The strength of the American dollar represents a “permanent handicap” in exporting American commodities; therefore, the only new market left to develop for buying what America produces is the domestic one.
That was the consensus of California producers testifying before the House Agriculture Subcommittee on General Farm Commodities and Risk Management in Fresno, Calif., recently.
How to expand domestic markets elicited several suggestions, including one from prominent Five Points, Calif., producer John Diener, who farms processing tomatoes, iceberg lettuce, almonds, grapes cotton and wheat on the west side of the San Joaquin Valley.
Loan rates and acreage limitation programs have failed to bring supplies and demand into balance, he noted.
U.S. commodity loan rates, he said, have proven to be price thresholds at which competing countries often add production to their base, making it more difficult for U.S. commodity prices to rise above loan rates.
Alternative fuel sources Diener said could be a reliable mechanism to reduce oversupplies of corn, wheat and soybeans in the U.S. He recommends selling surplus commodities to the government, converting them to alternative fuels to be sold on the open market.
Alternatives make sense
Diener recommended investing more research into making alternative fuels even more cost effective.
Even though he suggests more research is needed, “current alternative fuels make sense and can be competitive against conventional energy sources.”
Burning corn instead of natural gas at 50 cents per therm translates into $2.50 per bushel corn. Ethanol needs a subsidy only as long as crude oil prices are above $22 per barrel.
One of the biggest obstacles is increasing production of ethanol or other alternative fuels.
Diener said many potential alternative fuel manufacturing sites exist in rural America in the form of abandoned sugar mills. These sites, he contends, often have 50 percent of the capital costs of an alternative fuel producing facility in place. Federal rural developing funds could be used to convert these plants.
Diener suggests that the CCC purchase five to 10 percent of surplus commodity stocks per month when prices are below loan rates and convert these surpluses into alternative fuels sold monthly on a bid basis to refiners needing it to blend into gasoline to meet federal clear air emission standards.
Diener said American agriculture is at its “breaking point.” One way to survive is to invest in the research to develop economically competitive alternative fuels that consume excess agricultural commodities and convert that surplus into much-needed energy.
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