How Huge Food Corporations Will Make Upcoming Food Price Hikes Even Worse
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Experts debate how much biofuels impact food prices, but a few trends are clear. As we’ve devoted more and more of our corn crop to ethanol, corn prices have gone up. Once upon a time, prices hovered around $2.50 per bushel. Now they are well above $7 per bushel. Jeffrey O’Hara, an agricultural economist for the Union of Concerned Scientists, recalls when organic corn sold for $4 per bushel just a few years ago. Now it is going for $16 per bushel. “People are going to start wondering why they don't see organic milk at the grocery store,” he says.
With corn prices so high, farmers have devoted more and more acreage to growing corn. Perhaps when prices were lower, a farmer might have rotated between corn and soybeans, but now he might choose to grow corn every year. Maybe in the past she would have enrolled some of her more marginal land in a conservation program, earning money to keep the land in prairie instead of growing corn there, but now it is more profitable to grow corn on that land. As a result, U.S. farmers are growing more acres of corn than any other year since the bad old days of the Dust Bowl.
But U.S. corn production has not only increased because of increased acreage. Since 1960, the U.S. has increased average corn yields from around 60 bushels per acre to over 160 bushels per acre. Yields of over 200 bushels per acre are not unheard of. But this has come at the cost of genetic diversity. By selecting corn seed for yield and yield alone, the U.S. has sacrificed other valuable traits – like, perhaps, drought tolerance.
In recent years, the already narrow range of corn genes has been impacted by a lack of competition in the seed market. Together, Monsanto and Pioneer control about 70 percent of the corn seed market. Pioneer, now owned by DuPont, has been a giant in the market for decades as it was the first company to commercialize hybrid corn nearly a century ago, but Monsanto is a relative newcomer.
As it jumped into the corn seed market, Monsanto bought up major corn seed companies like Holden’s and DeKalb. The acquisition of Holden’s was especially significant as Holden’s produced inbred lines of corn seed and sold them to independent seed companies around the U.S. The independent seed companies then used those inbred lines to produce and sell their own hybrids. Monsanto now not only controls a huge share of the market, it also has the means to deprive independent seed companies of the germplasm they once relied on.
Globally, the U.S. produces more than 40 percent of the world’s corn. Next in line is China, which produces less than half as much corn as the U.S., but we are the world’s largest exporter whereas China is the world’s largest importer. We export more than five times as much corn as the world’s second largest exporter, Argentina. When the U.S. corn crop suffers, the global corn supply suffers – and prices go up around the world.
The full picture of U.S. farming includes more than just corn, of course. But not much more. Nearly 90 percent of U.S. cropland is comprised of just four crops. This year, the USDA estimates that the nearly 30 percent of U.S. cropland is planted in corn, 23 percent in soybeans, 18 percent in hay, and 17 percent in wheat. Of these, only wheat is significantly different from the others: it mostly goes to feed humans (not livestock), it is less affected by the drought in the U.S., and the U.S. is not the world’s top producer (it’s fourth).