The Voice Of One Crying Out In Suburbia

The economics of corn

Is there anything more midwestern than a cornfield? It is just a part of the landscape for those of us who grew up in places like Ohio, Indiana, Nebraska. We knew the seasons as the snow melted off the bare fields, the tractors started plowing and planting, corn started sprouting, grew tall, turned brown, got harvested and it all started over again. Cornfields are what people from the coastal cities fly over when going to a different coast.


Everyone complains about gas prices, but most people haven't a clue as to what is causing this or what the ramifications are. That is not intended to be self-congratulatory because I have taken a couple of courses in Econonomics at college, but rather just a fact that most people have had little exposure to economics and spend little time really thinking about how everything works together. Most people view each economic event in a vacuum. Gas prices are just arbitrarily changed. Milk prices inexplicably go up. Things just happen and aren't related to one another. That is simply not the case. Our economy and the world economy in general is tightly interwoven.

Ethanol versus oil production

There is a growing problem in America that gets little notice. Corn production is expected to be down from 13.1 billion bushels in 2007 to 12.1 billion bushels in 2008, and of that crop 4 billion bushels will be used for ethanol. As corn prices rise and as more and more corn is used for ethanol, it makes feed for cattle, chickens and hogs more expensive. It makes milk more expensive. It drives up the prices of other crops which in turn drives up the cost of rice and flour and other staple foods. Yet our agricultural and energy policies bear little resemblance to reality.

We have spent tons of money getting farmers to not plant crops, and meanwhile urban sprawl has been eating up farmland. We find ourselves late to the game, trying to replace oil with ethanol when oil prices are spiking instead of developing this technology when prices were still low. Fear mongers on the radical environmental fringe have convinced us to fear nuclear power, which could provide all the electricity we need with virtually no greenhouse gas emissions and yet those same radicals carp constantly about not signing the Kyoto Accord. We could cut back on all of those coal fired electrical plants but it isn't an overnight process and we have lost decades where instead of building and improving nuclear plants, we are shutting them down at huge expense and belching pollution into the air from coal plants. The same mentality is true of our agriculture policy, made in the halls of monstrous office buildings in D.C. by people who probably have never driven a tractor or seen livestock outside of a county fair or petting zoo.

Agriculture should be our second greatest strategic asset after our military forces, given our climate and vast areas of arable land. Food should be to us what oil is to the middle east. But we have squandered that advantage and are importing grains from other nations when we could easily grow our own. Is it any wonder with policies like this that our food prices and gas prices are spiking?

Gas prices are what motorists see because they pay attention to the gas prices and the news makes a big deal out of it, but what is missed are the more subtle price increases in food and staple goods as it becomes more expensive to move freight by train, truck and plane. Just this week, Fed Ex lowered profit expectations again because of increased costs. This filters down as it becomes more and more expensive to do business and profits shrink, jobs are lost. It is all interconnected. I fear that we are not seeing the worst of the economic slowdown, but rather are just beginning.

Agriculture is the backbone of our economy. Taiwan and Sri Lanka can make computer chips. Japan and Mexico can make cars. Europe can...well, most of the workers in Europe are unemployed so they don't make anything. Saudi Arabia and Qatar can drill oil. But no one else can feed the world as efficiently as we can. That we have forgotten that is a national tragedy and a strategic error. It is high time we start to figure out how to maximize our food production capabilities before our food supply becomes hostage to foreign powers the same way that our energy supply has become, before Hugo Chavez uses food against us the way that thugs in the Middle East do. The American farmer has for decades fed the world and that must continue if we are to avoid becoming a Third World economy.