America’s Wheat Farmers Grow Rich While World Panics

Global wheat stockpiles are dwindling. Prices have hit historic highs. Food insecurity is spreading. And American wheat farmers are getting super rich.

Have a look at the skyrocketing prices. From Minnesota:

Like a 100-year flood, spring wheat prices have risen relentlessly all winter, obliterating every record in sight. At the Minneapolis Grain Exchange, wheat fever pushed prices to $19.80 a bushel in trading Friday - nearly triple the record from 1996.

That explains this WSJ article on America's new wheat boom. In a nutshell: net farm income in the US is expected to hit $92.3 billion in 2008 on the back of soaring grain prices. That's a giant 51 percent increase over the 10-year average of $61.1 billion. And that's not all:

Robert Moskow, a food industry analyst at Credit Suisse, has proclaimed this the "golden age" of agriculture.

A golden age for a tiny pocket of America, perhaps. It's so small in fact that there's no way it can possibly cushion a recession in the rest of the economy. And the high prices are triggering food insecurity in every corner of the world. Not much to celebrate over.

Especially since international wheat prices are now up over 80% from a year ago, and stability seems more unlikely each day.

How come? To find out, it's worth remembering where the wheat price explosion came from. Draughts and floods caused from climate changes. Unprecedented rising demand for grains globally. And using arable land for fuel ethanol production. None of which are going away. All of which could get worse.

All of which boomerang through the economies of every nation, wielding effects at the most local level.

Here's one view from Israel -- a country that gets about 80 percent of the wheat it uses for bread from America. This farmer's worried, and rightfully so:

Because of declining stocks and skyrocketing global demand, there is already some talk in the US of stopping wheat exports altogether!

So I am encouraging more farmers to grow wheat for small flour mill owners who can bypass the big wheat distributors and pass the cost savings to consumers.
Thankfully, the high wheat prices may motivate farmers to grow more bread wheat here.

Sounds like a whole lot of wishful thinking, even to him:

But, it is a risky business because there hasn't been enough reliable rainfall to get a good crop this year. Rainfall patterns are very different. The winter is starting later and later, and this is a trend that the water company and desert agronomists have measured and observed for the last decade or so.

So...I don't know if the farmers I know will have confidence to spend money planting wheat.

That's because he doesn't know any farmers in America, who are planting during a golden age being missed by the rest of the world.

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