Monday, May 05, 2008

hunger means some business is booming

So it looks like while the price of food is skyrocketing, average farmers aren't exactly raking it in.

"When it's all said and done, we're still making what we did before," said George Zmitko, an Owosso farmer with about 8,000 acres spread across five counties.

Over the past three years, the price for staples like wheat and corn have risen dramatically. While that has made for painful grocery bills, Zmitko and other local farmers say they are coping with price increases of their own.

Fertilizer, for example, has quadrupled from $200 a ton to $800 while diesel fuel is more than $1.50 a gallon higher for farmers than it was a year ago… Costs for buying seed and crop insurance are up, as are the rates for borrowing money to operate a farm.

The net effect? All of that extra money people spend at the grocery store is not going straight into the pockets of farmers.

This is important because it suggests that even if the price of food continues to rise, there is no guarantee that the conventional method of growing food is going to get more lucrative. Amidst rising input prices, a linear system like industrial agriculture might become even more of a seasonal gamble with pricey pesticides and fertilizers- not to mention fuel costs- the ever more expensive 'ante up' on the bet of a big harvest. The article mentions higher interest rates on loans for those inputs and higher insurance premium on crop insurance. That makes sense given the increased stakes. But I wonder, are those bankers and those underwriters also talking to the climatologists?

I'm also wondering just how come all these guys are making tons of money? From the Independent,

The World Bank says that 100 million more people are facing severe hunger. Yet some of the world's richest food companies are making record profits. Monsanto last month reported that its net income for the three months up to the end of February this year had more than doubled over the same period in 2007, from $543m (£275m) to $1.12bn. Its profits increased from $1.44bn to $2.22bn.

Cargill's net earnings soared by 86 per cent from $553m to $1.030bn over the same three months. And Archer Daniels Midland, one of the world's largest agricultural processors of soy, corn and wheat, increased its net earnings by 42 per cent in the first three months of this year from $363m to $517m. The operating profit of its grains merchandising and handling operations jumped 16-fold from $21m to $341m.

It also makes me wonder just where I put my torch and my pitchfork.

Read the rest here and here.

1 comment:

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