The bold headline on the front page of the Financial Times some two weeks ago, "US Drought Triggers World Food Crisis Alert," reported that the worst U.S. drought in fifty years was pushing agricultural commodities to record prices. The situation has only become aggravated over the past two critical weeks.
Accentuating the growing emergency, the Wall Street Journal was to inform us on August 2nd that "Drought Dries Up Cattle Market," explaining that faced with seared grazing pastures ranchers across the U.S. who can't afford to provide food and water to feed steers and heifers and are rushing to sell them while feedlots are holding back purchases because of the escalating price of feed corn.
Clearly, a disaster in the making. A disaster not only for food prices in the American market, but portending a food crisis worldwide. It is an act of nature that has unsheathed a fact of fundamental significance, but barely touched upon in either political nor civil discourse. That the United States, with its vast expanse of fertile plains reaching from sea, past the Rockies, to sea, with its efficient inland waterways transport system, with its competent and professional farming community, has become, as the world's largest grower and exporter of corn, the largest exporter of wheat and the second largest exporter of soybeans, in other words, the world's food basket. It is a realization that will vest the nation with future choices of vast import and profoundly touch upon its character.
As if to underline the dimensions of responsibility that will be vested in the U.S. in this rapidly technologically flattening world, with its burgeoning population necessitating the doubling of food production by 2050, an event took place in Cambodia that may well set the parameters of future discourse on this vital issue.
Just last month Cambodia announced it would push for the formation of a Milled Rice Exporting Association together with Vietnam, Thailand, Laos and Myanmar. Cambodia's Minister of Commerce Cham Prasdih was quoted, "The five countries will be the world's food supplier -- what we could call the food basket of the world." Cambodia's Prime Minister Hu Sen would chime in, "when we form the association we would have enough power to negotiate with OPEC."
Well, clearly what is good enough for a helping of Goose and rice should be good enough for a helping of Gander and corn, or soybeans, or wheat, or meatballs. Inevitably this is the direction we are veering as the world's population grows and a planetary crisis in food
looms ahead. Not only will billions of dollars be at stake, but the very lives of millions of the planet's inhabitants.
How will we engage this responsibility? Will we join forces with other major grain producers such as Australia, Argentina, Brazil, Canada, Ukraine to form a Grain Growers Export Association (let's call it the GGEA) and pervert the market as OPEC has done with oil, whereby we would play the role that Saudi Arabia plays in OPEC, as the major and indispensable contributor to the cartel.
Will we permit the continuation of unbridled commodity speculation on our poorly supervised commodity exchanges to traders/speculators/gamblers who are free to hype the pricing of foodstuffs to levels grossly out of reach of the everyday consumer, let alone the offshore markets that have become dependent on America's harvest bounty. Just days ago the FT reported that "Trading Houses Bet Corn Price to Soar," "that traders and hedge funds are betting that corn prices will soar to never before seen levels as the worst US drought in half a century decimates the global corn crop... The number of call options that would give traders the right to buy corn at prices between $9 and $10 has risen thirteen fold in the past month."
Can we, in the future, permit the trading houses, the Bank Holding Company trading desks, and the vast plurality of gambling profiteers playing the grain markets who are neither farmers nor commercial consumers, to push prices ever higher to their own profit and benefit at the cost of consumers worldwide thereby becoming the arbiters of those who have access to food and those who do not?
These are serious issues of economic resonance, morality, and national conduct with worldwide implications. Given the devastation that this year's drought has brought about, this is a wake-up call that needs be addressed.
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