Tuesday, September 11, 2007

The Economics of Farming, Revisited

Extension people discuss wheat prices here.

The "target price" for wheat has been $4 since the 1981 farm bill (I think--too lazy to check). That's a quarter of a century. Cash wheat prices are about 50 percent above that price, probably a historic level. It's another reminder of the effect of having a free market system, with many sellers and few buyers, and inelastic demand and supply curves. You can have gluts, you can have scarcity, you can have periods when wheat farmers mint money, or not.

The ups and downs used to be more drastic, with more severe impact on the national economy. Now wheat is just another commodity, of relatively little economic significance to the overall picture.

But: "give us our daily bread".

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