the CUPBOARD is BARE

So what about prices? Despite some valid scepticism about the function of supply and demand in setting prices in a distorted market, it's hard to believe that prices can remain so low given the current scenario. As illustrated in "Wheat Price" (next page) before 1985, the inflation-adjusted farm-gate price of wheat fell below seven dollars only three times, all during the Great Depression. Since 1985, the price has been above that level only once. Historical evidence seems to suggest that the world should be able to sustain grain prices at double or triple their current levels, that such prices are, in fact, normal. In a functioning market, one would expect prices to be in that range. The situation today, however, is complicated by the conflict between the power of supply and demand, and powerful transnationals. Farmers are caught in the middle. The situation for corn prices is similar to that of wheat. While many of the observations made with regard to Saskatoon wheat hold for Chatham corn, some do not (see "Corn Price" on this page). Whereas wheat prices are at their lowest level since the Great Depression, last year marked the lowest price ever for corn. Farm-gate corn prices doubled in the mid-1970s immediately after touching a post-depression low. Like wheat, corn prices display a near-flat trend-line for the period from 1920 to 1980. Astoundingly, for corn prices to rise to the lowest level of the 1932 to 1980 period, prices would have to double. When we consider potential grain price hikes, we have to keep in mind that on their own they will not end the farm crisis. In fact, higher prices could cause other problems. If livestock prices do not swiftly adjust to reflect higher feed costs, then grain farmers' gains may become livestock producers' losses. Packers and large feedlots will make cow-calf operations the shock absorbers in any feed-grain price rally. Hog producers won't fare well either. They currently make a miserly two dollars per animal according to some estimates. Hog farmers could see this tissue-thin margin disappear and large losses mount if grain prices were to rise.