Milling & Baking News - November 29, 2005 - 30

C O R N

W E T

M I L L I N G

Too much corn a good thing?
PETER A. MEYER
Contrary to common thinking, too much
of a good thing may be a good thing.
A remarkable event happened on the
way to this year's harvest that has just
been completed. It is likely to have ramifications not only for this year but for years
to come. It will, or at least should, have
implications for farm policy, for energy
policy and for the role of U.S. agriculture
in the world economy. These developments are not yet certain, but there were
indications in the last year's harvest and
some resounding confirmations in this
year's second best harvest of all time.
The miracle of bioengineered corn
seed may have been confirmed. Like the
Roman Catholic Church's process of beatification or confirmation of sainthood,
a few more miracles may be necessary
for absolute confirmation but the early
indications are there.
The Nov. 10 World Agricultural Supply and Demand Estimates (WASDE)
from the U.S. Department of Agriculture
proclaims, "Forecast 2005 corn production is up 175 million bus from last
month to 11.032 billion bus (the second
largest crop on record). A 75-million-bu
increase in corn used to produce ethanol
boosts food, seed, and industrial use by
an equal amount. Exports and feed and
residual use are unchanged. Corn ending stocks are up 99 million bus from last
month and are 207 million higher than
the previous year. The projected 2005-06
price range for corn is $1.60 to $2 per bu,
down 5c on each end from last month,
compared with $2.06 for 2004-05."
The remarkable thing about this
crop is that it was produced in a year
in which drought of record proportions
ranged the heart of the corn belt. In a
swath of prime corn growing land that
stretches diagonally from Missouri
through Illinois and into Indiana, it

demand for corn will grow dramatically.
It must be remembered that each corn
plant is a small solar energy generator
that captures the sun's energy and stores
it in the form of carbohydrate, oil and
cellulose (the corn kernel). It is then used
for feed, food or fuel.
The more efficient the plant, the more
resistant to disease and pestilence, the
better the outcome for farmer and corn
product consumer.
In fact, these seeds that bring better
yields and produce more durable plants
may allow changes in government programs. For example, these new seeds may
allow farmland that has been set aside in
the Conservation Reserve Program to be
placed back in production with a positive outcome. If support levels have to be
reduced as a result of international trade
negotiations in the DOHA Round, greater
farm productivity would soften the blow.
Higher yields per acre with lower
input costs tend to maintain the value of
farmland, which also works to the benefit of farmers and their bankers.
Despite the momentary concern about
"oversupply" of corn, the sensational
photographs of Midwestern corn piles
and the current low price, better yields
are good news. Too much corn after a serious drought is indeed a good thing. It
promises corn for future growth in new
products from corn without depriving
traditional users. A bountiful harvest is
cause for Thanksgiving. MBN

literally did not rain for more than a
month. Between Chicago and Bloomington, Illinois corn plants were 3 feet
tall in August. The leaves of the corn
plants turned brown, and were twisted
into ugly contortions. Unlike 2004,
when timely rains produced a record
crop, the rains in 2005 in this arid rectangle were non-existent.
Experts have debated why this occurred. Some argue for subsoil moisture
carried over from last year. Some claim
that it was high yields in other areas
that more than made up for Illinois'
shortfalls. Not so.
Sure, some part of the droughtstricken areas were short by 20% of
last year's yields, but farmers and state
agronomists were expecting 50% to 60%
losses. A general consensus is forming
that it was the seed. Particularly the bioengineered seed, which has shown itself
to be genuinely remarkable in producing high yields in the most challenging
of circumstances.
If this is in fact true, the ability of U.S.
farmers to produce consistently larger
yields will positively impact both the
supply of corn and the farmer's ability
to earn a return on their farmland. Recently, the New York Times - the farmer's
friend - published a front page article
that featured a full color picture of piles
of corn sitting next to a chockfull elevator in Iowa. The theme of the article was
that misguided U.S. agricultural policy
was producing unusable surpluses and
costing the U.S. taxpayers millions in
unnecessary support payments.
What is conveniently ignored is that
much of this corn will, in fact, be used
in producing ethanol and possibly in
other products that replace crude oil-derived ingredients. If these corn-derived
products grow - chemicals from corn,
plastics from corn, ethanol, etc. - the

Peter A. Meyer is
president of PMI
Consultants, a
Chicago-based consultant to the food
and agribusiness
industry.

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Milling & Baking News - November 29, 2005

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