The drought in the American West is causing devastating consequences on US agriculture. With grain prices climbing steadily, some have proposed the reestablishment of a Strategic Grain Reserve to control costs, a program which was phased out entirely seven years ago.
Driving across any highway through the American heartland, you’re sure to see the horizon dotted by tall grain silos. Whether the classic, wooden variety which wouldn’t look out of place in an Edward Hopper painting, or the more modern, metallic version, the structures serve an important purpose. Silos preserve the excess harvest from earlier seasons to be used during more trying times in the future.
With the California drought potentially entering a fifth year, it may be beneficial to consider the concept on a more national scale, according to Frederick Kaufman’s article for the LA Times.
Kaufman compares the idea to the Strategic Oil Reserve, the vast stockpile maintained by the US government. The utility of that supply is twofold. For one, it provides a safety net in the event of an emergency. If, for any reason, fuel supplies are temporarily cut off, the Strategic Oil Reserve retains enough crude to supply the country for an estimated 58-day period.
The stockpile can also serve as a way to ensure market stability. If gas prices climb too high, the government can release oil from its own reserve, thereby increasing supply, reducing demand, and preventing inflation.
The fact that the United States doesn’t already have such a system in place is especially surprising given that, once upon a time, it did. President Franklin D. Roosevelt established just such a reserve to rescue farmers during the Great Depression. But the focus on capitalism during the second half of the century led to the 1996 Freedom of Farm Act, a bill essentially meant to keep big government out of agriculture.
An especially baffling decision given the billions spent each year on farm subsidies.
Once passed, US grain reserves were allowed to dwindle, until what little remained was converted into a dollar amount in 2008.
Full article: Surprise! US Has Zero Grain Reserves Since 2008 (Sputnik News)