The U.S. Is Growing More Corn Than It Can Handle

Source: By Justin Fox, Bloomberg • Posted: Wednesday, September 25, 2019

The spectacular productivity gains of the past 90 years are a miracle — and a problem.

So corny.
So corny. Photographer: Daniel Acker/Bloomberg

This year’s U.S. corn crop isn’t looking great. Soggy spring weather in many parts of the Midwest delayed planting, and warmer-than-normal temperatures lately have been posing their own problems. 1

Still, while the 13.8-billion-bushel corn harvest currently projected by the U.S. Department of Agriculture would be the smallest since 2015, it’s about 40% more than U.S. corn farmers were bringing in just two decades ago, and more than three times the average harvest in the 1960s.

That’s a Lot of Corn

Corn is the biggest U.S. crop by volume, acres harvested and value (the most valuable agricultural product is cattle and calves, which are usually fed a lot of corn in the latter stages of their lives). That’s not even counting corn for silage — an animal feed of fermented, chopped-up corn plants — and the sweet corn that we eat off the cob. Silage and sweet corn are measured differently, which is why they’re not included in the above chart, and they are also much less widely grown, with 6 million acres of silage and 473,100 acres of sweet corn harvested last year to just under 82 million acres of corn for grain.

That acreage is higher than it was a few decades ago, which accounts for some of the production boom. But this acreage increase followed even bigger declines in the mid-20th century — grain-corn acreage hit its all-time high of 110.9 million in 1917. The main reason the U.S. produces much more corn than it used to is because U.S. corn farmers have become much, much more productive.

Corn’s Productivity Revolution


The production and productivity of corn — which people outside the U.S. (as well as some in the U.S., of course) generally call maize — has been rising all over the world. The grain was first cultivated at least 8,700 years ago not far from what is now Mexico City, spreading during subsequent millennia into North and South America and the Caribbean (where the name “maize” comes from). It went global after Christopher Columbus showed up in 1492. In 2001 it became the largest crop worldwide by tonnage, surpassing rice and wheat. In 2012 corn passed rice even in China, and more land is now planted with corn in China than any other country. But U.S. corn farmers remain tops in both production and productivity.

U.S. Corn Farmers Lead the Way


It’s great to see Ethiopia on this list, and not at the bottom of the productivity rankings, either. The country, infamously beset by famine in the 1980s, has more than doubled per-acre yields and quadrupled corn production since then. Nearly 90% of Ethiopian corn is consumed directly as food, so productivity gains there have literally been a lifesaver.

In wealthier countries the role of corn is more complicated. In China, most of it goes to animal feed. That used to be the case in the U.S., but for the market year that ended last month, the USDA estimates that 38% of U.S. grain corn went to making ethanol versus 37.3% into animal feed. Another 14.6% was exported, followed by 5.6% used in making the sweeteners high-fructose corn syrup, glucose and dextrose. 2

This is enough to make a person suspect that the U.S. is producing more corn than it knows what to do with.

Indeed, since the 1970s, the U.S. Department of Agriculture and lawmakers from the corn-producing states of the Midwest have made finding uses for excess corn a major priority. High-fructose corn syrup, developed in Japan in the 1960s, was an early success, although in recent years its popularity has wanedin the face of health concerns. It has been more than supplanted by ethanol, thanks to the renewable-fuel standards mandated by the Energy Policy Act of 2005 and Energy Independence and Security Act of 2007 that require increasing amounts of biofuels to be blended into the nation’s gasoline and diesel each year. These laws were passed by Congress amidst high gasoline prices and concerns about “peak oil,” as well as widespread hope that rapid growth in new biofuels made from things like switchgrass would bring declines in greenhouse-gas emissions. Since then, U.S. oil production has rebounded to an all-time high, and corn-based ethanol, which seems at best a wash in terms of carbon emissions, has remained far and away the dominant U.S. biofuel.

With President Donald Trump now complaining of spending way too much of his time trying to balance the interests of the oil industry, which wants a relaxation of biofuel standards, with those of Midwestern farmers who don’t, it seems pretty clear that the main continuing role of the biofuels mandate is to keep U.S. corn prices — which happen to have hit their all-time inflation-adjusted low in 2005 — from collapsing further.

Corn Is Cheap


All in all, it’s a pretty weird situation. In the rest of the U.S. economy, one of the biggest complaints since the 1970s is that productivity increases — apart from an information-technology-related spurt in the 1990s and early 2000s — have slowed, thus making it harder to achieve increases in living standards. For corn farmers, and for U.S. farmers in general, it’s almost as if too much productivity growth is the problem. 3

Farmers Outproduce the Rest of the Economy


The productivity revolution in corn farming in particular began in the 1930s with new hybrid seed varieties, then continued after World War II with advances in fertilizers, pesticides and machinery. More recently, genetically engineered seeds have come to play a big role. Productivity gains have also come from low-tech changes in farming methods such as no-till agriculture and the regular rotation of corn and soybean crops that now defines the Midwestern landscape. But on the whole U.S. corn farming, along with the intensive livestock operations it supplies, has come to more or less epitomize what is often derided as “factory farming.”

Environmentally, there are positives to this as well as negatives. Agricultural productivity gains are surely one of the biggest reasons U.S. forests have stopped shrinking: After declining by an estimated 30% from 1630 to 1920, U.S. forested acreage has grown about 6% since 1920 even as the population has tripled. In theory, at least, rising corn yields here and elsewhere could also slow the conversion of tropical forests into farmland in Africa, Asia and South America. Then again, fertilizer runoff from Midwestern cornfields helps create a giant oxygen-deprived dead zone in the Gulf of Mexico every year, and the risks of pesticides have been coming under renewed scrutiny lately with more than 18,000 plaintiffs blaming the widely used weed killer Roundup for their non-Hodgkins lymphoma and entomologists growing increasingly concerned that the neonicotinoid pesticides that coat nearly every corn seed sold in the U.S. are harming honeybees, aquatic insects and even predators that eat agricultural pests. And the lead author of a blockbuster study documenting a 29% decline in the number of birds in North America since 1970 pinned some of the blame on habitat destruction due to “this steady intensification of agriculture and pastureland being converted to pure corn.”

For the farmers growing all this corn, the productivity boom has been a mixed blessing as well. I’ve already noted the downward pressure it puts on prices. Higher productivity also generally means fewer people needed to produce something, so if you’re looking to explain the oft-lamented depopulation of rural and small-town America, rising agricultural productivity is the most obvious culprit. Getting more productive also tends to entail spending money upfront — even a used high-end combine harvester will set you back more than $500,000 — which favors bigger farms over smaller. According to the USDA’s once-every-five-years Census of Agriculture, the number of farms growing corn for grain fell from 450,520 in 1997 to 304,801 in 2017, while the number of corn farms of 2,000 acres or more rose from 868 to 4,097. Describing similar trends in the dairy industry for a column I wrote a few months ago, Cornell University agricultural economist Andrew Novakovic called it “an economic miracle wrapped around a social tragedy.”

I don’t have any grand solution here. Productivity growth is a good thing. But in the case of corn farming in the U.S., it could be that government policy (in the form of farming subsidies as well as the biofuels mandate) ought to be seeking to take advantage of the productivity gains to encourage farmers to plant fewer acres of the stuff rather than more.

  1. This assessment is based not on any great stores of corn-farming knowledge but on following University of Illinois agricultural economist Scott Irwin on Twitter.
  2. Here’s the rest of the list: 1.7% became starch, 1.5% cereals and other products, 1.1% alcohol for beverages and manufacturing and 0.2% seed.
  3. The chart shows total-factor productivity, aka multi-factor productivity, which is an estimate of how much of a product or service can be produced with a constant amount of labor and capital. It’s harder to conceptualize than yield per acre, and a lot harder to measure reliably. The estimates in the chart are also from two very different sources (the Penn World Table project as updated by the Groningen Growth and Development Center in the Netherlands versus the USDA’s Economic Research Service), which muddies the comparison a bit. Still, I think the overall picture it gives is correct.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.