My family tells a story of checking on the price of corn during the Great Depression, and the local elevator didn’t know because no one was selling. It turned out to be 7¢ per bushel.
I’ve been watching corn and bean prices since cash corn peaked here locally on July 3 at $7.03, about 100 times higher than that Depression era price, not counting inflation. I noted a while back somewhere that corn had fallen by a third since the peak, into the upper four dollar range. It then went back up into the fives, and stayed there. In last week’s, Iowa Farmer Today, it went down some. Corn tanked into the threes, an average of 48 October 5 elevator prices as featured in IFT of $3.82.
Soybeans were up to $15.44 per bushel on July 3. We had no price listed for a while because there was no local market due to the flood. Today soybeans tanked into the eights, an average of 41 October 5 elevator prices as featured in IFT of $8.33.
This compares to Iowa State University projected costs (but not full costs,) of $3.48 per bushel for corn following soybeans ($4.17 for corn following corn) and $7.79 for soybeans (depending upon the system). This year the projections, which came out last winter, used $2.75 per gallon (bulk) for a diesel fuel cost. Most of the year it has been much higher. It’s fallen recently. Today it was $3.09. Other fossil fuel related costs (ie. fertilizer, pesticides,) were also likely significantly higher than projected.
I called the local elevator today and they had no price, stating that there was no market and corn and beans had already gone down "the limit" (the regulatory, anti-free trade limit on how much prices can fall in one day).
I estimate that corn was probably already below full costs as of October 5. That means, from a U.S. perspective, we’re back to dumping. Certainly if prices continue to tank out, this will be true.
The 2008 U.S. farm bill Commodity Title gives farmers 28¢ per bushel whether they need it or not. That’s for situations like this. Other subsidies kick in for corn (under the traditional farm bill option), not at cost or 28¢ below cost, but down well below cost at $2.75 per bushel (counter cyclical) and $1.95 per bushel (Loan Deficiency Payment). At Depression era prices subsidy caps kick in limiting these payments, even for smaller farmers under this system. That’s how it works under this free market, with government subsidies set to pay farmers partly for whatever the market fails to pay. (This has been the policy since 1996, and, to a lesser degree, since 1961.)
Perhaps this will change discussions of the "food crisis" in the mainstream media and among progressives and the left. Most discussions in the U.S. have ignored our quarter century of dumping as a cause of world poverty, hunger and starvation, and blamed the recent, living wage, fair trade market prices for those problems. (See my comments to various articles at ZNet.) Basically they called for the world’s farmers to subsidize the solution, instead of seeing us getting paid as the only credible long term solution. Of course, massive aid has been needed for the acute crisis, and the aid given has been massively inadequate.
If corn prices fall to Grandpa’s level from the Great Depression, (ie. in constant 2007 dollars) I’ll post that here in my blog.