot days of August roll on, we were reminded through a few news stories and conversations over the weekend that farming isn't exactly a profession for wusses.

Last week, the USDA released a new estimate of what this year's U.S. corn crop harvest likely will look like - and indeed, the crop looks to be one of the largest ever. Most non-farmers might look at that and think, 'Great! A Bumper crop is a good thing, right?'

In terms of sheer productivity, yes. A bumper crop in any year proves America's farmers can once again navigate the challenges of Mother Nature, international agribusiness, our gridlocked Congress, and other unforeseen events to deliver a successful harvest. That said, it's not exactly like any of those challenges that farmers face are easy or stable. Even the best farmer can rarely account fully for unintended consequences, the kinds of things that often bite them in the behind.

One look at the complicated monster that is the corn market gives outsiders a perfect view of how success in growing food doesn't always mean success in the pockets of farmers.

When you're looking at how corn is sold in agricultural markets, what happened last year and in previous years matters. This year, corn harvest yields are forecast to be up worldwide. After last year's U.S. corn crop withered in the heat of late summer, many international corn buyers had to switch away from American suppliers to South American nations. Five years ago, combined exports from Brazil and Argentina accounted for only 23% of global trade. Last year, thanks to the weather in the U.S., it was 47%.

With more and more corn, and the same number of purchasers or less, thanks to global agribusiness corporations the demand is down - and sadly so is the price of corn. All of which means a bumper corn crop in the U.S. this year isn't exactly great news for the pocketbooks of American farmers.

What's going on in the Middle East and Egypt could also come back to bite American farmers. As Tim Fernholz wrote in Quartz this weekend, the Suez Canal in Egypt looks to remain open, even as that nation burns. Part of why the canal remains open is America's financial support of Egypt, as well as its international agreements with the Egyptian government.

There are plenty of people on all sides insisting President Obama is caught in a dilemma on Egypt - but the facts don't really bear that out. There are many reasons why President Obama won't likely publicly admit a coup has taken place in Egypt. For one thing, as soon as he would do so, legal considerations would automatically come into play that could potentially close the Suez to American shipping interests. That would include not just agribusiness interests, but also up to 3 million barrels of oil per day. A closed Suez Canal would be brutal to the bottom line of most American farmers.

Such an admission would also likely cut off a great deal of the U.S. military access to the Middle East - making America weaker in the Middle East, not stronger.

Finally, Mother Nature isn't exactly stable these days. In fact, as Jillian MacMath of AccuWeather notes, the entire greater midwest, from the Rockies through the Ohio valley looks to be getting an early frost this year - which could completely change the harvest outlook again, if the forecasts hold true.

All of which reminded us over the weekend to thank the next farmer we see, and reminded us to be thankful we don't have to deal with the issues farmers do every day. Even when they win, they can still lose - and that really bites.