Sunday, September 16, 2012

Farmers and The Magnificent Seven.


 Dialogue about peasants (farmers), from The Magnificent Seven:              

"They are afraid of everyone and everything.

They are afraid of rain, and no rain...

The summer may be too hot, the winter - too cold.

The sow has no pigs, the farmer is afraid he may starve.

She has too many, he's afraid she may starve."


The farmers across the midwest were complaining that this would be a terrible year for them because of the extended drought - all the worse because the early spring had raised hopes of a banner year, and they had over planted accordingly.

Amazingly, after all the complaining about the heat and lack of rain, this year (2012) may not be so bad.


There's no question there will be less corn for sale than expected in the U.S. this year. But here's the rub - it's driven grain prices to record levels.

The U.S. Department of Agriculture said despite the current drought, it predicts net farm income will rise 3.7 percent this year to more than $122 billion, as high grain prices offset loss of production.

Most grain and oil seed farmers have taxpayer-subsidized crop insurance which will cover, on average, 70–80 percent of their loss of "average production."  It is also becoming apparent that most farmers will still have some corn they can sell at top prices, if they haven't pre-contracted too much of it back when corn was $5 a bushel instead of $8, and provided they made the decision to buy crop insurance - it's a free country, and it's their choice, but they could complain that they made the wrong choice


In fact, some farmers will make more money this year having crop insurance than they would have if there was a normal yield because they planted so many corn acres.

Surely someone's got to get hurt.  Possibly the livestock producers because of the high cost of corn.  And so it goes on - unless there's still another angle to this.

And then there are the insurers, which includes the federal government, which means taxpayers like you or me.  We should be the ones complaining.  We're the peasants from The Magnificent Seven.


It seems someone always benefits from a drought.  Remember the movie Chinatown. There's a drought in Los Angeles sometime in the thirties. The sheep farmers certainly aren't benefiting, as is made clear at the beginning of the movie when a flock of sheep is herded into the city water department meeting in protest.

Turns out it's Noah Cross, (played by John Huston), who's going to benefit.  He's been buying up land in the Valley at daylight robbery prices driven down by the drought; and while he has been siphoning off city water to irrigate his orange groves, he's been depriving the other landowners of water so that he can buy their land cheap.  Too far fetched?, or not.

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