Why Corn?

A couple of days ago I had the opportunity to visit with a very pleasant woman with a very interesting job. She's involved in community wellness and was particularly interested in trying to promote healthier eating in our schools.  As readers of this blog know, it is an interest of mine as well. Jamie's Food Revolution (His Not Mine). But as we visited it quickly became apparent that as farmers we need to do a better job explaining to people why we grow what we grow.  What often seems obvious to us is decidedly not so to much of our consumer public.

In our conversation she was eager to understand why farmers like me weren't working hard to grow fresh veggies and fruit for the dietary needs of our local schoolchildren.  There IS (thankfully!) a movement afoot to get healthier, fresher, less-processed food into our schools and she obviously felt a perfect storm existed where our local farmers could shift their production to such food and supply a great local market.  In her mind it was a WIN-WIN.

If only it were that simple.

And there lies the rub.  I think many good-intentioned consumers mistakenly think it is that simple.  They want to eat fresh, eat organic, eat locally-grown.  Oh, and don't forget -- they want to eat affordably too!  And make sure everyone else in the world has plenty of food they can buy and eat too.

This is why farmers need to speak up.  We need to explain ourselves.  We need to explain to consumers that there needs to be efficiencies in production.  There are real differences between the soils, climate, infrastructure, markets etc. that allow certain foods to be produced in certain geographies.  There are important reasons I grow corn and not cauliflower in Northern Illinois.  Likewise a California cauliflower producer probably shouldn't be growing corn either. Our short growing season, our temperatures, our soils, or insect and disease profiles, etc. do not favor growing fresh market fruits and veggies.  Sure we could grow some for a short period of time during the summer.  But what do we eat the rest of the year?  And what do we do about the fact that because of my climate, soils, insects, diseases etc. I can only grow half as much cauliflower as that farmer in California?  At the same time, the farmer in California can't efficiently grow corn.  He might only get half the crop I can get and doesn't have the natural rainfall nor infrastructure to handle the huge volume of commodities produced.

Sure, I'm over-simplifying here.  Global food production is immensely complex.  But over time markets have a way to naturally adapt to create efficiencies.  I grow corn here because there are few places in the world where someone else could grow as much, as cheaply, and as able to transport it around the world to those who need it.  Bucking those natural efficiencies can be done.  I can grow cauliflower.  I can supply fruits and veggies to my local farmer's market.  I can even grow organically.

But there is a cost to our global society in doing so.

The next time you see a hungry child in Africa or a food riot in the Middle East, pause for a moment and think about the organic cauliflower you bought at your local farmer's market.

Was it worth it?

Budgets and Farmer Subsidies

Gulp.

I have said this before to any who would listen, but this is the first time I have written these words, for the record, in a public forum.

Farm subsidies in the form of direct payments to farmers need to go.

They are bad for the industry, bad for farmers and bad for taxpayers.  They are an easy mark for the media,  the socio-political elite, and the under-informed public.  They get all the attention in the "multi-billion dollar" farm bill yet are only a very small part of the overall spending -- a distant cry from the food and nutrition support (food stamp) portion of the bill.  At today's prices they amount to less than 3-4% or so of the gross income on every acre of grain production.  Even then, ag economists are generally in agreement that they are capitalized into the expense side of the production equation (especially in land costs).  Yet the general public sees them as "income" or welfare payments to farmers.  They are not.  Famers merely pass them along to landowners, equipment manufacturers and other input suppliers.

Farmers are rightly seen as frequent fiscal conservatives.  As a group we tend to tilt to the right, favoring free trade, smaller government, and reduced market intervention.  Yet when talking about direct payments, farmers, our industry representatives and farm belt legislators tend to circle the wagons.

Direct payments are not a sacred cow.  Nor should they be -- especially not now.  Budgets at the federal, state and local levels are a mess.  Some would argue that direct payments are such a small part of the overall budget mess that the public is being misled as to their overall significance.  I couldn't agree more -- and that's part of my point!  We need to focus on the big-ticket items.  Medicare/Medicaid, Social Security, meaningful Health Care reform, military and public-sector employment spending.  Direct Payment ag subsidy spending IS a drop in the bucket.  Focusing on it is a game of smoke and mirrors.

Am I against all public spending support of agriculture?  Not necessarily.  There are some expenditures which I believe the public gets a positive return on their investment dollar.  Crop insurance, some conservation programs and (historically) renewable energy.  Even then, I think we need to take an honest look at them and do a better job of justifying their continued need.  In future blog entries I will try to discuss the merits (or lack thereof) of some of those programs.  But for now, I intend to put my money where my mouth is -- literally!

Direct Payment subsidies for all farmers should go.  And the sooner the better.

Grain Exports

I just got back a couple of days ago from the U.S. Grains Council annual meeting in New Orleans, LA.  The Council is an organization composed of stakeholders of the export industry doing business in barley, sorghum and primarily corn.  Several hundred smart folks were there (most unpaid volunteers) doing their part to promote the export of the corn I, and so many farmers just like me, produce every year.

It is an exciting time in agricultural exports.  Currently farmers export about 2 billion bushels of corn every year -- that's about 15% of our annual production.  United States farmers produce almost 40% of the global supply of corn every year.  Our exported corn goes all over the world, but mostly to destinations in Asia.  Important trading partners include Japan, Korea and increasingly China.  There is growing talk about the prospects of increased exports to India too.  The basic idea is this -- as people in third-world countries experience increasing economic success one of the first things they spend their rising incomes on is improving their diet.  Usually this results in a rapid increase in the amount of animal protein consumed.  In other words, meat becomes more of a staple food rather than a rare treat.  It takes grain (such as corn) to feed these animals (like chicken, pork and beef) and many of these countries do not have the ability to produce this grain in sufficient quantities internally.  Hence the need to import.

This shift to the "middle class" in countries like China and India are HUGE!  That's a market with over 2 billion people!  This shift is the basic cause of much of the increase in food prices around the world -- more so than ethanol, inflation, energy prices etc.  It is the basic law of supply and demand.

While in New Orleans I also had the ability to visit the Zen-Noh Grain Exporting Terminal.  This is the largest single grain export terminal in the United States.  Typically they unload barges and trains from the interior U.S. filled with grain and then load ocean going vessels with that grain for destination primarily to Japan and SE Asia.  They can unload around 30 barges and load a 2 million bushel ship simultaneously in roughly a 24 hour period.  They move almost 400 million bushels through their facilty annually, 24 hrs./day, 364 days/year.  Below is a video of their barge unloading and logistics center.