If you are, like me, bemoaning the costs of your regular groceries due to the uptick in oil and gasoline prices, be prepared for worse this coming fall.
Driving through rural Illinois and Iowa over the Memorial Day weekend, I was shocked to see vast stretches of unplanted corn fields. Very few had a faint fuzz of sprouting seedlings. I was puzzled: I had been assured of what a spectacular sight they would be, and had at least hopes of seeing growing crops, even if they wouldn't be anywhere as large as they would be at harvest time.
Apparently, the early spring sogginess and other conditions have led to delays in the crop plantings:
“The planting has gotten off to a poor start,” said Bill Nelson, a Wachovia grains analyst. “The anxiety level is increasing.”
Randy Kron, whose family has been farming in the southwestern corner of Indiana for 135 years, should have corn more than a foot tall by now. But all spring it has seemed as if there were a faucet in the sky. The rain is regular, remorseless.
Some of Mr. Kron’s fields are too soggy to plant. Some of the corn he managed to get in has drowned, forcing him to replant. The seeds that survived are barely two inches high.
At a moment when the country’s corn should be flourishing, one plant in 10 has not even emerged from the ground, the Agriculture Department said Monday. Because corn planted late is more sensitive to heat damage in high summer, every day’s delay practically guarantees a lower yield at harvest.
Elsewhere, worries grow on this year's harvest, and markets for futures react accordingly.
Corn futures at the Chicago Board of Trade surged as much as 4 percent on Tuesday, with an all-time high of $6.60-3/4 a bushel set by the July 2009 contract.
So what's the big deal, if it is primarily the corn production which could be in trouble this year? The answer lies in the fact that corn is the primary feedstock for several processed food industries and CAFOs (Concentrated Animal Feeding Operations). This doesn't even take into account impact on the production of corn ethanol, still a minor player in the fuel industry.
Update:
The weather in the mid-West hasn't improved this last week.
The rain will worsen the ongoing flooding situation in Iowa, Wisconsin, and Indiana.
I guess those farmers are going to have to wait yet some more before planting their soggy fields.
Consumers in the meantime had better get ready for some serious belt-tightening in the autumn.
For the first time in my life, I'm genuinely concerned that the economy is going bad, bad, bad.
Of course, if we get a sane president who ditches the corn-based ethanol plan, that will help... a little.
Posted by: joe | June 14, 2008 at 08:53 PM
It's been quite a week- every area that we drove through during the Memorial day break has now been flooded to some extent. So even the small corn seedlings we saw are goners. Estimates say that about 20% of the crop has been lost ( I suspect the other 80% didn't even get planted, because of the weather conditions not being conducive.)
Do you know what McCain's position on corn-based ethanol is, Joe? I could find out that Obama favors cellulosic ethanol as an alternative biofuel as per his website,but no clear information regarding McCain's stance.
On edit: googling produced this dated Feb '08:
McCain has more often than not spoken against subsidies for corn-based ethanol, and he therefore claims he's been consistent on this issue. Sort of. Here's him trying to explain his ethanol flip-floppery to Tim Russert back in 2006, when he was still planning to contest Iowa. Judge for yourself whether you find it convincing.
As for Barack Obama, winning Iowa was the linchpin of his electoral strategy, and pander he did. And Hillary Clinton? She says she opposed ethanol subsidies on behalf of her New York constituents, but supports them as a presidential candidate—big time.
Nobody, in other words, looks good on this issue right now.
Ah well, so everyone was for corn-based ethanol before they were against it. (Politicians, politicians...)
This link has a wealth of evenhanded information on the issue as it affects the corn producers themselves. I'm going to spend some time skimming through it for a more balanced look at the issue.
Posted by: Sujatha | June 15, 2008 at 05:42 AM
I haven't read all of the materials, so I could surely be wrong as a factual matter... or this could be more legitimately disputed than I believe... but my understanding is that corn-based ethanol is (1) not energy-efficient to produce, which means that it's not good as an environmental matter; (2) so limited in quantity that it's not going to put an important dent in our oil demand, anyhow; and (3) contributing to the higher costs of food, at a time when this is very much not good globally, or good for American citizens (with the possible exception of farmers and Iowans).
I suppose it's a tough issue to ask politicians to be good on when they're so concerned with losing potential swing states in the middle of the country, but it just strikes me as stupid as a policy matter to subsidize corn production for ethanol-making purposes.
Posted by: joe | June 15, 2008 at 12:21 PM
Joe:
We've talked about ethanol from corn on A.B. on more than one occasion. See here a post from earlier this year. Anna's original article is linked within.
Posted by: Ruchira | June 15, 2008 at 02:04 PM
Huh, maybe that's where I got those ideas about corn!
Posted by: joe | June 15, 2008 at 07:57 PM