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Thursday, May 22, 2008

Real Story Behind Food Prices

By Michael White
President, New Mexico Farm and Livestock Bureau
      Don't blame these high food prices on the farmers and ranchers. It seems this complex story is being oversimplified in the media at all levels and is leading to confusion in the ranks of consumers. We are working hard to get the real story out to the media and the public because once there is a mantra like “ethanol production is causing high food prices,” a mob mentality takes over and you hear it every night on network news programs.
       The truth is simply … not that simple.
       So let's examine what is really contributing to these increases in food prices across the board. First and foremost, the cost of fuel is affecting food manufacturers and shippers just as it is you and your family. In fact, agriculture economists say 44 percent of the rise in food costs is directly attributable to increased prices for crude oil and natural gas, but that increase is not coming from farmers raising the price of their commodities. The higher prices are coming from increased charges by all those that process, transport and retail your food after it leaves the farm. Remember, farmers have to take the price the market offers; they do not set the price they get for the things they grow.
       All of this is very dramatic because it's happening right now, right before our eyes as we drive past gas stations and gasp anew at the posted prices. They are at historic highs and it will take comprehensive and thoughtful measures to mitigate this problem.
       Agriculture has always been a global player and we are used to seeing the waves and ripples that are created around the world by an unexpected incident, a political crisis or a natural disaster. We work out in the weather as do our contemporaries such as our mates in Australia. They have been suffering a tremendous drought down under and their wheat crop has been devastated. So what does that mean to you? It's a good bet the wheat in your pizza crust comes from Australia. On the domestic side weather “events” like the recent Florida freezes took a toll on oranges and the price soared up 20 percent. In California, weather hit the lemon and lettuce crops and fewer the fruits the higher the cost all down the line. Also, as the world develops, cultures that have traditionally relied on fish, rice and vegetables now want meat, eggs and dairy products from the good old US of A. Increased worldwide demand for commodities, especially in China and India, is a very real factor in this economic vortex.
       Other factors filtering in to this situation include a lack of guest workers to pick and process the crops and the high cost of labor all through the system from the field to the factory. The weak dollar on the commodity trading floor is a major factor in this scenario and, again, the spiraling cost of natural gas and crude oil is sending rattles down the entire food chain.
       Short-term, nearsighted gimmicks are not the solution to food and fuel prices. One of the most important things you can do after you've thought globally is to act locally. I borrowed that from our friends in the so-called environmental movement. We need to elect officials who aren't afraid to support new oil refineries, more nuclear power plants, increased domestic oil and energy production, and improved infrastructure in this country. When the price of gas goes over $4 a gallon, I suspect support for energy development up in Alaska's desolate arctic tundra will soar like the price of fertilizer on my farm and our elected officials will not be so enamored of those who have no solution other than to pour french fry grease into their gas tanks.
      
       Michael White is an alfalfa and small-grains producer at Dexter in Chaves County. He is president of the state's largest agricultural organization and is a member of the board of directors of the American Farm Bureau Federation.
      

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