Most businesses allow the operator of that business to exert a
modicum of control. Business people can set their own prices,
maintain the level of their inventory, and advertise for new
customers. In a sense, with careful planning, most business people
can control the profitability of their businesses, in some measure
making them happy and healthy (and sometimes wealthy).
But it is not so for corn farmers in Central Illinois. Even though
Central Illinois farmers have the best soil in the whole United
States, a climate that for the most part is cooperative with raising
corn, and the best GMO corn hybrids ever invented by mankind, they
cannot control their crop, alter the weather, set their prices,
choose their markets, outflank their competitors, control the price
of land. Corn farmers in Central Illinois have very little power or
control (and yet still seem quite healthy and happy).
Perhaps the most frustrating thing from the list of items beyond
control is the issue of prices. Corn farmers have been waiting for
sustainable prices since 2013 when the market wandered south of
$4.00 and has continued to decline.
Prices are controlled by market forces, not set by the individual
farmer. The farmer must accept the price the market offers, or take
his chances to enhance his price by feeding his corn to his own
livestock (however, livestock prices are also controlled by market
forces, not set by the seller). Also, some producers enhance their
profits by growing alternative corn crops such as non-GMO or
Prices are largely set by five major players who buy, sell, process
and export 90 percent of all the grain crops: Cargill, ADM, Bunge,
Dreyfus and Glencore. Since 2013 these five companies have
controlled the market in their own favor by maintaining the supply
high and the demand too low to allow prices to move upward.
Many producers and analysts also say that the USDA keeps prices low
for these major consumers by overestimating the size of the corn
crop in their annual crop estimates. The $4.00 corn seems illusive.
This is truly the conundrum (an unsolvable problem) of corn.
An individual corn farmer cannot do anything to directly influence
prices. Because there is so much production, surplus yields cause
prices to be low. If an individual farmer decides to raise less corn
on purpose to play the market, some other farmer somewhere else in
the world will decide to raise more corn. Farmers are victims of
their own efforts, stuck in a catch-22. No single farmer can
And farmers are so independent and competitive that they will never
organize with other farmers to plan out their yields to cause the
market to go up.
The only way that prices can go up precipitously is for there to be
a bad year and at least a part of the producer market to suffer
losses. However, those producers suffering loses might include those
in Central Illinois.
[to top of second column]
In 2006 the ethanol market was optimistically planning for the
possibility of a tripling of the production of ethanol from 5
billion gallons to 15 billion gallons, supplying 10% ethanol for
nearly every gallon of gasoline sold. Such an increase of ethanol
production would have been good for the corn farmer in 2006, raising
prices significantly since every bushel of corn raised in the U.S.
would be needed to produce that much ethanol.
Since 2006 ethanol production has grown to 15B gallons, but corn
yields have outpaced ethanol production and although ethanol
production now accounts for over 50% of the corn crop, there is
still a significant surplus of corn driving prices southward.
In a bold move in 1972, the Soviet Union bought all the surplus
grain in the U.S. market for $500 million through the Continental
Grain Company in an attempt to manipulate prices, cause bedlam and
shortages, and recoup their $500M through inside trading.
To contain the situation, the federal government under then
President Richard Nixon kept the sale to the Soviet Union a state
secret for three months, preventing the Soviet plan to recoup their
$500M and succeeded in keeping the price of corn steady for
consumers (although the price of wheat doubled and the price of
soybeans tripled). Prices in 1973 returned to their earlier norms as
though nothing had ever happened.
Although prices remain too low for sustainability of farmers in much
of the nation, the yields possible today in Central Illinois because
of the soil, the climate, and new GMO corn varieties keep Central
Illinois corn producers afloat because their yields produce extra
salable bushels. While farmers in other parts of the U.S. are going
bankrupt, farmers in Central Illinois are surviving on their
extraordinary yields, undefeated by this conundrum of corn.