New Hampshire — It was an abundant year for corn growers in the U.S. This year’s corn crop is going to be substantially higher than any year on record. According to the monthly World Agriculture Supply and Demand Estimates (WASDE) report that is released by the U.S. Department of Agriculture, total production is now projected at 14.475 billion bushels, 550 million bushels over the 2013 record. Yields, also a record, are projected at 172.4 bushels per acre. In fact corn yields have been growing substantially over time.
See the chart below for more.
More crop means less money for farmers: the projected price will be $3.40 per bushel, the lowest price in eight years, according to WASDE. Those lower prices ought to mean that consumers should see food prices go down. Right?
If only it were that simple. First it’s important to understand that when we hear about corn prices in the U.S. we really aren’t even talking about corn grown for human consumption, we are talking about field corn. Of all of the field corn that is grown, less than 10 percent ends up in anything that includes corn that humans ingest, meaning high-fructose corn syrup, corn chips, corn flakes, even alcohol. The corn that we eat off the cob or that comes frozen or in cans, which is called sweet corn, makes up even less of the corn crop. For every 1 acre of sweet corn planted, U.S. farmers plant 260 acres of field corn. More about that later.
Field Corn: 65 Percent for Animal Feed, 13 Percent for Ethanol
Of that field corn, the truth is that the greatest percentage of that corn crop grown goes to feedlots, which purchase more than 60 percent of the field corn grown by farmers in the U.S. (About 13 percent goes to ethanol plants.) With that in mind, it would follow then, that when corn can be purchased for lower prices, meat could then be sold for lower prices. However, this isn’t the case.
Globally, the Food and Agriculture Organization of the U.N. (FAO) has reported that its international food price index declined 2.6 percent from August and is down 6.0 percent over the last year. The FAO noted that grain prices were down nearly 9 percent since 2013, while meat prices are nearly 22 percent higher than a year ago.
Domestically, food prices in August are up 2.5 percent compared to December 2013, nearly the same as the overall Consumer Price Index, which is up 2.1 percent for the same period. But while corn and other grain prices are rapidly declining, consumer meat prices are up 11.6 percent since last December.
“The current WASDE projections and recent reports from the FAO and Bureau of Labor Statistics further confirm that there is virtually no correlation between U.S. ethanol production and consumer food prices,” said Tom Buis, CEO of Growth Energy in a statement. “In report after report, we see that the American farmer can produce an abundant amount of food and fuel. It is clear that the food and fuel myth is completely unfounded and does a great disservice to the hardworking men and women that help feed the world and fuel our nation.”
Economics Dictates What Farmers Grow
A story from American Public Media takes this one step further. In it, Dan Weissmann asked Bruce Babcock, an econ professor from Iowa State University who studies corn, ethanol and other renewable fuels what would happen if farmers in America planted actual food for human consumption instead of food for animal consumption on all of those acres. Babcock said it would be pretty easy to supply the entire world with vegetables if farmers wanted to. In fact he told Wassermann that even if the world population were 3 billion higher than it is today, “we would have more land available for the 10 billion than they would know what to do with.” Babcock said that the ability of U.S. farmers to “supply the world with vegetables” is “practically unlimited.”
The reason that farmers are NOT growing more food for human consumption is because they are working to meet the demand from the factory farming industry; the same industry that that Growth Energy’s Buis says is driving the deception about food verses fuel.
Deceptions Fueled by Big Oil
Buis continued: “As integrated livestock and poultry companies brag about their record profits and margins to their stockholders and investment bankers, the Turkey Federation, National Chicken Council and The National Council of Chain Restaurants, all allies of Big Oil, continue their campaign to intentionally mislead Americans about the cause of rising food prices in the U.S.”
Whatever you believe about sustainable farming and whether or not animals should even eat corn or people should even eat animals (side note: Michael Pollen’s Omnivore’s Dilemma is great on this topic) the truth of the matter is that the production of biofuel from corn is not disrupting the food supply in any way, shape or form.
One final quote from Buis: “Corn prices are below the cost of production for most farmers, and ethanol is selling approximately $1.00 per gallon less than the gasoline on the wholesale marketplace. The unrelenting deception coming from these trade associations to continue to perpetuate this lie to mask their growing profits at the expense of the American consumer is deplorable. Their greed and deception knows no boundaries. It’s time for Big Oil and its Big Food allies to begin telling the truth.”
Lead image: Animal Feed via Shutterstock