The corn rush

New figures show American farmers planting even more corn than was previously estimated. And South American farmers are wasting no time following suit.

By Andrew Leonard

Published June 29, 2007 5:18PM (EDT)

American farmers planted 92.9 million acres of corn in 2007, 16 percent more than last year and the most since 1944, according to figures released Friday by the USDA's National Agriculture Statistics Service. That's a hefty 2 million more acres of corn than the USDA's last estimate, in March.

In 1944, explains the Wall Street Journal, American corn farmers were responding to hunger in war-ravaged Europe. Today, they are motivated by high prices driven by the demand for ethanol. And they are far from alone -- farmers everywhere are paying attention. Argentina and Brazil, two of the biggest corn producers and corn exporters in the world, are also reporting record harvests and record plantings. In Mexico -- the historical birthplace of corn -- farmers are similarly responding to price signals.

The U.S. is by far the biggest player in the global corn trade, responsible, in 2006, for 44 percent of global corn production, and 68 percent of global corn exports. So one could well ask, given American dominance, is there any feasible chance that boosted production elsewhere might put effective downward pressure on corn prices, and thus mitigate the impact corn's price surge has had on downstream food prices? And one can well wonder whether there is enough arable land and water and cheap petroleum-based fertilizer to grow all that corn.

A year from now we'll know a lot more. If the world's corn-producing countries all experience record harvests again and the price of corn continues to rise, then serious trouble will be brewing for the global food chain. But in the meantime, global markets are responding to corn prices exactly as one would expect. Higher prices, increased production. Which usually means lower prices down the line.

Setting aside the question of whether corn makes any sense at all as an energy source, those higher prices do have a silver lining. They represent new opportunities for the world's farmers that have been hitherto closed off -- by the difficulty of competing with the United States. Government subsidies for corn farmers in the U.S., combined with American agriculture's incredible efficiency and economies of scale, lowered the global price of corn to the point where many farmers in the rest of the world were unable to compete. The most drastic result of this was Mexico's transformation into a major corn importer, and the flight of bankrupt Mexican farmers from their fields, across the border into the United States. As many as 1 million Mexican corn producers are thought to have lost their jobs as the result of low corn prices and the NAFTA-imposed reduction of trade barriers.

A NAFTA deadline to remove the last remaining agricultural tariffs between Mexico and the U.S. is due in 2008. The conventional wisdom, until recently, was that this would place Mexican farmers under even more hardship. But if the price of corn stays high ... not so much.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Globalization How The World Works Latin America Mexico