16 Jan 2006
Corn Farmers Smile as Ethanol Prices Rise, but Experts on Food Supplies Worry

Oh, the joys of trying to thrive in a commodity market! These poor bastards will crank up production so much that the price will fall off a cliff, and bunches of them will lose their butts. And of course, the price of soybeans will rise, because less of them will be planted, and next year the cycle will repeat itself.

This is the crux of the problem with the Law of Supply and Demand - and no, I don't think that state planning would solve it or make it better. In practice socialism makes it worse. But on the scale as they exist today, commodity markets and future pricing are driving more and more producers out of business, and eventually that's going to produce some real problems - which we will undoubtedly try to solve by the application of a little state planning. Which will start a second level cycle all over again.

There has to be a better way, but damned if I know what it is.

High oil prices have increased the value of ethanol, and the price of corn, from which it is made. As a result, many farmers are altering their planting decisions.

(link) [New York Times]

00:00 /Agriculture | 3 comments | permanent link