Food prices will ultimately rule

As public protests multiply about high and rising fuel and food prices, old-fashioned economics will come into play.

As the consuming public demonstrates what they will buy and won't buy, and in what quantities, it will filter back to the farm and determine what is grown--and more importantly, what isn't.

The free enterprise system and the marketplace will ultimately rule. As prices rise and incomes don't, consumers will have to decide what to buy with their shrunken and scarce dollars. That's the classic definition of economics: the science of allocating scarce resources.

It's already starting to show up in the oil market: less driving, people buying more energy efficient cars, taking mass transit instead of driving their own car. U.S. oil consumption is dropping, and that trend will show up as less income in Arab pockets. It may take a few months, but oil prices will come down, and OPEC will have to pump more oil to receive the same income.

The same system will work with agricultural commodities. There is a temporary economic dislocation now, as the competition heats up for corn between food and manufacturing ethanol. Manufacturers are already switching from corn sweeteners back to cane sugar or artificial sweeteners for baked goods and soda pop. This is only in the early stages, but as the demand for corn falls, and it will, the price will too.

While now the market signal is to plant corn fencerow to fencerow, when the price and demand drops, farmers will be searching for a replacement crop.

The successful futurists are already figuring out what that will be, and planning accordingly. Progressive farmers and ranchers would be wise to do the same thing.