English 250 High Grain Price Mediation

English 250 High Grain Price MediationMick SitzmannI did my mediation on how the drought of the summer of 2012 has caused many grain prices to go to record numbers.

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Problem to be SolvedDrought of the Summer of 2012 caused record high grain prices.Scarce amounts of rain caused the crops of the Midwest to have minimal yields. -Only 6.6 from June-Sept. in 2012Low yields means small amounts of grain.

Small amounts of grain leads to low supply for consumers.

The problem to be solved- The drought of 2012 caused record high grain prices. This was because scarce amounts of rain caused fields to have minimal amounts of yields. There was only 6.6 inches of rain that fell from June until September in the summer of 2012. A yield is how much a plant produces as an end product. A normal yield for corn is 180 bushels per acre. Back home last fall, we had a field that averaged only 3 bushels per acre. Low yields means small amounts of grain, small amounts of grain leads to low supply for consumers.

2Grain Price ContractsA Grain price contract would satisfy the needs of both parties involved in the conflict of high grain prices.

One mediation for high grain prices would be the implication of a Grain Price Contract. A grain price contract would satisfy the needs of both parties involved in this conflict of high grain prices. There are many different types of price contracts to choose from. Choosing the correct contract is essential in resolving this conflict.

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Who is Affected by High Prices Prices as high as they have been recently are taking a toll on many different operations and families.Two main groups in particular.Row- Crop FarmersCattle Farmers Who is affected by high grain prices?High prices are taking tolls on many different operations across the Midwest including even single families. Two groups in particular that are affected by high prices are row-crop farmers and cattle farmers. Even though they are both affected, they are affected in completely different ways. Row-crop farmers are reaping the benefits of these high prices because they are selling their crop for record prices and receiving unbelievable profits. Cattle farmers are the exact opposite. These are the men who are paying the high prices to get the grain to make feed to give their animals to make them grow.

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Row Crop Farmers Not producing enough grain to keep the price lowLaw of Supply and DemandFarmers making huge profits if they have excess grain.Worried about big crash of markets after these record prices.

Row-Crop FarmersFarmers arent producing enough grain to keep the prices low. The law of supply and demand is in effect because the supply is low and demand is high, so it forces the price to rise greatly. If farmers have excess grain to sell, they are making record profits because of these high prices. In normal years, the price of grain wouldn't be so high, so the profits wouldn't be near as high either. Farmers are actually beginning to become concerned that the markets are going to crash if the drought ends and the supply goes back up. I wouldn't say that this worry is so bad if the drought stops.

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Cattle Farmers Really feeling high grain prices through rising feed costs.Starting to question if purchasing feed is worth the cost of raising the cattle.Rising meat cost at the store is the end effect of the high feed costs.

Cattle FarmersCattle Farmers really feel the high prices because the grain they must buy is used for the feed for their animals to make them grow. Some farmers are even starting to reduce heard size because of the high feed prices are causing them to spend so much that they arent making enough profits. The meat at the store is starting to become more expensive because of these rising feed prices. This all begins when the cattle farmer buys the expensive feed to give the cattle in the feedlot, which causes them to sell the cattle for a higher price to the butcher. In turn, this causes the butcher to raise his prices to the stores and consumers just to make a profit of his own.

6Some Against Grain Price Contracts People want to take the chances of making money on their own.Some have other strategies to sell their grain at high market points.Some people might make mistakes.. (Sitzmann)

There are some people against Grain Price Contracts. Some people want to take the chance of making money all on their own. Other people have different strategies to sell all their grain at high market prices to avoid any low prices at all. Jim Sitzmann stated, Some people might make mistakes and choose the wrong contract which would result in them losing money in the end.

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MediationGrain Price ContractPrice agreed upon by both parties in the contract to sell and buy grain at.Helps row crop farmer because it takes away risks of market crashes.Helps cattle farmer because it takes away fear of extreme high prices.My MediationThe mediation I chose was a grain price contract. This is a price agreed upon by both parties in the contract to buy and sell grain at. This helps row-crop farmers because it takes away the risks of market crashes. This also helps cattle farmers because it takes away the fear of extreme high prices. You can now see how this contract would be beneficial to both parties.

8Works Cited"2012 Precipitation." USGS Iowa Water Science Center., 23 Apr. 2013. Web. 4 May 2013."Drought meeting with Vilsack draws hundreds." KCCI News., 17 Aug. 2012. Web. 2 Apr. 2013.Thornberry, Tim. "The high grain prices of 2012 are likely to stick around through 2013, expert says." KyForward., 6 Jan. 2013. Web. 3 Apr. 2013."Look for Grain Prices to Remain Historically High." National Hog Farmer., 14 Jan. 2013. Web. 2 Apr. 2013.Hurt, Chris. "Drought Creating Decline in Cattle Numbers, Value." AgFax., 6 Aug. 2012. Web. 1 Apr. 2013.Piller, Dan. "Rising beef prices worry producers." USA Today., 18 Feb. 2013. Web. 4 Apr. 2013."Grain Contract Glossary." Farmers Cooperative Co. Web. 2 Apr. 2013.Sitzmann, Jim. Personal interview. 1 Apr. 2013.

My last slide is my works cited. Are there any questions? Thank you for listening.

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