Under increasing demand from the ethanol industry, and China summer food prices have risen exorbitantly. The USDA reports a record level of grain being planted in America but the increase is being far outpaced by demand. Corn prices currently stand at above six dollars a bushel while only last year prices struggled to break the four dollar mark and food prices are going to climb further. For example, the USDA revised their expected corn exportation to China to quadruple their prior predictions.
This massive increase in exports to China indicates a increase in worldwide demand for corn and therefore an increase in food costs. Similarly, 2011 is the first year that the amount of corn utilized for Ethanol will outpace that of live stock feed (5.05 billion versus 5.00 billion respectively). Although the market has seen an increase in production, with an ever-increasing global population and rising energy demands, food prices will likely escalate across the board. Farmland prices will likely follow this trend to follow expanding costs of soybeans, corn and wheat.
Farmers are increasingly carrying this burden of spiking prices as fuel and loans for operating costs swelled in the second quarter. As the USDA makes strides in defeating “food deserts”, or areas in which non-processed food is inaccessible, farmers will have to adjust to the market demands over the next decade. Yet, local organic foods seem to burden farmers most and they will have to identify other ways to cut costs and even begin to market their own goods. The industry is still plagued, however, with a poor foundation built on an unsustainable labor system and excessively cheap oil; both of which will soon be out of reach for most American farmers. Therefore, in order to be competitive, America's farmers need to tackle these issues head on and adjust to the rapidly evolving world of modern agriculture in a globally competitive economy.
# # #