Letter From Langdon: Running Out
According to all the authorities, we're about to run out of corn.
It had to happen sometime. They can blame the drought — it's a bad one for sure — but regardless of weather we were still going to run out because from the day they tied the price of grain to oil, it was meant to be.
Unlike oil prospecting, digging deeper holes is not the way to find more corn. Corn has to have good weather and water and soil and someone to plant it. There are no new unexplored areas of farmland left in America. Growing more corn means growing less of something else or going someplace else to get it.
It's purely a business decision.
I like businessmen just fine. I deal with them all the time when I buy their stuff to grow my crop. These days with farming being so profitable, even some of my farmer neighbors call themselves "businessmen."
How we draw the line probably isn't as important as where, but near as I can tell the biggest difference between businessmen and farmers is a good financial statement with a thick bottom line.
I tend to think of businessmen as the types who do things solely for profit — hardheaded, no-nonsense, don't-want-to-pay-taxes, hide-the-money-off-shore kind of guys. That's partly why I resist referring to myself as a businessman even though I make business decisions.
Shortsighted farmers like me can only see to the end of the row. We prefer simply to farm as long as we have the money.
Anytime I cash a big check, I start to feel like a businessman. Then I make a payment to big business — tractor, combine, truck, fertilizer, seed, herbicide — and I start to feel human again.
Grain elevator owners are get-the-money businessmen. This year some farmer-businessmen are even going to write checks for the corn they contracted to grow, but couldn't because of the drought.
The reason is that forward contracts on farm crops are binding and enforceable. Farmers sign those contracts just to be sure of the price they'll receive in the fall. That means farmers must either grow the grain they sold or buy it from someone who did.
Or they buy the contract.
Corn is an old story going all the way back to America's earliest days. The story’s always the same: When corn becomes too cheap, farmers can't pay the bills.
Government came up with a plan to idle fields through conservation reserves (CRP) and put a floor price under a few basic crops. There's no doubt the conservation and recreation industry had a lot of say in that. It wasn't all about corn.
Cattlemen feared expansion of beef supplies on cheap CRP land left open to grazing and haying. They made sure that could never happen. Conservationists accepted burning of CRP land cover because old tall grass prairies used to burn when dry weather heat lightning struck them.
Suddenly we had grass to burn, but nothing extra for cows when drought scorched the pasture.
We had crops to burn, too. Biofuels made from grain were profitable, mostly due to the high price of crude oil the biofuels replaced. In the last four or five years, corn prices have improved because of that. Farmers can afford to grow corn for the price it brings.
During every hot dry spell, warnings come from conservationists and sometimes even the beef industry against opening CRP acres to haying and grazing. Small beef and dairy farmers not only had no insurance against crop and market failures, they couldn't even get compassion.
So crops became sure money and farmer-businessmen began plowing up their pastures.
Livestock farmers turned into grain farmers. And then they learned they could buy something they'd never had before: insurance against crop failure.
Corn had taken on the sweet smell of success, but manure just smelled like — you know.
Let me explain; crops like pasture and hay are shallow rooted need-to-have-rain-every-week plants that live or go dormant based on what weather does. In 2008 conservationists sued to stop USDA from helping drought stressed livestock farmers having a hard time for just that reason.
Conservationists won. So the Department of Agriculture had to rescind permission for cattlemen to use CRP land for supplementary haying and grazing.
Anyone who has ever owned a cow that stretched her neck through a barbed wire fence just to find something to eat will agree that three-foot tall CRP grass just across the way is maddening to cow and farmer alike.
So what did drought crazed farmers do? They sold those crazy cows, let CRP contracts expire, and plowed up all the grass.
This year we learned again that if drought is hot and dry enough, not only does grass not grow, corn doesn’t either.
Thanks to the drought, no one — not the conservationists who wanted wildlife habitat, nor the cattlemen who wanted profitable cowherds, nor the grain buyers who wanted more corn — got what they wanted.
As I said earlier, I'm just a farmer. But that looks like bad business to me.
Even though we hear a lot about having hungry mouths to feed in America and around the world, I’ve never seen a really hungry person up close. Even the guy holding a sign that says "Will work for food" while standing at the highway exit next to McDonalds doesn't look that hungry to me. Maybe it's the degree of hunger we're talking about. Or maybe I need to get out more. Or maybe we just do a better job of taking care of our own in the Heartland. I think that's good because I don't really want to see any thing or anyone starving in my back yard.
When it doesn't rain, what I have seen are a lot of hungry cows. If it gets to the point of not having feed, we slaughter cows until the hungry ones are all gone. There is no other choice, because in most places allowing animals to go hungry is against the law. That's really interesting because the House of Representatives Agriculture Committee proposed a Farm Bill that rewards ever bigger crop farmers while ignoring the current drought disaster and shrinking the budget for food aid.
Starving livestock is illegal, but starving people may just be good business.
Higher prices are generally the cure for high prices. Grain markets will prove that yet again as farmers and businessmen alike use less corn this year and plant fencerow to fencerow the next. But simply planting a bigger cowherd is no more possible than growing more oil or raising corn when it doesn't rain.
For dairy and beef producers, things don't work that way. It takes years to build a cowherd.
But there's more:
Congress has passed disaster bills with clear payment limits. One approved by the Senate last month said no farmer, no matter how damaged, should receive more than $100,000 in government aid. We should place limits on grain and crop insurance subsidies for big farm businesses, too. Then use those savings to establish meaningful disaster insurance protection for every farmer in the food chain.
And conservation should always be a required goal — but not at the expense of food security. That would help everyone, including farmers and ranchers, businessmen who don't like taxes, and hungry people who just want food.
Even in an election year Congress can't make it rain. What they can do is stop being rainmakers for policy favoring industrial food production and big business. They should concentrate instead on building a farm income safety net just large enough to catch family farms.
All we want is to grow things — things like kids, flocks, herds, and crops.
I'll be the first to admit that may not seem very businesslike.
But I'm just a farmer.
Richard Oswald is a fifth generation Missouri farmer, president of the Missouri Farmers Union and a regular columnist for The Daily Younder.