Volatile Commodities

I fear the price of rice.

In some countries this commodity is as much a part of the customs and culture as it is a common staple. If the price of rice gets out of hand, confusion, protest and rioting are the natural result. In the most extreme cases, governments which ineptly manage the price of rice face certain coup d’Etat.

In December, 2005, US Secretary for Agriculture Mike Johanns held a press conference in Hong Kong. While speaking of a general desire by the World Trade Organization for all members to eliminate government subsidies by 2010, and Johanns’ describing his feeling that change would most likely happen as scheduled, the following fiery exchange on the price of rice, as transcribed by officials at the US Consulate in Hong Kong, took place:

QUESTION: “Is rice specifically not something that would be an (inaudible)?”

SECRETARY JOHANNS: “J.B. works in this area, so I might ask J.B. to offer a thought.”

Well, we are left to wonder what an (inaudible) rice might or might not be specifically. Poor transcriber wouldn’t even offer a contextual clue! Mysteriously, I note that this “J.B.” person never takes the stand and is not mentioned anywhere else in the Hong Kong transcript. So much for that.

But it’s clear even the vaunted Sec Ag is very cautious when speaking about rice. He’s obviously aware that speaking out of turn on the price of rice could lead to unexpected ripples in the world economy. Maybe he’s delegated this delicate subject to a covert team of agriculture specialists, shadowy field operatives who are only known by their initials.

I had put that dangerous thought away until this week.

A few days ago, I read that our old friend Paul Wolfowitz, now the subdued World Bank President, resurfaced in Frankfurt. In a Reuters report, it’s said Wolfowitz recommended the US sign on to drastic reduction if not complete elimination of farm subsidies. Wolfowitz sees that as an important compromise for the success of the G-8 and a way to break the deadlock in the Doha trade talks.

As we’ve learned from recent history, our leaders listen when Wolfowitz talks. Chances are, when he speaks, somebody, somewhere is losing money and somebody else is laughing all the way to the bank. He’s a scary guy. He’s so scary to some people that US Senator Charles Grassley, Republican from Iowa, boldly responded that Wolfowitz should “keep his nose out of trade issues", as quoted in the Toronto Star.

While he’s at it, Grassley should tell the Heritage Group, the Cato Institute, and practically every other privately financed organization which has any political influence in this country to keep their noses somewhere else, too. It seems nearly everyone is on the “stop subsidies” bandwagon.

So, here we have a situation. US Cabinet executives, leadership of the World Bank and the major propaganda tanks of the filthy rich are all in line with eliminating US farm subsidies. It’s gonna happen, they’ve already decided, it’s only a matter of time. Like the anxious citizens gathered in the Agora in ancient Athens, we’re all just waiting for the next soothing road-side speech delivered from Crawford Palace to fill us in on the details.

Meanwhile, guys like Senator Grassley, hired guns who make their living by defending government subsidies for their constituents, are out on the edge.

Should make for an interesting debate, don’t you think? If nothing else, it might get our troubled minds off of illegal immigration.

But the question is, I hear ya, what does all this have to do with the price of rice?

Grassley isn’t on the rice diet like I am. Based on what I read, he’s more into pork, beef and corn. But the subject of subsidies is common to us both.

http://www.ewg.org/farm/findings.php

A quick check of the fact-filled Environmental Working Group’s database linked above tells us the following:

“American taxpayers spent a staggering $143.8 billion on farm subsidies over the past ten years, more than $104 billion of which (72 percent) went to the top 10 percent of recipients--some 312,000 large farming operations, cooperatives, partnerships and corporations that collected, on average, more than $33,000 every year.”

Staggering is a good description, I think, and that’s a long sentence, even for me.

Adding to my concern, the report shows that the top US farm subsidy recipient in 2004 was Riceland Foods Inc of Stuttgart, AR. Salute! Between 1995-2004, Riceland received more than $505 million in rice subsidies.

I will spell that more precisely because I think we all are numb to these huge, rounded numbers. For all you accounting nerds out there, that’s $505,552,720 in total rice subsidies over a ten year period for Riceland Foods Inc alone.

And this report confirms another thing we already know. The largest handouts don’t find their way to the front doors of the mom and pop farms. Those farms were co-opted long ago, my friends. So, word to the wise, when the debate heats up later on, don’t go thinking that most of these subsidies go to help the little folks in Iowa. They don’t.

Hear ya go, three of the top five subsidy recipients made the list due to rice subsidies.

Producers Rice Mill Inc of Stuttgart AR collected $295,006,553 and Farmers Rice Corp of Sacramento CA cashed in their ticket for $143,546,738 during this same time frame.

Total rice subsidies paid over ten years to these top three is a whopping $944,103,011.

And there’s the point, for those who may be now desperately searching for one, if $94 million a year in subsidies doesn’t alter the global price of rice, I don’t know what will.

On the outside, if, I mean, when these subsidies are eliminated, rice farmers around the world will finally be able to sell rice for a profit instead of a loss. According to the EWG report, while the US will see a modest gain by saving those subsidies, Europe and Asia will be poised to profit to the tune of tens of millions of dollars every year.

Closer to home, if, I mean, when those subsidies are turned off, you know what will happen. Some mom and pops in the US who haven’t caved in already will sell the farm. There are poor farmhands, all legally working in Stuttgart, AR, of course, who will then be looking for employment elsewhere. The unfortunate corporate executives of large co-ops will be forced to sell some stock options and diversify their impressive management skills with a different enterprise, perhaps internet marketing, military contracting or politics.

That’s chaos, baby, mass confusion, and the price of rice will go up.

What to do?

Well, don’t worry. I’m unusually intimate with this kind of danger. Like the unpredictable rise and fall of volatile commodity prices, my own personal whims regularly take their own perilous ride on the roller coaster of life. I can tell you, it may be thrilling but there’s nothing good to come from this depressing catastrophe, nothing good at all, so you must steel yourself for that outcome and seek sympathy immediately.

When my fears heightened most recently, when my own mood took a violent upsurge while the price of rice threatened to do the same, when my mouse pointer hovered precariously over the “Delete Blog” button one too many times in the past week or so, I finally broke down and placed a call to my friend the Doctor, looking for sympathy wherever I might find it. He usually knows what to do.

Unfortunately, to make matters worse, now it seems he won’t even return my calls. Maybe I prodded him too much or too urgently. Forget global turmoil and calamity, the painful truth is that I can be a real pest.

He’s not happy with me and I can understand why. He gave me one chance and I blew it. It’s my fault and if I could just get to him through his damned answering service, I would admit that.

But, having no other recourse, I will review for you some of his overdue prescriptions from our past encounters.

I have this one here, sorta hard to read, but it says something about manic depression, with a side note about all the excellent new drugs now available for remedy. That’s promising.

Then, there’s this other one that suggests a hint of anxiety and obsessive compulsions, mixed with an unhelpful passive-aggressive nature, all leading to a diagnosis of narcissistic tendencies. I think this is the part where he told me we like to think we own the world and how everyone else owes us something, even if it is just some special attention or sympathy alone.

Fortunately, he said these symptoms are all self-induced and treatable, not the manifestations of incurable diseases. These days, it seems, everything has a cure.

And, I recall this one as the best advice I ever received, it says such abnormal thoughts will cease and change for the better when the patient “tires of his present behavior”.

Well, we should be tired of it and our behavior damned well better change. We have no choice but to bravely face a harsh cure of our own devices. Farm subsidies are going down in a ball of flames, $14 billion a year in handouts is ridiculous and prices for such staples as rice may go sky high overnight as a result of our own interference with the natural course of things.

Now that we are aware, though, I’m confident we all can handle this change without resorting to public protest or violence in the streets. We, on the whole, are better than that.

But as for the lonely space that lingers uneasily above my own thin neck, I suppose a coup d’Etat is still not out of the question.

Cheers,
Mb