Pictured Above: Damian Mason (r), ag economist and business speaker, presented at the Moving Iron Summit and following his presentation, he sat down to with Chip Senf (l), used equipment manager for C&B Operations, a 38-store John Deere dealership. The two discussed the possibility of growing less corn in the U.S. as other countries start producing more and if there’s another — yet to be discovered — corn-based product that could have a similar impact on the industry like ethanol did.
Chip Senf, Pre-Owned Equipment Specialist, C&B Operations
Damian Mason, Hosts The Business of Agriculture & Do Business Better Podcasts
Damian Mason: We’ve been telling ourselves “feed the world” for my entire existence, and we’ve done a really good job of that. We still have some starving and hungry people, but those are economic and political problems, not production problems.
We love the idea of “feed the world” because it plays to our strength. We don’t have to change anything other than technology to make more food. We’ve been amazing at it. We still need corn, but we’re going to need less of it moving forward because the rest of the world is growing more corn. Twenty-five years ago the U.S. was responsible for two-thirds of global corn production and now we’re one-third. Why would that reverse?
Chip Senf: Because more people are producing corn.
Mason: We’re going to be needed less for our corn supply and corn demand itself is going to go down.
Senf: I can’t argue with your facts. It’s just harder for the average producer, and producer of corn, to figure out how to produce less and make more money. The mindset is toward making more money.
Mason: Some producers will end up making none. Others still will make plenty. In other words, the person in Minnesota who has beautiful black ground can grow the heck out of corn. The producer in Kansas, who has to punch a hole in the ground, dig down to the Ogallala Aquifer, and has to run diesel engines to put water on their ground is going to go back to growing grain sorghum or grassland.
Individual producers won’t produce less, but we as a country might ultimately produce less because of the demand decreasing. In fact, that’s going to mitigate it even more quickly. The fact that a guy in Iowa can produce 280-bushel corn in another few years certainly will remove the economic incentive for someone else doing all they can.
Why are they growing corn in parts of Colorado that only get 6 inches of rain? When did North Dakota become a corn state?
“The person in Minnesota who has beautiful black ground can grow the heck out of corn. The producer in Kansas, who has to punch a hole in the ground, dig down to the Ogallala Aquifer, and has to run diesel engines to put water on their ground is going to go back to growing grain sorghum or grassland…”
Senf: Because they felt they needed to, right? They’re switching a lot of it to edibles now too (in Colorado). North Dakota went from wheat to corn. When I was a kid in southern Minnesota, we used to have peas first and then put beans on top of it. Now we have a shorter season. That practice has gone by the wayside.
Mason: What just happened is we went from worrying about too much corn to not having a really good economic benefit to grow corn here anyway. I’m going to grow everything from hemp to lettuce, kale and then the corn problem fixes itself. Now the guys in Minnesota and Iowa where they should be growing corn are still growing corn. That’s one of my big contentions, the “less corn” discussion. Also, the ethanol picture. We like talking about ethanol, but is it really a need economically? We’re at $2.49/gallon gasoline right now.
Senf: No. And with government subsidies, how much does that actually cost us to get ethanol? It’s reasonable as a purchase. In our area, we have ethanol plants all over. They’re closing a big plant 20 miles from my home because it just can’t make money and cannot produce enough ethanol.
I think that’s probably the unfortunate thing. What’s going to replace it? Somebody’s going to come up with something they’re going to promote because they’re scared of running out of oil. The fear was there when I was a kid. I’ll never forget the long line at gas stations in ’75 and ’76. Do you think there is going to be something that replaces corn ethanol?
Mason: Sure. We’re probably going to get better with renewables, but also we keep finding more oil, more natural gas. The U.S. went from being a net importer of fossil fuel to a net exporter, actually the top oil producing country right now. There’s the problem with ethanol.
I know change is coming. Economics always work themselves out. Market forces always work themselves out. Ethanol is fine, and I’ve worked with ethanol companies. It’s just that it does not pencil out without subsidy.
Senf: It never has, right? But I wonder, will there be another product that would be developed and produced to help consume some of that corn?
Mason: I make these predictions and people think I’m crazy because it’s new to how they think. We didn’t grow canola until the 1980s. We didn’t grow soybeans in the U.S. at any appreciable level until the 1960s. Now you say we’re going to grow less corn? That’s crazy! But there’s absolutely room for all these oddball crops — kale, hemp, quinoa.