Farmers across America and in many other parts of the world are calling 2009 the worst harvest they’ve ever seen in their lives, owing largely to extended bouts of bad weather. At the same time the U.S. Department of Agriculture is officially forecasting bumper crops, while grain elevators stand nearly empty and close to three-fourths of the country’s farmland is in areas declared eligible for federal disaster assistance due to failed crops.

A popular farmers’ Web site is chock full of stories of entire crops of soybeans rejected for moisture damage, long delays in harvesting corn only to find out the corn is moldy, damaged or too light to be used as animal feed or even ethanol, and farmers unsure if they’ll even have a farm for another year due to the losses they’ve taken.

Most agricultural products are purchased in futures, which are promises to deliver a quantity of a commodity at a future date. Futures carry many risks, prominent among them the possibility that the commodity simply won’t be available at the promised delivery date. While futures prices are set by the market, some of the information used to set the prices comes from the USDA’s World Agricultural Supply and Demand Estimates reports. The unrealistic 2009 bumper crop predictions in its recent reports, which may have seemed reasonable months ago before 2009’s long string of bad weather but which USDA has failed to revise, drove futures prices artificially low.

But grain futures prices have already risen well above the USDA’s latest projections as the corn harvest threatens to drag on into March in some areas of the country, thanks to an unusually wet 2009 and unprecedented fall flooding in the Midwest.

The good news is that even with 2009 being the worst harvest in human memory, there will still be plenty of food in the U.S. to feed everyone in the U.S. The bad news — if you’re in the U.S. — is that the food won’t be used to feed everyone in the U.S.

It seems China has finally figured out what to do with all the U.S. dollars it’s holding. You’ll recall that the Federal Reserve took some pretty extreme measures over the last two years, ostensibly to save the U.S. economy. In fact, those measures have set us up the bomb. For decades China has been buying U.S. debt and financing Americans’ credit addiction as well as the government’s massive spending on millions of projects it has no business being involved in. But, it seems, they’ve had enough of the dollar and are about to pull the plug.

In the meantime, China has been using those dollars to buy every morsel of American food it can get its hands on. Combined with 2009’s bad weather and the USDA’s ridiculous numbers, this prompted a late August soybean shortage which is expected to continue through 2010.

The U.S. has a very good reason to fudge the numbers on crop estimates. If it published realistic numbers, and crop futures prices rose sharply, three things would likely happen: Wall Street would take massive losses, inflation fears would cause investors to dump bonds, frustrating the government’s attempts to finance its incredible expanding debt, and most importantly, China, whose currency is tied closely to the U.S. dollar, would allow it to appreciate. That alone would likely send the U.S. dollar into freefall; all three would mean utter economic collapse.

Of course, you can’t fool the market for long; as noted above, futures prices are already well above the USDA’s numbers. All they really managed to do with their numbers game was buy the U.S. dollar another year of life.

One market analyst believes that the 2010 food shortage will be the catalyst which not only brings about the collapse of the U.S. economy, but takes down Great Britain and Japan with it.

While a food crisis was unavoidable to some extent because of the abnormal weather and financial crisis, the total panic which will soon grip world agricultural markets is a creation of the USDA and its fictitious production estimates. If not for the USDA’s interference, food prices would have risen in the first half of 2009 in anticipation of the 2009/10 shortage. The United States Department of Agriculture has caused incalculable damage to the world economy by encouraging overconsumption of rapidly diminishing food supplies.

Once the 2010 Food Crisis starts, confidence in the US government will be shattered as a result of the USDA’s faulty estimates. The starvation and misery caused by higher food prices will also create a lot of anger . . . — Market Skeptics