Today, Friday morning, gold is at a record price of $975 per ounce, while the U.S. dollar is at an all time low to the Euro of $1.52 to 1 Euro and one British pound equals almost two U.S. dollars. This is great for our exports to Europe and Asia, yet we still run a trade deficit monthly of almost $60 billion per month or almost $2 billion per day.
The record low dollar in Europe is not rebalancing our U.S. trade figures. Many people for years have blamed the high value U.S. dollar for our trade imbalance. This thought was wrong, and now it has been proven wrong. Our own trade policy of moving manufacturing production off shore will continue to erode the U.S. dollar. This is a real threat to our economy, the middle class and U.S. sovereignty.

This practice has helped many American corporations and elites, while only marginally reducing American consumers’ cost of purchased goods. Outsourcing increases U.S. federal and state budget deficits and the U.S. trade deficit.

This economy for many years has been driven more by consumption of goods than production of goods. We have nearly tapped out the consumer growth by over-extending cheap money on inflated assets (sub-prime and non sub-prime mortgages) with little or no down payments. The availability of cheap money in many respects has been loaned (subsidized) to America by foreign governments to finance our federal budget deficit. This has over-encouraged our consumption and under-encouraged fiscal responsibility. The one aspect we can not afford on top of this would be runaway inflation, which would be followed by much higher interest rates intended to curb inflation.

Quickly, two causes of concern for farmers near term are that agriculture policy people (USDA and legislatures) need to observe and may need their action on, is margin calls by rural and regional elevators.

These elevators are hedgers of grain for farmers and not speculators. The ability by banks to loan money on this is limited but may need to be temporarily expanded for the good of rural communities.

The other concern is that policy makers need to be aware of the targeting of newly-formed ethanol plants by some who would wish to derail or destroy renewable fuels, especially, the locally owned ethanol plants who are more vulnerable than large-scale corporately owned.

One stabilizer for farmers, ethanol producers and end users of corn is bringing back a farmer-owned grain reserve. ADM and the grain trade would fight this very hard. We had this from 1933 until the mid-’90s. Agriculture should learn from the sub prime mortgage mess. We are in the production side of the economy, and now we are being rewarded.

The end user needs our corn, wheat, soybeans and many other soft commodities. He now is paying a reasonable price. In 2007 and 2008 and beyond, we may see 10 percent to 20 percent return over our cost of production. The farmer need not apologize for that at all. Corporate America and its surrogates will not let this stand any longer than possible. If corporate America makes a 10 percent or 20 percent return, it calls it marginally acceptable; if farmers are paid the same, it is called a bubble waiting to burst. We should be proud of the agricultural products we produce domestically and apologize to no one for being paid in the market place instead of by the taxpayer.

These are “real” markets that are working for the producer and the end user. While in the last 10 years of “free trade” markets, the end user was the winner and the loser was the taxpayer and the farmer. “Real” markets make us free and “free trade” markets make us slaves.

Keith Bolin of Manlius is president of the American Corn Grower’s Association.

Editor's Note:  This article by Keith Bolin, ACGA President, appeared in the Bureau County Republican, Princeton, IL