June 18, 2008

The Iowa Corn Issue

Smaller livestock and emptier wallets?

As you may know, Iowa, Illinois, and Wisconsin suffered from never-ending rainstorms last week. As a result, flooding has occurred in one of the most important U.S. farming regions, the U.S. ‘corn belt,’ in Iowa and Illinois. Anywhere from 1 ft to 4 ft of stagnant water sit over corn and soybean fields across the region. One farmer estimated that “15, 16 per cent of the total croppable land in Iowa” is under the contaminated floodwater. Tuesday, June 17, the USDA said in its weekly crop progress report, “12 percent of the U.S. crop — or about 3 million acres — [is] in poor to very poor condition” because of the flooding.

Importance of Corn:
Corn crop serves as a food product as well as an ingredient in many different areas of food and fuel production. “Corn is an essential ingredient in many processed foods” as well as livestock feed and feed for ethanol fuel. The prices per bushel of corn have been rising for the past few months because of “global demand to feed livestock and make biofuel.” Because of the flooding, financial speculators are anticipating a much lower corn yield. Thus, corn prices per bushel rose for seven days straight last week and finally settled at “$7.3175, still up 22.75 cents” for corn to be delivered in July.

Re: Global food crisis:
Some experts speculate that this drop in corn crop yield is going to drastically effect the global supply of food. Yet, an expert farmer and economic specialist in Iowa, David Miller, is optimistic about other areas of agriculture, such as wheat farms, increasing production to help make up for the loss of corn. Hopefully wheat yields will be a good substitute supply for livestock feed and meat production. He also predicts that consumers will not feel the brunt of high priced corn at meat counters in grocery stores for at least six-months from now.

Minnesota farmers and Iowa farmers not affected by the flooding are pleased with the higher priced corn for the season. They hope that the increase in price will result in much needed extra revenue that will help pay off debts.

Overall, nobody can say how much corn yield has been lost because of the storms until the water recedes. And with more rain expected this week, it could be months before accurate numbers are available. However, no need to panic yet. If dry weather continues, farmers may have a chance to replant with short season corn and take the risk of frost damage in pursuit of a smaller, but usable, crop.

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