High Commodity Prices - From the Ground Up

Commodities like cotton, corn, wheat, and soybeans are at historical highs on the future’s boards, and in this week’s From The Ground Up, Ashley Batey tells us that farmers say there is also a down side to these high prices.

“I guess the biggest down side I feel like on high prices is that everything else is going to go up right with it.”

Lee Denena grows grain and cotton in Brazos and Robertson Counties.

“Costs of production always tend to, and commodity prices tend to come together, so high commodity prices tend to lead to high input prices, and what I’ve seen with these volatile markets is commodity prices can fall very quickly. Input costs, fertilizer costs, don’t seem to go down quite as quick.”

Walter Vajdak farms in Burleson County around Snook.

“Short term I think it will be better for the farmer, but long term it’s probably going to be like it always was.”

Denena is concerned about stories that unfairly portray farmers in a negative light.

“Some of the negative things that are spoken about, well, look at how much cotton, it’s going to increase the price of garments, and shorts, and fabrics, and everything, and of course, when you see the reality of it you know that there’s so little cotton that goes into that shirt, how it affects the actual price of the shirt is not that determined by the price of cotton.”

Vajdak says he doesn’t remember a time when supply and demand were as close as they are today with very little commodities stored in reserve.

“It’s kind of scary when you think about it. You might not be able to feed the population, I mean, it’s kind of something to think about.”

Neither Vajdak, nor Denena, believe 2011 will provide them with a retirement windfall.

“Commodity prices are too high. Farmers are getting rich, and we’re going to pay for it as consumers. That’s not really the case, but if that perception is reality, and if that’s out there, it can be negative.”

“I don’t believe it’s going to be a serious wealth project - farming - it’s going to be a whole lot like it always was; you’d better like it if you’re going to stay in it.”

I’m Ashley Batey, looking at Brazos Valley Agriculture, From The Ground Up.

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