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“Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded—here and there, now and then—are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty. This is known as "bad luck."”     Robert A. Heinlein,    The Notebooks of Lazarus Long

May 13, 2008

Farmers Struggling Despite High Corn Prices

by Brad Warbiany

With record-high corn prices, and plenty of subsidy money floating around, an interesting thing is happening. Less farmers are growing corn!

Why? Because the inputs used in growing corn are rising in price even more quickly:

The amount of corn planted in the U.S. is expected to dip this year. Rice acreage in California, which sells as much as half its crop overseas, is predicted to increase by only a small amount. Instead, farmers are planting cheaper-to-grow wheat and soy.

They say the reason is simple. The cost of planting some crops is rising as fast as their prices, and sometimes faster, leaving little incentive to increase production of some foods that remain in high demand around the world.

Farmers typically plant their crops once a year and not all of them cost the same to produce. Both corn and rice, for example, require more fertilizer to grow and fuel for farmers to tend than other crops. As the prices of those supplies rise faster than the prices of some commodities, farmers are shying away from some expensive crops.

This, of course, came as a bit of a shock to me. I never realized that corn was so resource-intensive to grow. So much so that the cost of growing corn makes it barely sustainable, even with the subsidies and record prices caused by high demand.

But that raises another question. If corn is a very resource-intensive crop for us to grow, why in hell would we want to use it as a fuel source?!

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28 Comments

  1. Because Bush and the pro-ethanol environmentalists are a bunch of fucking idiots.

    Comment by UCrawford — May 13, 2008 @ 4:21 pm
  2. Good point Brad. I also never realized it was that intensive. Makes you wonder how protectionist the environmentalists have to be to not even consider using Brazilian sugar to make ethanol.

    Comment by trumpetbob15 — May 13, 2008 @ 5:20 pm
  3. trumpetbob,

    It’s not the environmentalists who are protectionist…it’s Bush. He’s trying to protect the subsidies he gave the corn farmers by imposing a $0.51 tariff on the Brazilians so his critics can’t claim he’s subsidizing foreign industry (since Brazilian ethanol benefits from the same subsidies). Of course, he’s screwing over the taxpayer at the pump in the process but neither the Republicans nor the Democrats care about that because they think the people are too stupid to notice.

    Comment by UCrawford — May 13, 2008 @ 6:30 pm
  4. There might be a positive development here in Australia, since our new Prime Minister took office this year and he is looking into scrapping our very own ethanol subsidies in the coming weeks.

    Comment by Jono — May 13, 2008 @ 9:46 pm
  5. both environmentalists and the FedGov are protectionist, in that both are pro-regulation of all types.

    free trade agreements are protectionist, irony and all.

    Comment by oilnwater — May 14, 2008 @ 10:32 am
  6. trumpetbob & oilnwater,

    I view it more as a “Baptist and the Bootlegger” scenario.

    The environmentalists aren’t necessarily protectionists, though some assuredly are. They have their own goal (saving the environment), and the protectionists use it as cover to further their own agenda.

    It’s standard regulatory behavior. The group which has a high-minded agenda– saving the environment, protecting the children, protecting consumers– pushes for regulation they believe will further their ends. But they don’t understand the end results very well, and the regulation is then influenced by those who can use it to their own benefit: lobbyists for the affected industries. Thus, the regulation often fails to meet its intended goal AND creates economic incentives which reward those with political power while harming those without.

    Comment by Brad Warbiany — May 14, 2008 @ 10:46 am
  7. Brad,

    Now that I think about it, the Baptist and Bootlegger seems more likely. After all, if environmentalists were true protectionists, they wouldn’t be blocking American drilling. However, they are protectionist in the most extreme sense if we are to believe in their “buy local to save the environment” idea (as this state of Florida website illustrates midway down its list).

    Comment by trumpetbob15 — May 14, 2008 @ 11:42 am
  8. trumpetbob,

    Agreed. I think many environmentalists have some protectionist leanings, as the “buy local” movement expresses. I wouldn’t call it a central tenet of environmentalism, rather an accident of sloppy thinking.

    After all, many environmentalists are in love with organic food, despite the fact that it is claimed to be only 50% as efficient as conventional farming. Thus, it requires double the farmland to feed the same population, and the only way that farmland can be found is to encroach and destroy other habitats.

    I would say that most environmentalists see the “buy local” as a goal, not understanding that division of labor and economies of scale can actually make imported/mass-produced goods MORE environmentally friendly, despite the transport cost to the environment.

    Comment by Brad Warbiany — May 14, 2008 @ 11:54 am
  9. Brad,

    After all, many environmentalists are in love with organic food, despite the fact that it is claimed to be only 50% as efficient as conventional farming. Thus, it requires double the farmland to feed the same population, and the only way that farmland can be found is to encroach and destroy other habitats.

    That’s why I call them idiots. I grew up in a farming area, where I actually know people who own and operate farms, so I learned long ago that environmentalists tend to be very uninformed about how things actually work and why “non-organic” farming is important. I suspect that’s why their main constituency appears to be college students…their ideas are most attractive to people who don’t have much real-world experience.

    Comment by UCrawford — May 14, 2008 @ 12:24 pm
  10. oilnwater,

    free trade agreements are protectionist, irony and all.

    Yup…it’s sad how many people don’t understand the basic difference between free-trade and managed trade. People who fail to recognize that distinction annoy me almost as much as people who call government intervention in health care “market-based”. If something is really free trade or market-based, it doesn’t need the government to create it.

    Comment by UCrawford — May 14, 2008 @ 12:29 pm
  11. oilnwater,

    For someone who doesn’t identify as libertarian, you do seem to embrace some of our most important arguments :)

    Comment by UCrawford — May 14, 2008 @ 12:32 pm
  12. UC,

    Remember that there’s degrees of freedom of trade vs. protectionism. Yes, there are a lot of screwed up things built into some of those free trade agreements. But does that mean we should scrap them and go back to a less free trade scenario? Managed trade is more free than closed trade.

    It’s like saying that the George Bush tax cuts weren’t set up properly, and although they lowered our taxes slightly, they were geared towards “the rich”. And thus, we should repeal the Bush tax cuts. The fact that the cuts were “non-ideal” is one thing, it doesn’t necessarily follow that we should be pushing against those cuts, rather we should be pushing for more.

    Likewise with trade. Are NAFTA or CAFTA truly free trade agreements? No. But that means we should EXTEND them, not scrap them. Ron Paul’s position (as I understood it) was that we should withdraw from NAFTA/CAFTA and completely renegotiate the agreements, making them truly free or not bothering at all. I don’t know that we’d have luck negotiating an improvement over those agreements from scratch, though (as most governments’ leaders tend to believe misguided mercantilist economic theories). I’d suggest that we simply try to push the envelope every little bit we can to expand those agreements, to extend freedom inch by inch, because each inch is an IMPROVEMENT.

    Comment by Brad Warbiany — May 14, 2008 @ 1:33 pm
  13. Brad,

    I didn’t say that “free” trade agreements are bad things, because trade after NAFTA is certainly better than trade before it, only that they aren’t better than and shouldn’t be confused with actual free trade.

    I simply take umbrage at the extremely common misconception that free trade and market-based solutions don’t occur unless the government creates a plan or signs a treaty for them.

    Comment by UCrawford — May 14, 2008 @ 1:38 pm
  14. UC,

    In reality, then, my comment wasn’t really directed at you. But we have a lot of protectionists who wear libertarian clothing and fight against NAFTA and CAFTA under the grounds that “they’re not really free trade.”

    When pressed, you find that they follow the standard mercantilist belief that we’re being made much poorer through our trade with these countries. Continue pressing, and you’ll get them to go on and on about trade deficits, how “we don’t manufacture anything and we’re just a service economy”, etc. I personally believe that if they had a choice between protectionist tariffs and truly free trade, they’d choose the former.

    I’m not saying that applies to you, but it does apply to most WRT the free/managed trade debate.

    Comment by Brad Warbiany — May 14, 2008 @ 2:42 pm
  15. Brad,

    But we have a lot of protectionists who wear libertarian clothing and fight against NAFTA and CAFTA under the grounds that “they’re not really free trade.”

    Nope, I’m not one of those guys. I’m a believer that compromising for incremental freedom is much better than going down in the flames of ideologue futility and martyrdom just to make a point. The goal should always be to accomplish something positive, even if you don’t get everything you want. I just don’t believe in pretending that NAFTA and CAFTA are something they’re not.

    And yes, many of the people who oppose NAFTA and CAFTA do so not because they think it doesn’t create enough free trade opportunities but because it creates too many that aren’t of the one-sided variety.

    Comment by UCrawford — May 14, 2008 @ 4:35 pm
  16. UCrawford, how about a synopsis of “how things really work”?. Some organic supporters, for instance, my wife and I, are of the opinion that if we don’t start re-adopting sustainable farming methods at some point, our agriculture system will collapse and we will have no food, or food so poor in nutrition that it will be worthless without being pumped full of gov’t-approved chemicals. This is easily verified on many non-looney websites. Topsoil loss and nutritional value of crops are what you’re looking for. Mostly old news since mid-20th century.

    Comment by tfr — May 15, 2008 @ 9:30 am
  17. Uhh..I’m not sure I understand how farming more crops on less land is somehow “unsustainable” in a way that organic farming is not.
    I have no problem with people who think that organics taste better or who think they are healthier (which is debatable). But to claim that modern farming methods will ultimately lead to ruin and are “unsustainable” in a way that organics are not requires some serious fudging of the numbers.

    Comment by Mark — May 15, 2008 @ 10:50 am
  18. tfr,

    Topsoil loss and nutritional value of crops are what you’re looking for.

    The claim that organic food is more nutritional than “unsustainably produced” food is inconclusive at best, and cynical marketing bullshit at worst.

    http://www.guardian.co.uk/uk/2000/aug/25/foodanddrink.foodtech

    And topsoil loss? I’m guessing that you’re one of those who assume that farmers who don’t eschew all pesticides must be ignorant of basic techniques to prevent erosion.

    http://www.ces.purdue.edu/extmedia/AY/AY-228.html

    Farmland is an investment…people who mass produce crops are just as mindful of their investment as anyone else. Once they recognize that their yields are decreasing, they take steps to remedy it, same as any other farmer. In fact, they’re probably a bit better about it than organic farmers because they closely track crop yields.

    Coincidentally, those “non-sustainable” claims you’re making don’t hold water. Thanks to improved farming techniques, many farmers don’t need the same amounts of land they had before so they’re letting it go back to forest.

    http://phe.rockefeller.edu/SAF_Forest/

    If you want to farm organically and inefficiently, that’s your own business…but save the crap about how organic farmers are the only ones who’ve got it all figured out. From what I’ve seen the only thing many organic farmers have figured out is how to sucker people into paying more money for pretty much the same food as the non-organic farmers.

    Comment by UCrawford — May 15, 2008 @ 12:50 pm
  19. yes, modern agriculture not only ruins topsoil over time, but also produces harvest significantly lesser in nutritional value as well as introduces far too much nitrogen and phosphorous into waterways that produce an imbalance of algae and other unwanted aquatic plant that chokes their ecosystems. these are all flat facts.

    that said, i personally won’t ignore the fact that modern agricultural techniques are what produces the yield necessary to feed the Earth’s population. given the world’s energy environment (World Peak Oil being a reality or otherwise), however, modern agriculture will be hitting a brick wall and decentralizing our food chain will eventually be in our nation’s best interests. decentralization and reverting to semi-organic regional farming will be optimal in the future. this will become more and more apparent as fertilizer products get too expensive to produce for any farmer other than corporate/conglomerates.

    reverting and re-inventing semi-organic techniques will be a vital component in untangling our complex food supply chains, as well as fighting off genetically engineered corporate self-terminating seeds produced by Monsanto et al. if i sound like a lame hippie by bringing these matters up, just know that i dont care an inordinate amount about the fishies in the brook and such, only about human survival away from the corporate yoke. and then if i seem too anti-corporate, in the case of Monsanto and their engineered terminating seeds this is a legitimate concern as termination genetics does indeed cross-pollinate to other crops and all of this information is quite public and extensive.

    learning about the root problems of modern agricultural is one of the subjects touched on in “The Long Emergency,” an excellent book i recommend to anyone. being able to own your own food supply and organizing a food supply chain on a regional basis grants communities enormous power away from corporate and government means of control.

    Comment by oilnwater — May 15, 2008 @ 9:07 pm
  20. oilnwater,

    modern agriculture not only ruins topsoil over time, but also produces harvest significantly lesser in nutritional value

    This is why farmers rotate fields and let them go fallow for a season or plant crops that don’t deplete the soil…to regenerate. That’s a basic of farming and even “corporate” farmers know about it and practice it. “Environmentalists” and organic farmers often like to claim that isn’t the case, despite the fact that you can drive through any rural area of Kansas and see it in practice.

    as well as introduces far too much nitrogen and phosphorous into waterways that produce an imbalance of algae and other unwanted aquatic plant that chokes their ecosystems.

    I agree with you about fertilizer runoff from farms, it’s a problem. It’s not really an argument against farming technique, though, it’s an argument about common property land usage. As with most pollution problems, farmers dump runoff into rivers because nobody owns the rivers (being considered common property), very rarely are the people tasked with maintaining the rivers (the government) watching, so therefore runoff into streams is “somebody else’s problem”. Find a way to put the advantage (and burden) of ownership for the rivers on the farmer, you’ll eventually find that the pollution problems starts sorting themselves out. Unfortunately, most major environmental groups tend to advocate going in the opposite direction and want to strip away property rights.

    They’ve done some stuff with water rights and usage out in western Kansas in regards to a long-running dispute with Colorado over the Arkansas River that may be relevant to the conversation but I’d have to dig into it a bit more to have a conversation about it.

    Comment by UCrawford — May 16, 2008 @ 6:37 am
  21. believe me i know quite a bit about said issues as it’s my major. under the Clean Water Act fertilizer runoff is considered a non-point pollution source and therefore unregulated. there are attempts to change the Act in that regard but it’s virtually impossible to regulate non-point agricultural sources and i would never agree with trying it, either.

    i speak with ag majors on a regular basis and asked them about what they think and know about modern fertilizer and farm techniques with regard to soil and they tell me that fertlizer binds minerals away from the soil over time which leeches it and makes for both poor soil and lesser nutritional product, albeit very gradually and of course crop rotation and such can mitigate the effects.

    as i said, of course i won’t underestimate what modern ag does to reliably feed the world, ever since Norman Borlaug modified wheat to feed twice as many people as it could before. but modern ag has the Achilles’ Heel of oil dependency and the food supply chains that support it are far too complex to remain reliable as procuring energy and raw materials are going to prove to be challenging. personally i’m looking at improving family land and starting a little bit of farming of my own in anticipation of uncertain times. that probably sounds quite a bit too Homestead/whacky Ron Paul mentality to many people, but so be it. food dependency is always one of the most immediate and effective forms of control and most people dont even know how food in the supermarket gets there.

    as for the water rights topic i dont know that one specifically but a few years back Kansas private landowners were fighting a govt measure to place water meters on their private water wells and the Paragon Foundation tried to fight it off; dont know the outcome. at least over here we’re blessed with an abundant aquifer. the issue of the “Commons” and the history of legislation accompanying it will definitely become an important and closely watched branch of law.

    Comment by oilnwater — May 16, 2008 @ 7:46 am
  22. oilnwater,

    that probably sounds quite a bit too Homestead/whacky Ron Paul mentality to many people, but so be it. food dependency is always one of the most immediate and effective forms of control and most people dont even know how food in the supermarket gets there.

    That’s not wacky at all…my grandparents had a large garden and grew their own vegetables for many years (it’s where I picked up my love of tomatoes) and I knew quite a few people who weren’t farmers who did the same in the area where I grew up. I suspect that as food prices rise you’ll probably see quite a bit more of that…not so much because of people worrying about energy dependence or supply chain issues (because I think that’s way overblown and most people don’t look that deeply into it) but because it’s cheaper for them to do so and it can become a potentially profitable hobby. Left alone, the market will eventually sort things out on its own so I don’t envision a huge collapse unless we let the government start running things.

    There was a really interesting article that I saw a couple of days ago about the proliferation of suburbanites turning their lawns into mini-farms and selling the produce to places like Wal-Mart. Wish I could find a link to the article.

    as for the water rights topic i dont know that one specifically but a few years back Kansas private landowners were fighting a govt measure to place water meters on their private water wells and the Paragon Foundation tried to fight it off; dont know the outcome. at least over here we’re blessed with an abundant aquifer. the issue of the “Commons” and the history of legislation accompanying it will definitely become an important and closely watched branch of law.

    I think the water meter thing might be related to that. The basic problem that Kansas was having with Colorado stemmed from Colorado diverting too much from the Arkansas River for irrigation and recreation, which left little for Kansas farmers, especially in western Kansas (every once in awhile, the river would actually go dry). The two states were arguing over this for about ten years because they couldn’t find consensus about how ownership of the river should work (i.e. do you have a right to take all you want if it leaves nothing for the next guy?). They came to a consensus about ownership a couple of years ago, but I wasn’t following it closely enough to know the details. Haven’t heard much about it since then so I’m assuming it’s worked out pretty well. Whatever they decided, though, didn’t do anything for the pollution issue because the Arkansas River still gets a lot of runoff. But I suspect there’s a free-market solution in there somewhere if we look at how to approach the ownership situation.

    Comment by UCrawford — May 16, 2008 @ 8:29 am
  23. UCrawford,

    Erosion? Nope. Farmland, besides being an investment, is a crop-producing organism, for lack of a better term. In nature, plant and animal materials are continually recycled through the soil automatically, providing the building blocks of the next generations. This process has been fine-tuned to high efficiency by millions of generations of living and dying organisms. True enough, we found a way to temporarily speed things up: inject large amounts of chemicals, some of the same chemicals which nature is continually producing with the breakdown of previous generations of biological materials, and disturb the soil in such a way as to deliver all of this to the plants’ roots as fast as possible. However, nature continues to operate – the organic content of the soil continues to decline with the normal ongoing breakdown of organic material, and in fact declines at an increased rate under these conditions of cultivation. If that were all there was to it, perhaps we wouldn’t care – we could supply, chemically, everything the plants need, and the soil would be merely an inorganic means of holding the plants in place. However, organic material in the soil performs other functions than feeding of plants through release of its inherent chemical makeup through breakdown. It holds water and fertilizers, lightens the soil structure, buffers toxins, a host of things that we must provide chemically or otherwise as the soil continues decline. As long as we can continue to cheaply and easily produce chemical or mechanical means of providing everything the plants need, we can maintain an artificial bubble of very high production. How long do you think we will be able to do so? That is how “sustainable” the current method is.

    Call me somewhat amazed that you guys, who seem to be long-term thinkers extraordinaire in regards to economics, are so short-sighted elsewhere.

    If you want to get into nutrition:
    http://www.soilassociation.org/Web/SA/saweb.nsf/9f788a2d1160a9e580256a71002a3d2b/de88ae6e5aa94aed80256abd00378489/$FILE/foodqualityreport.pdf
    The evidence is admittedly rather meagre but is growing.

    oilnwater,
    I’ve also been expanding our veggie garden this year, and anticipate more later. Nope, not 100% organic! It’s not clear at this time what’s ahead, but it’s good to be ready.

    Comment by tfr — May 16, 2008 @ 9:20 am
  24. tfr,

    the organic content of the soil continues to decline with the normal ongoing breakdown of organic material, and in fact declines at an increased rate under these conditions of cultivation.

    Most, and usually all, of which is offset by crop and field rotation. And you conveniently ignored the link I sent earlier about farmers allowing their land to go back to forest. If the crop quality and yields were actually irreparably decreasing as a result of land overuse, you’d see more acreage being used as farmland, not less, so farmers could make up for lost productivity. Your position is unsubstantiated and ignores basic realities that should be clearly visible to even the most casual observer. Oilnwater’s discussion of crop problems had merit to it because he was pointing out rising transportation and fuel costs as a negative factor for the agricultural sector, and I agree with him it will probably lead to an increase in home farming. But you’re just bashing farms that mass-produce crops, which smacks more of personal preference on your part rather than an actual problem with what they’re doing.

    The evidence is admittedly rather meagre but is growing.

    Which is why I call your position “unsubstantiated” and “speculative”. Long-term thinkers don’t tend to demand action over “problems” that haven’t been proven as such…that’s for commodities brokers, psychics, and people prone to overreactive panic (who are usually wrong more than they’re right).

    Comment by UCrawford — May 16, 2008 @ 9:43 am
  25. tfr,

    P.S. Your link is broken.

    Comment by UCrawford — May 16, 2008 @ 9:44 am
  26. And here’s a piece from the Mayo Clinic on organic food…where they note that there is no substantiated difference to the consumer between organic and non-organic, except in the customer’s personal preferences.

    http://www.mayoclinic.com/health/organic-food/NU00255

    Comment by UCrawford — May 16, 2008 @ 9:58 am
  27. UCrawford,
    I don’t think you read my last post.

    Try this:
    http://www.soilassociation.org/sa/saweb.nsf/9f788a2d1160a9e580256a71002a3d2b/de88ae6e5aa94aed80256abd00378489

    Comment by tfr — May 16, 2008 @ 11:08 am
  28. tfr,

    The link in your first post didn’t work. I was able to access your re-posting of it, and it backed what I (and you) have already said about your position…there is no definitive evidence that organic food is any more or less safe for human consumption than non-organic, nor is there evidence of organic food being a better product (merely a more expensive one). Organic v. non-organic is an issue of personal perception and choice at this point…not science. And your claims about farmland depletion are speculative and seem to be contradicted by current farming and land use trends.

    http://phe.rockefeller.edu/SAF_Forest/

    Comment by UCrawford — May 16, 2008 @ 1:23 pm

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