Friday, November 5, 2010

Corn in the USA

Heather Cox Richardson

Five hundred and eighteen years ago today, on November 5, 1492, two of Christopher Columbus’s men reported back to their captain from a journey to explore the interior of Cuba. Columbus recorded in his journal that the men had found the land planted with “a sort of grain they call Maize, which is very well tasted when boiled, roasted, or made into porridge.”*

The story of corn and the early Americas is well-known. We know that the corn John Smith and Jamestown colonists stole from Indian caches helped them to stave off hunger; we know that the Whiskey Rebels cared about liquor less for drinking than as a way to get their fragile corn crop to distant markets. We know that the Ohio Valley, with its corn and hogs and whiskey, was a buffer between the North and South in the antebellum years, and how westward migration undercut the Ohio Valley Region’s political power until it could no longer stave off war.

But few of us pay much attention to the later history of corn, although there is no food in America that has a bigger effect on our lives. It is the country’s biggest crop. The USDA reports that in 2009, the nation produced a record corn crop of 13.2 billion bushels. Only China comes close to the U.S. production of corn, but its production has not kept up with its growing population, and it has been importing US corn (at least until last week, when it rejected a US cargo ship full of corn because the ship contained a strain of genetically modified corn outside of trade agreements.)

The rise of corn started in the late-nineteenth century, when impoverished western farmers agitated for a system in which they could store crops, rather than sell them in a weak market. This idea grew until the Depression, when, under FDR, the government began to regulate production, paying farmers to keep land fallow and offering loans to tide farmers over bad market periods. The restriction of corn production managed to keep prices high enough to keep farmers from starving, but it did make food prices susceptible to sudden rises, a volatility that could be a terrible political liability for presidents.

Federal regulation of production managed the corn crop until 1972, when the sale of 30 million tons of corn to Russia combined with a bad harvest to make domestic corn prices spike. This meant that animal feed prices rose, too, and higher prices found their way to the supermarket. By 1973, food prices were so high that meat became a luxury and middle-class mothers worried about feeding their children. President Nixon well understood the political power of a restive middle class, and he launched a new program to make sure that food prices fell quickly.

Nixon’s second Secretary of Agriculture, Earl Butz, dramatically changed government support for corn. No longer would the government support prices by managing the crop. After the carefully-named Agricultural and Consumer Protection Act of 1973 (aka the Farm Act of 1973), the government urged as much production as possible, and guaranteed farmers a target price for their corn. Rather than limiting production, the government made direct payments to farmers for every bushel of corn they produced. Under the new system, production climbed into billions of bushels.

Production got another boost after 2005, when that year’s Energy Policy Act required increasing amounts of ethanol—made from corn—to be mixed with gasoline. Two years later, President George W. Bush launched an initiative to turn even more dramatically to ethanol to reduce the nation’s dependence on oil by 20% by 2017. The scientific journal Nature immediately warned that this initiative would actually move the development of biofuels backward, rather than forward, since corn is inefficient as fuel, but corn farmers loved the proposal. Corn production leaped even higher. Today more than a quarter of that production goes to produce ethanol.

The flood of cheap corn had a number of dramatic effects.

It has involved the government deeply in agricultural production. As the price of corn dropped, the only way for farmers to survive was to plant more and more, so they could collect more subsidy money. Farm subsidies now run over $12 billion a year. Government statistics don’t easily reveal how much of that money goes to corn growers, but, according to the USDA, 97% of the farms that grow grain collect subsidies, and 90% of grain growers produce corn.

It has cemented the power of agribusiness. More than 60% of subsidy money goes to big growers. The push for production favors agribusiness, which can exercise huge economies of scale. (Nixon and Butz not only foresaw this move, but encouraged it because they believed it would keep prices down.)

Cheap corn has also changed the way we eat. It finds its way into most of the foods in American supermarkets, as high fructose corn syrup (HFCS) into soda and processed foods, of course, but also into less obvious places like beef, since corn was so cheap cattle growers began to use it to feed animals that had always fattened on grass. The raft of organizations concerned about America’s obesity epidemic have pointed to the ubiquity of cheap corn as a key ingredient in our increasing health problems.

It has also most likely changed recent demographics. Researchers speculate that heavily subsidized US corn has combined with NAFTA to disrupt rural Mexico, where small farmers can’t compete with cheap US corn. They have left rural regions to move to cities in Mexico, and while no research has been conducted on cross-border migration, it seems likely that displaced farmers are making their way to US farm operations to find work.

And it will soon become a factor in politics. The Great Plains states that decry big government and demand a smaller federal budget depend on agricultural subsidies. According to the Department of Commerce, subsidies provide up to 40% of personal income in counties across the Great Plains. In the current drive to slash the budget, it’s hard to see how the $12 billion price tag of agricultural subsidies cannot be on the table for cuts, but it’s also hard to believe that Plains voters will support such cuts. How this will play out is anyone’s guess, but it will certainly be a factor in the political debates of the next few years.

Five hundred and eighteen years ago today, Columbus thought he was hearing about a curious plant. He was really learning of a special kind of New World gold.


dan allosso said...

Interesting. Iowa is almost all dark-green, on your map. I uses to live in the dark-green section of Minnesota, right above it. Iowa is the #1 corn producing state, and corn makes up 37% of total Iowa farm receipts. It’s also #1 in soybeans (21% of farm receipts), and #1 in “live animals and meat” (hogs, 21%; cattle, ~12%). Rural per capita income is about $36,500 (about $3,500 less than Iowa urban per capita income), and rural per capita federal funding is about $8,300. BUT, only $1,000 of that goes to “agriculture and natural resources.”

I’m not 100% sure if that $1000 is the money you’re talking about, though I think it is. On a national level, there are just under 350,000 “corn farms,” 16% of total farms. Their average size is 745 acres (nearly double the average farm size, but less than half the size of average sorghum and wheat operations). The average age of the farmer is 55, and they make an “average farm related income” of about $16,400, which is 50% of their household income, on average. 86% of corn farms receive government payments, in an average amount of about $13,300 per farm. But the average market value of the corn crop on these farms is $336,000 -- so there’s a lot going on between the top line and the bottom line.

These numbers came from two different USDA reports, but they seem to suggest that somebody is getting a lot of government money, but maybe not the people in the prime growing areas like Iowa. It also suggests there’s a lot of money being made between the cutting of the check for the corn harvest ($336,000) and the farmer’s net income ($16,400). And it’s a lot more than the money that’s going from the government to the farmers. Suggests to me that the people getting rich between the harvest and the farmer might be the ones behind the government subsidies, which wouldn’t be needed if they hadn’t squeezed all the blood out of the stone.

I know, I’ve been reading a lot of populist material lately...

Lorielle said...

I was born and raised in Iowa -- the "Tall Corn" state. I found it interesting that Nebraska isn't higher... they are, after all, the "Cornhuskers." Perhaps they just husk Iowa's corn? :)