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**Sapiens** · September 21, 2009, 07:08 PM

Re: Farmers waiting for inflation bus to arrive

http://wallacesfarmer.com/blogs.aspx...9&e=2009-10-09

Where Did the Ever-Worsening Grain Shortage Go?
Posted on September 09, 2009 at 10:22 AM
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Grain elevators across Kansas have a problem this fall as the combines get ready to roll for what looks to be a record fall harvest. The elevators are full of wheat. The terminals are too.

Faced with lower than break-even prices, farmers haven't sold their wheat. They are holding on, hoping that dwindling supplies will push prices upward or that a recovering world economy will spur export sales. But that leaves no place to put the corn, soybeans and milo about to start pouring in to local co-ops.

This time last year, all the furor was about the high price of commodities, the high price of food and who was to blame for the "global grain shortage" that was projected to get nothing but worse unless we immediately stopped all bio-fuel mandates.

Well, we didn't stop making bio-fuels. We're making more than ever in fact. But the grain shortage didn't last and neither did the high prices. Like many 'projections' based on everything continuing down the same road, it went far afield.

I would argue that how best to use abundance is a much better position from which to operate than how to find make a short supply stretch to feed the hungry.

I just hope that those who feed on fanning the flames of fear in others are paying attention to the fact that moving from shortage to surplus took only one growing season.

Argentina Set for Record Soybean Crop on El Nino Rain

Aug. 31 (Bloomberg) -- Argentina may produce a record 50 million tons of soybeans in the next harvest as rains forecast for the next three months break the worst drought in a century.

Brazil has second largest grain harvest in its history
September 8th, 2009

RIO DE JANEIRO - Brazil reaped 134.34 million tonnes of grain in the 2008-09 harvest, the second biggest production in its history, state-owned food company Conab has said.

Grain production in the last 12 months was scarcely less than the 2007-2008 harvest, when the country set a record of 144.12 million tonnes.

Brazil is one of the world’s biggest grain producers and the biggest producer and exporter in the world of commodities like soybeans, coffee, sugar and orange juice.

The 6.8 percent drop from the last harvest to this was attributed to the drought that affected production in the southern part of the country of soybeans and corn, the country’s two biggest crops, Conab said.

The drought chiefly reduced grain production in the states of Parana, Rio Grande do Sul and Mato Grosso do Sul, three of the country’s main granaries.

Of a total of 134.34 million tonnes reaped in the harvest just ending, soybeans made up 57.1 million tonnes and corn 50.1 million tonnes. The two products together, despite their drop in production, represented 79.8 percent of the total.

...

Minnesota's farmers struggle with depressed prices and steep losses

Sharon Schmickle | Monday, Sept. 14, 2009

Recession in Minnesota
Much of Minnesota escaped the full force of the recession's damage last year by standing on agriculture's broad shoulders.
Now it's time to flex your own shoulder muscles, town folk. Farmers need the favor returned.
Unlike last year, when many farmers prospered, their incomes now are falling even as the overall economy picks up.

Depressed prices are forcing livestock farmers to sell milk and animals at steep losses — driving hundreds of them out of business. Crop farmers are faring better, but grain prices are down from last year's highs. And an early killing frost could clip crop returns.

"People came to the State Fair, and they saw everything looking nice, farmers with nice animals and so on, but they didn't see reality," said Scott Schley, a hog farmer from Dodge Center. "The reality is we have to go back home and face debts and all of our other problems. It's tough."

A contraction in the second-largest sector of Minnesota's economy is exactly the opposite of what the state needs right now.

Minnesota faces a budget deficit as high as $7.2 billion for the biennium that begins less than two years from now. That's a whopping 19 percent of the state's overall budget. Gov. Tim Pawlenty and some other politicians have expressed hope that rising revenues could narrow the gap as the state recovers from the recession.

In the face of that hope, MinnPost is examining Minnesota's economy, region by region and sector by sector. You can find the kickoff for the series here. This installment weighs prospects for agriculture.

Instead of picking up, though, portions of the farm economy are in such dire straits that analysts worry the state could head toward a repeat of the crisis of the 1980s when some 20,000 Minnesota farmers were forced off the land, main street businesses folded in droves and 49 ag banks failed across the Upper Midwest.

More troubled loans, less income
"We are seeing a dramatic increase in numbers," said Mary Preisler, director of Minnesota's Farmer-Lender Mediation program.

Minnesota law requires that creditors with $5,000 or more in secured debt against a farm offer mediation before proceeding with foreclosure and other collection procedures.

Nearly 2,800 farmers across the state have received notice this year that creditors are moving to collect such debts, making them eligible for the mediation — and also placing them at risk of losing property, Preisler said.

"What has happened is that they are not able to pay a major creditor," she said. "If they fail to come up with a plan, the next step is foreclosure or bankruptcy where that is appropriate."

Many other farmers, though, are better positioned to face hard times because they built equity and bolstered their financial positions during last year's boom, said Tobias Madden, regional economist for the Federal Reserve Bank in Minneapolis.

"They may need that [reserve] now," Madden said. "The outlook for the next quarter is for decreased farm income and capital spending and household spending."

Forty percent of Minnesota bankers surveyed by the Fed said net farm income was down through the first half of this year. And nearly half the bankers predicted it will fall further.

The repercussions already are pummeling farm towns. More than one-third of the bankers said farm families have cut household spending and investments in capital improvements. One in five said loan repayments are falling too.

While ever fewer of us make our livings on farms — only about 3 percent of Minnesotans are active farmers — the sector still figures very large in the state's economy.

The state's 79,000 farmers generate about $9.3 billion a year in income that is spread through their home towns and regional centers. Factor in the full sweep of the businesses that supply their needs, process their outputs and deliver their goods, and the tally rises to $55 billion worth of economic activity supporting more than 367,000 jobs.

That makes agriculture second only to manufacturing in the state's economy, according to calculations by the Minnesota Department of Agriculture.

...

It is all about timing, they may be in a world of hurt with that bet.

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Farmers waiting for inflation bus to arrive

Farmers waiting for inflation bus to arrive

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