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 But this is not the type of “sustainability” that interests us
most at this time in the history of agriculture. We can fertilize
and supply all the nutrients that corn requires at the time that
those nutrients are needed. We can irrigate and supply all the water
corn needs when rainfall fails to provide adequate groundwater. We
can provide everything for corn needed to grow a fantastic crop. But
the sustainability we should be discussing is not whether corn can
grow itself but whether “King Corn” can sustain our farms, our
families, our communities and our way of life.
With today’s low corn prices, every farmer is feeling the pinch,
along with seed companies, fertilizer companies, implement dealers,
insurance companies and every other business that provides inputs
for the farm. Rural communities are in decline because of low corn
prices. Because of the steep drop in prices since 2012, all the
inputs have also dropped in price to stay in the game. But these
drops, including fuel prices, have not been enough in most cases to
provide sustainable profitability on the farm.
 Lincoln Daily News did a five year study from 2011 through 2015 of
the total yield and value of the U.S. corn crop. The study shows a
significant decrease in the total value of the corn crop. In 2011
the total U.S corn crop brought approximately $78.5 billion dollars.
In 2012 - $74.6 B; in 2013 - $62.7 B; in 2014 - $52.6 B. And in
2015, the total corn crop brought $47.9 billion, a drop of $26.7
billion dollars in just five years. That means there are $26.7
billion fewer dollars in the entire ag industry, and $26.7 billion
fewer dollars on the family farm.
A correlating Lincoln Daily News five year study of the consumer
side of corn reveals why the value of the corn crop has fallen
significantly. Despite significant gains on the production side, the
major consumers of corn: ethanol production (no growth), animal
feeds (some growth), hi fructose corn syrup (declined), other
sweeteners (minor growth), alcohol and beverages (minor growth),
cereal and food (no growth), starch (declined), seed (no growth, and
export (declined), are not consuming more corn. Their total
consumption numbers over the last five years have largely remained
static, with no overall growth. Great gains in production and no
growth in consumption have caused significant downward price
pressure.
Unless new markets are found for all the corn we are growing, prices
will likely continue to fall. Logan County producers who are farming
owned ground are currently experiencing low profitability on their
corn crop, adequate to pay for the inputs and taxes on the ground
they farm, with some left over to sustain the farm. Producers in the
county who are farming cash rent ground are really hurting (the
degree dependent on the amount of cash rent they are paying). Cash
rent farmers are likely experiencing negative cash flow.
One of the current strategies employed by Logan County farmers is to
try to “out-produce” the low prices. If they can produce more
bushels per acre, they can beat the low prices and sustain the farm.
This may be a good short term strategy. In 2016, Iowa farmers are
experiencing an average of 165 – 185 bushels per acre, while many
Logan County farmers are experiencing 230-250 bushels per acre.
While this higher production raises the cost of inputs, it provides
a significantly higher gross income for the farm and brings the
possibility of profit much closer. But in the long term greater
production will only continue the cycle of growth in production
while consumption remains flat, thereby later causing more downward
pressure on prices.
Another strategy employed by farmers across the country and
especially in Logan County is to increase the amount of on-farm
storage. The corn cash price at the beginning of harvest this year
was $3.18 per bushel, and has since gone to $3.50. Farmers are
holding back the larger portion of their corn crop in storage
looking for significant increases in price, selling only what they
need to pay the bills, waiting for the magic numbers. By controlling
the supply they hope to increase the demand. But studies have shown
that the magic number for cash rent farmers is likely to be
breakeven at $3.85 per bushel, a number that is not likely to be met
if the USDA is correct about the estimated size of the crop this
year.
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A third recommended strategy recommended for farmers is to diversify
the crops they grow away from corn into alternative crops which
bring substantially higher gross incomes per acre. In the past five
years quite a number of acres which previously grew cotton or wheat
or oil seed or other crops around the world have been moved into
corn production likely because of the high prices paid for corn in
2011 and 2012. This has increased the worldwide corn glut
significantly. The plan is that moving a portion of the farm acreage
away from corn will reduce the amount of corn produced, thereby
lowering the price pressure, and will bring higher profits from
alternative crops. But for Logan County producers this will mean
significantly more labor and time investment per acre as well as an
investment in new equipment and a total change of practices. Logan
County ground is perfect for growing the highest yields of corn in
the nation, while other crops will experience variable yields based
on rainfall, pests and other factors, making them less desirable
than corn.
Perhaps there are two answers on the horizon for the Logan County
producer. First, new markets for corn need to be generated and
discovered, and existing markets increased. We have learned how to
grow more corn, now we need more and better markets to sell it in.
Greater consumption will lead to higher prices. Our national leaders
need to work to ensure and increase the export market. Our livestock
industries need to increase to produce more high-quality meats and
thereby require an increase in corn for feed. Our government needs
to continue the ethanol subsidy and the industry needs to expand to
continue to replace the use of petroleum products, relying instead
on the use of corn to satisfy this nation’s energy needs. And new
consumer products need to be produced to utilize corn.
Second, producers in other parts of the world where corn production
is not as high will likely be forced to diversify their acreage away
from corn to other crops because they will be the first to fail in
the corn market. This will lower the total acreage dedicated to
corn, and lower the total corn production to be more in line with
consumption, thereby raising prices. If others are getting out, then
Logan County producers should stay in and do what they can to
survive until prices go up. Higher corn productivity on Logan County
acreage may ultimately save us and sustain the farm.
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