Why There'll Be Less Corn
As farmers head to the field to plant corn this spring, it’s time to discuss something North American Agriculture doesn’t want to hear: The world is going to require less corn someday. And that someday might be sooner than you think.
Please don’t mistake my business message for an indictment on corn or Agriculture in general. I’m an Ag guy. I own farms in Indiana - the fifth most corn-producing state in the country. Corn is what we do, right?
Well, yes. Although on a global comparison, America does less corn than we used to. A couple decades ago America produced two thirds of the world’s corn. Last year we produced just over one third of global corn output.
During those couple decades, U.S. corn production increased by 50%. So, we’re still growing lots of yellow kernels. The rest of the world is too. Countries that never made the radar of maize production have become pretty a-maize-ing corn producers. Like China for example. With an expanding middle class hungry for meat, China feeds corn to hogs and imports soybeans to do the same. Did you know China’s hog industry is 5 times the size of ours?
Corn is not going away. But it’s no longer a crop America holds a patent on.
Why There’ll Be Less Corn
The headwinds for corn, over the next decade are demand driven. There’ll be less demand for: ethanol, processed human food, and possibly even livestock feed.
Let’s look at each corn consumption category and why it’ll contract rather than expand.
Per the National Corn Growers Association, 30% of our corn crop goes to ethanol. Good for corn. But ethanol was a short term solution to a long term problem of too much corn.
Detractors claim ethanol makes economic sense only because of subsidies and the Renewable Fuel Standard mandated by the U.S. government.
Ethanol’s bigger challenge than economics: electric cars. The European countries of Norway, Netherlands, France, and Great Britain legislatively banned internal combustion engines beginning as soon as 2025. This trend will continue as environmentalism’s push into politics increases.
As fuel consumption declines, how will Exxon or Royal Dutch Shell respond? These companies exist to sell fossil fuel. Do you suppose they’ll let corn growers in Iowa take a bigger share of declining fuel sales? Doubtful. And what about Saudi Arabia, whose power and wealth lies in oil? The Saudis will crank up production to keep selling oil, even if it’s cheap. In these scenarios, ethanol loses.
Grocery stores are struggling in the “center store” — the area that sells processed food. Consumers are switching off packaged food and opting for fresher alternatives. That’s why shares in KraftHeinz plummeted 30% in February.
If it comes in a box and has lots of hard- to -pronounce additives, consumption is declining. Those are just the sort of products that contain corn. Cereal isn’t faring well either. According to Food Dive, cereal sales decreased 17% from 2009 to 2016.
It’s not just packaged food, but beverage too. Specifically beverages containing corn syrup. Right or wrong, corn syrup is vilified (have you seen the Bud Light commercials?). Six percent of corn is consumed via sweeteners and corn syrup. Look for drastic decreases there soon!
38% of our corn crop “walks off the farm” as meat or is consumed by dairy cows. This will continue to be corn’s biggest use. But the world of meat and milk is changing too.
Plant-based “milk” sales in the U.S. were up nine percent in 2018 and plant-based “meat” sales increased 24% according to Food Navigator.
Grass fed beef -and yes, I know corn is technically a grass but not as it pertains to grass fed beef designation - is growing 25-30% annually according to Supermarket News.
Then there’s Lab “meat.” While not yet commercially viable or available, it’s coming. With lots of backers, including conventional meat giant Tyson Foods.
A Changing World for Corn
Corn won’t go away, there’ll just be less demand for it. Don’t despair. We produce less tobacco, oats, and flax than we once did too. This is the evolution of the Business of Agriculture.
Damian Mason is an Agriculturist, Speaker, Author, and Podcaster. For speaking engagements, commentary, and podcasts visit www.damianmason.com