Farmers unable to cash in on soaring food prices
With costs as high as an elephant's eye, some growers are even cutting back on crops that are in short supply.
All over the world, prices for basic foods -- barley for beer, milk for cheese, corn for tortillas, and the rice that serves as a staple for more than half the world's population -- are soaring. But farmers aren't rushing to cash in on the boom by planting more of the crops.
The amount of corn planted in the U.S. is expected to dip this year. Rice acreage in California, which sells as much as half its crop overseas, is predicted to increase by only a small amount. Instead, farmers are planting cheaper-to-grow wheat and soy.
They say the reason is simple. The cost of planting some crops is rising as fast as their prices, and sometimes faster, leaving little incentive to increase production of some foods that remain in high demand around the world.
Farmers typically plant their crops once a year and not all of them cost the same to produce. Both corn and rice, for example, require more fertilizer to grow and fuel for farmers to tend than other crops. As the prices of those supplies rise faster than the prices of some commodities, farmers are shying away from some expensive crops.
The little-noticed development could keep the price of some foods at their current high levels, or send them even higher, until worldwide supply can catch up with demand, economists say.
"The price of crops drove what farmers did last year," said Chad Hart, an Iowa State University agriculture economist. Now "it's costs, and that's prompting farmers to reevaluate how they allocate their land this year."
The cost of farming an acre of corn, for example, has risen almost 47% over the last year, according to Wells Fargo & Co. estimates, outpacing the 35% increase in the price of corn in the same period.
It's the same with rice. The price on the futures market of U.S.-grown long grain rice -- the type that is in short supply worldwide -- has risen 64% this year to $22.74 per one hundred pounds. (Such a move also pushes up the price of medium grain rice, which makes up most of what is grown in California.) Still, farmers are expected to plant 549,000 acres of California rice this year, up less than 3% from last year, according to the U.S. Department of Agriculture.
Charlie Hoppin, who farms 3,200 acres scattered across Yolo and Sutter counties, is one farmer opting for a crop other than corn. He figures that safflower will be just as profitable, if not better, and a whole lot easier to farm.
