What the record corn crop actually means

U.S. farmers are expected to plant 37 million hectares of corn this spring, the largest area of corn since “the Allies invaded Normandy”. It is a 15% increase from last year, all thanks to the demand for ethanol. At the same time, the planted area of soybeans is expected to be 11% lower than last year.

That’s 90.5 million acres of corn, in American English (sick of getting sent data in pounds, cubic feet per second and acres, I'm a on one-person quest to convert to USDA and the USGS to metric).

The media has been all over this today. The coverage I've seen is largely missing the point.

Corn and soybeans are the two prominent crops in the central U.S. For the past 10-15 years, the “Corn Belt” has really been the “Corn and Soybean Belt”. In 2006, the planted area of corn was 31.9 million ha; of soybeans, 30.6 million hectares. The crops are often grown in rotation – corn on a field one year, soy the next – since the nitrogen-fixing soy helps reduce fertilizer needs on corn (and residual nitrogen from corn helps the soy the next year). Both crops are largely used to generate animal feed, a sizeable chunk of which is exported to Europe and Asia.

We’re not about to discover more fertile farmland in the US. The additional corn to produce ethanol is largely coming two ways:

1. Replacing other crops. Since soybeans and corn are usually grown together, the surge in corn means less soy being grown. That means fewer soy available as feed, both here and overseas.

2. Reducing other uses of corn. The major uses of corn are animal feed, exports (mostly feed), food and now fuel. The domestic animal feed isn’t changing substantially lest we change our diets; the domestic food is a small fraction; the surplus here is coming from exports.

Those headlines about the impending choice between food and fuel? That’s not happening here, at least not yet. Ethanol is being generated in the US via planting more corn (at the expense of soy) and exporting less corn. The result is not less food in the store. It is less grain being sold for feed overseas.

That has market implications and environmental implications overseas(more on the environmental side later). As has been widely reported – the “tortilla effect” in Mexico – the price of corn has been high because the supply is being diverted (from exports for feed) to ethanol. It is important to remember that plenty of other factors affect food and crop prices. People seem to be getting carried away blaming ethanol for everything, like the price of wheat, which is rarely used for feed or to generate ethanol.

As for the US, with a 15% increase in planting of heavily fertilized corn, at the expensive of largely unfertilized soybeans, there may also be a record amount of nitrogen in central US soils this summer. A wet spring means a large hypoxic zone is likely to appear in the northern Gulf of Mexico next summer.