Essentially it is you, the consumer, that sets the price you are willing to pay for our produce. Sure there is profiteering by food processors, retail outlets etc but the demand from consumers dictates the end price to the primary producer. As a farmer I have being weighing up over the summer what to produce from my property in the coming season. As we all know there is strong demand for most grains and the forward contracts currently being offered are exceptional. As a mixed livestock and cropping enterprise we will plant significantly more area to crop at the expense of livestock.
On the international scene there is basically a bidding war occurring to secure acreage for produce and grain is winning hands down. The way I see it is although world grain stocks are at alarmingly low levels, they can be corrected very quickly, possibly even one year. But to do this farmers have displaced livestock to make way for extra grain production. The problem here is livestock production takes much longer to correct any major supply issues. I can see a major correction in the protein meat sector by the 3rd and 4th quarter of this year and lasting much longer than the current grain prices.
On your other question of storage, very few farmers have enough storage for their entire crop, some do but they are well and truly in the minority. Most of the grain is sold before it is actually harvested and delivered to a storage facility (here in the west it is CBH - co-operative bulk handling) so your grain is tested on site and stored in the appropriate stack. The buyers then arrange for pickup from that facility. Hope this answers some of your questions.
