As food prices skyrocket, farmers see payoff

 corn and wheat The 83-year-old crop and livestock farmer said the dramatic rise incommodity prices are only good news for those farmers who didn'tlock in futures contracts earlier in the year, when the prices werelower. He farms corn, soybeans, hay, wheat and some livestock on300 acres. He locked in a contract to sell a bulk of his wheatseveral months ago at $5.50 a bushel, thinking he was getting agreat price for the crop. Since then, the price has risen a fewdollars. "We were never accustomed to thinking about such prices," saidLesser, who blames part of the rise in demand for such commoditieson the weak dollar and higher foreign demand. "There is such afluctuation on the commodity markets. We are in a situation nowwe've never been in before." Lesser did not sell futures contracts on his corn or soybeansbecause now the markets "are too unpredictable." The International Monetary Fund estimates biofuels accounted for almost half the increase inconsumption of major food crops in 2006-07, saying it has propelledprices for corn, other grains, meat, poultry and dairy. Willis raises corn and soy beans on 550 acres near Willmar, Minn.,some of the nation's best corn-growing country. He sells his grain nine miles up the road from an ethanol plant heinvested in. His family cars are powered by an 85 percent blend ofthe corn-based fuel. His black and gold-trimmed cap reads "E85Everywhere." Willis isn't saying how much he made last year. While heacknowledges these are good times to be a farmer, he says he's notpulling in as much as the median income for crop farmers. "Most people are excited, yes, but cautious about when things aregoing to turn around, and how hard it's going to turn around," hesaid. Others dispute that. A report last month from the Agricultural and Food Policy Center at Texas A&M University said higher corn prices have had little to do with rising foodcosts because other factors, such as rising energy costs, have beenat least as important. Score said when economists look at the market, they typicallyattribute about one-third of increasing prices to the use of grainsin fuel production, with the rest due to the decreasing value ofthe dollar, unexpected poor crop conditions in the rest of theworld and increasing affluence in countries like China and India. Willis is quick to point out that farmers pay much of their profitsright back out to their own suppliers. The liquid propane that runs his corn drier cost $1.55 per gallonlast year. He's been told to expect $2 this year. Fertilizer lastyear ran $115 per acre. This spring it cost double that. He bought2,500 gallons of diesel fuel for his tractors last year, at a pricethat started at $2.50 a gallon and rose to $3.09 by the end of theyear and has risen further since then. "You look at the grain prices, yeah, that's nice," he said. "Buteverything's going up right along with it." While virtually all businesses are contending with higher energycosts, the rising commodities prices are proving to be bottom-lineboosters for other sectors, too.