http://www.theprairiestar.com/articles/2007/06/12/ag_news/opinion/oped06.txtIt's a grain reserve that's needed
By DARYLL E. RAY
Sunday, June 10, 2007 3:28 PM MDT
The impact of the ethanol driven rise in corn prices continues to generate the attention of everyone from members of Congress, to academics, to the end users of these crops, to farmers who are trying to find the mix of crops that will best serve them in the coming year.
In the past couple of weeks, two studies that look at the impact of increased demand for ethanol have been released.
<snip>
One of the conclusions caught our eye. Not surprisingly, with increased prices, exports of corn and soybeans decline. But, “due to generally higher commodity prices, the value of total U.S. exports increases slightly under both scenarios.” What a turn around from attempts over the last 20 years that resulted in lower export revenue as we lowered our price in a futile attempt to increase export quantities.
<snip>
Pushing against the barn door of biofuels-driven demand for corn seems futile. For the foreseeable future anyway, livestock and other grain users will no longer pay grain prices that are well below the full cost of production. Instead of lamenting that fact, organizations representing livestock producers could better spend their energy considering policies that will help their members deal with the potentially severe spikes in corn prices that are likely to occur.
<snip>
(Daryll E. Ray holds the Blasingame Chair of Excellence in Agricultural Policy, Institute of Agriculture, University of Tennessee, and is the Director of UT's Agricultural Policy Analysis Center (APAC). (865) 974-7407; Fax: (865) 974-7298; dray@utk.edu;
http://www.agpolicy.org. Daryll Ray's column is written with the research and assistance of Harwood D. Schaffer, Research Associate with APAC.)