A recently released document from the United States’ Department of Agriculture is sending shocking surges throughout our economy.
That paper revealed the sorry state of production, which will be far lower than originally estimated.
That will entail significant price increases, not only in food items, but in the many other sectors tied to agricultural output.
Despite an increase in the area harvested, corn production will be lower than last year because of long, hot summers.
Hence, the price of corn soared so much that the Chicago Board of Trade’s limits on trading were put in place. Not only is the weather a factor, but U.S. regulators are set to raise the proportion of ethanol in fuel by 15 per cent, meaning less corn for livestock and other consumption.
To aggravate that situation, supplies for wheat are meagre. Poor growing weather in the principal regions has compounded the depletion of supplies because of enormous exports. We have the emergence of China as an exceptionally large buyer.
That trade began under Prime Minister John Diefenbaker, who signed the first large-scale grain deal with Communist China. The development of middle-class buyers who supplement their diet has changed the outlook drastically and permanently.
The Westernization of Africa’s and Asia’s diet has been going on for more than a decade. Rising incomes, growing population and urbanization are combining to shift eating habits away from the staples of yesteryear toward livestock and dairy products.
The changing consumption patterns will make it especially difficult for the less developed regions where food represents at least 40 per cent of a person’s annual income.
Too, it has been estimated that there will be an added 140 million people over the next four years. That will be in addition to three billion living in the fast-growing regions in Africa and Asia.
Then too, the demise of the small, individual farmer who is being supplanted by large-scale farms, which generally are less efficient, is making things worse, not only for Canadian farmers, but for all the efforts to expand production.
What is hurting households surviving on a few dollars is the rise in price. If you spend half of your income on food, even a modest rise in prices is devastating. That provides very little left over for health and education.
What does all that mean for the future?
Economies in the less developed world will be in crisis, imperilling Canada’s export trade, and indeed our economic stability.