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November 9, 2009 (LPAC)—In the Northern Hemisphere, the harvest season is now drawing to a close, continuing below-need production of grains and other staple commodities, and loss of agriculture capacity. This year's production of all kinds of grains is below that of 2008, and animal protein supplies are in decline. This food/farm crisis is all part of the general monetary chaos, and worldwide breakdown of the physical economy. The dairy sector, especially, is being decimated.

A snapshot of the world grains shortages is provided by the October monthly report of the U.S. Department of Agriculture. Despite the roughness of any international statistics, the gross patterns show that the current crop year's grain output (wheat, rice, corn, sorghum, etc.) is significantly down from last year, and about half of what is required for a well-fed world. Estimated world grains production for the 2009-10 crop year is 2,194.31 million metric tons (mmt), which is down from 2229.93 mmt in 2008-9.

Rice production is in dramatic decline. Internationally, 445.67 mmt was estimated to have been produced in 2008-9. In the 2009-10 crop year, world production may be only 433.65 mmt or less. Rice is the staple diet for millions in Asia and Africa.

In this context of declining production and existing acute shortages, any adverse weather episode is an automatic disaster. For example, the early cold and wet conditions in the U.S. cornbelt have caused an immediate threat to the corn, soybean, and animal protein food chain, especially with so much U.S. corn now diverted into ethanol fuel.

From the Great Plains to the Deep South, late-season rains have caused terrible harvest conditions. As of Oct. 31, only 25% of the U.S. corn crop was harvested; normally, nearly three times that volume, over 71%, is harvested by then. This year, the two biggest corn states, Iowa and Illinois, had only 18% and 19%, respectively, harvested by Halloween.

The U.S. soybean crop was only 51% harvested by the end of October. Normally, 87% is harvested by that date. The farmers can't get into the soggy fields; many who do, get stuck in the mud, spending hours to get moving again. Corn producers face the increased expenses of drying the stored crop. Yields will be down. The corn is being attacked by mold and fungus, particularly vomitoxin.

The Delta South is a disaster, from cotton, to corn, and soybeans. Flooding is widespread across all types of farm operations. Potato farmers are contending with rot and a crop wipe-out. For farmers, the rain and flooding are a "second Katrina." Local government leaders are appealing for emergency aid.

However, under the prevailing World Trade Organization (WTO) tenets of "free trade," any emergency aid (not just offers of unpayable U.S. Department of Agriculture loan "opportunities") is taboo, as is any ongoing provision for floor prices for farm commodities, parity pricing for farmers, and similar policies that would provide for national food security, by ensuring the productivity of domestic, high-tech family farming.

Instead, family farmers are being ruined, even as the speculative free-for-all is allowed to continue on the Chicago Board of Trade and other world food commodity exchanges.

The volatility in futures prices for corn and soybeans is out of control in Chicago, as speculators bet on price trends, under the day-to-day guesstimates about the impact of the problem harvest. In just a ten-day period, the corn futures price (for December delivery) bounced from $4.13 a bushel on Oct. 23, down to $3.59 on Nov. 2, with wild daily swings between. Soybean futures went from $8.78 on Oct. 5 to $10.06 on Nov. 2, also with wild daily swings—for example, by 44 cents on Nov. 2.

The White House and Congress remain aloof.