
Drowning in grain: historically high supplies and low prices - prostoalex
http://www.reuters.com/article/us-grains-supply-special-report/special-report-drowning-in-grain-how-big-ag-sowed-seeds-of-a-profit-slashing-glut-idUSKCN1C21AR?utm_source=Facebook&utm_medium=Social
======
thriftwy
Around here people tend to look at unused land and lament that it was all
farmed 30 years ago.

But the reality is that grain growing operates on ever-thinner margins. It now
makes sense to skim grain from the best lands, insolation and precipitation-
wise, and leave the rest to grasses, shrubs and marshes. What do people do in
depressed regions in the absense of productivity, especially in the country,
is another story.

------
generic101
I'm surprised that nobody has mentioned the reduction of Fed stimulus -
reduction of quantitative easing as well as low inflation rate. It's not just
grains that have slumped -- almost every major commodity is down from its 5
year high.

------
tryingagainbro
Let's eat pork then! They love corn, even though it makes them fat (white
meat)

For those complaining about subsisides: any country worth its salt needs to
make sure farmers and heavy industry don't go caput. People need to eat and
someone needs to make tanks and bullets during tough times.

------
MicroBerto
Elephant in the room that nobody wants to discuss: domestic demand is dropping
for cereal grains.

If you follow dietary trends you would know why.

------
fish_fan
Naturally, the american tax payer still foots the bill via subsidies.

------
jcun4128
What about making bio fuel

------
deepGem
"For every dollar a shopper spent on breakfast cereal in 1980, today you'd
have to spend $2.93"

Source from 2015: [https://www.cnbc.com/2015/09/28/puffs-flakes-and-dollars-
why...](https://www.cnbc.com/2015/09/28/puffs-flakes-and-dollars-why-your-
breakfast-cereal-costs-so-much.html)

Which means that the marketing/advertising spends have increased in a
disproportional manner. What a world we are living in.

~~~
ginko
Is that inflation adjusted? Because 1 1980's dollar would be about $2.99
nowadays according to Wolfram Alpha.

~~~
deepGem
Since the source is CNBC, I presume the $ is inflation adjusted.

------
narrator
How about growing corn without pesticides and herbicides? They'll get lower
yields but can charge more for it if it gets organic certified.

~~~
donarb
Organic certified foods are allowed to use pesticides and herbicides, just
that those substances come must from organic sources, like rotenone.

~~~
alexandercrohde
rotenone is no longer certified in america as a pesticide [other than to kill
fish]. May seem like nit, but it was a very dangerous pesticide and citing it
as an organic pesticide might incorrectly lead to the conclusion that organic
pesticides are not safer.

------
drpgq
With global warming, Saskatchewan and Manitoba production could really take
off.

~~~
mturmon
I think you're kidding, but this has already happened in North Dakota:
[http://www.npr.org/sections/thesalt/2014/08/13/340116405/shi...](http://www.npr.org/sections/thesalt/2014/08/13/340116405/shifting-
climate-has-north-dakota-farmers-swapping-wheat-for-corn)

The story leads with climate changes, but other reasons include corn varieties
that have shorter growing seasons. According to the query tool
([https://quickstats.nass.usda.gov](https://quickstats.nass.usda.gov)), corn
acreage in ND has gone from 1.0M acres in 2000 to 3.7M this year.

------
afarrell
I note that oil prices crashed 2.5 years ago and oil is needed for the Haber
process to make fertilizer. Could that be a cause?

I also note that high grain prices led to the Arab Spring which led Arab
monarchies to need money to pay to keep their supporters happy...

~~~
Robotbeat
No, not oil. The Haber process uses hydrogen. Which almost all comes from
natural gas right now.

(A note to clean hydrogen advocates: this is a much better market for hydrogen
than burning it or converting to synthetic methane as it costs money to
convert natural gas to hydrogen. Displace all that natural gas used for
ammonia and nitrate fertilizer production before moving to burning it.)

------
newsmania
I have an idea. Corn farmers aren't making money, so let's subsidize corn
farming to help them make money. Of course, that will lead to a worse
oversupply, but hey, it's been working so far, right?

------
eighthnate
And yet, bread prices have jumped recently.

~~~
Kadin
Makes some sense. As a result of fast-growing corn, areas previously planted
to wheat are switching to corn instead. This has increased the supply, and
thus decreased the price, of corn -- but wheat, on the other hand, would see a
corresponding decrease in supply, and increase in price.

This is also why cash crops can cause food shortages.

~~~
icebraining
You can make bread from corn, though. I don't mean that sugary cake called
"cornbread" in the US, I mean actual bread, but made from corn flours. It's
one of our national delicacies: [https://easyportugueserecipes.com/broa-de-
avintes/](https://easyportugueserecipes.com/broa-de-avintes/)

~~~
dragonwriter
The US has nonsugary cornbreads, too.

~~~
icebraining
No doubt, I just wanted to be clear what I was talking about.

------
forkLding
Its almost as if the grain and corn could be fed to starving peoples around
the world for a lower price.

Sarcasm aside, a lot of starvation could be counteracted with better
distribution of excess corn at a lower price so I don't see a real problem.
North American farms might be hit but the actual amount of labour needed at a
massive corn-producing farm is shrinking every year due to technology
(although there is also a agricultural labour shortage).

~~~
chrissnell
Most of the corn grown around here in Kansas is not the variety that you eat
off the cob, it's the kind you feed to livestock. Shipping this corn off to
starving people doesn't do much for them unless they want to raise cows and
pigs on it.

~~~
forkLding
Its still quite edible, I've seen people eat pig corn as corn flour, its not
great but it does make an alright stew

But then again, we shouldnt steal food from livestock to just feed humans.

I apologize for my sarcasm, I couldnt help it

------
splitrocket
Is there enough food for everyone?
[http://isthereenoughfoodforeveryone.com](http://isthereenoughfoodforeveryone.com)

~~~
mi100hael
Annoying that the domain is "is there enough food for everyone" but the site
asks the opposite question "do people still die of starvation" so the site has
a big YES despite the answer to the question in the domain being NO.

~~~
ddlatham
I think the point is that the answer is YES to both questions.

There's enough food to be able to feed everyone, but people still die of
starvation, because it's not well distributed.

The other question links to
[http://dopeoplestilldieofstarvation.com/](http://dopeoplestilldieofstarvation.com/)

------
dogruck
As a kid, I was taught in school that the world population was growing so fast
that soon we wouldn't be able to grow enough food to feed everyone.

But, here this article says we're growing an endless bounty of corn.

~~~
wbc
Did you grow up in 18th century England and Mr.Malthus was your teacher?

~~~
kbutler
"The battle to feed all of humanity is over. In the 1970s hundreds of millions
of people will starve to death in spite of any crash programs embarked upon
now. At this late date nothing can prevent a substantial increase in the world
death rate...."

Paul Ehrlich, The Population Bomb, 1968

His first sentence appears to be correct - just not in the direction he meant.

He's still making similar doom-laden predictions, and still getting paid lots
of money for them.

~~~
GuiA
The battle is very much not over. Famine remains a major issue in many places
all over the world.

[http://www.worldhunger.org/2015-world-hunger-and-poverty-
fac...](http://www.worldhunger.org/2015-world-hunger-and-poverty-facts-and-
statistics/)

~~~
kbutler
Famine is caused by poor distribution, not poor production.

From your link: "The world produces enough food to feed everyone."

Further: "For the world as a whole, per capita food availability has risen
from about 2220 kcal/person/day in the early 1960s to 2790 kcal/person/day in
2006-08, while developing countries even recorded a leap from 1850
kcal/person/day to over 2640 kcal/person/day."

~~~
GuiA
The quote from the post I replied to mentions “the battle to feed humanity”.
Distribution is very much part of that battle; otherwise it could only be
considered solved in the purest theoretical sense.

~~~
kbutler
Yeah, and you can also talk about specific nutrient needs, and really the
obesity epidemic is also a part of the battle to feed humanity.

But Ehrlich wasn't talking about any of that. He was specifically saying there
was no way we could produce enough food to feed the population of the world in
the 1970s, and we'd have to drastically curtail population to survive.

"The battle to feed all of humanity is over. In the 1970's the world will
undergo famines—hundreds of millions of people are going to starve to death in
spite of any crash programs embarked upon now. At this late date nothing can
prevent a substantial increase in the world death rate, although many lives
could be saved through dramatic programs to "stretch" the carrying capacity of
the earth by increasing food production. But these programs will only provide
a stay of execution unless they are accompanied by determined and successful
efforts at population control. Population control is the conscious regulation
of the numbers of human beings to meet the needs, not just of individual
families, but of society as a whole."

------
owenversteeg
Very interesting. Modern technology lets you grow corn that would previously
take 120 days in 80, and everything is getting cheaper and more efficient. At
the same time prices for corn are falling, but nobody wants to stop growing it
because they're locked in with expensive equipment.

~~~
mapmap
A similar oversupply happened right before the Great Depression.

Wheat prices were dropping from too much supply partially attributed to newly
expanded prairie farming in the US. But these farmers owed fixed costs on
their mortgaged land. So to pay their expenses, they plowed up more prairie
and grew more wheat. This compounded the supply problem. Eventually, as wheat
piled up at railroad depots unable to be sold, farmers left the plowed prairie
fallow and the topsoil blew away.

Source: The Worst Hard Time by Timothy Egan

~~~
StudentStuff
Thing is, prices for food never really shot back up massively, instead our
govt ended up creating price floors for many commodities, insofar as they
would give farmers money if what they produced was sold for less than a
certain amount[1].

This led to consolidation, whereby family farmers became much fewer in number,
and those that owned and operated larger farms ended up working a 2nd job to
cover their living expenses. What used to take a whole family to farm is now
nearly entirely automated, causing food prices to continue to decline.

1 -
[https://en.wikipedia.org/wiki/Agricultural_subsidy#United_St...](https://en.wikipedia.org/wiki/Agricultural_subsidy#United_States)

~~~
falsedan
> _What used to take a whole family to farm is now nearly entirely automated,
> causing food prices to continue to decline_

I don't see the immediate causal relationship between these: cars are semi-
automatically manufactured, but the price of cars hasn't declined anywhere
near as much as grain/commodities.

~~~
Pyxl101
The quality of vehicles has increased dramatically over that time. There isn't
a similar increase in the quality of grain.

A vehicle that I purchased roughly ten years ago has operated perfectly fine
with half of its scheduled oil changes and very little other maintenance. From
an engineering perspective I find that mind-blowing: you buy these machines
and they operate flawlessly for years, running for thousands of miles, while
performing a complex, mechanical task with many moving parts. It's easy to
take for granted how marvelous modern automobiles have become.

~~~
falsedan
Thanks for explaining how car quality has improved, but I still don't follow
your link between automation and price decreases. I feel like your explanation
doesn't address the market side of farming, and disregards the huge advances
in crop & agricultural science.

~~~
danmaz74
Not the OP, but the point is that the car you buy today has much more value
than a car that was sold 20 years ago at a similar price. So, even if the
average price paid for a new car didn't go down, the price _for the same car_
has effectively decreased, thanks to automation.

~~~
falsedan
I still don't see how this relates to farm automation: automation didn't
significantly change the price point, it increased production, decreased labor
costs and increased equipment/maintenance costs.

~~~
jerf
I can't help but get the sense that you want to see "factor X made Y cheaper"
come out in Y getting absolutely cheaper. But it's just a single factor in a
complex world. Consider the alternative; do you really think that removing the
automation today would have no impact on the price? Even after the economy had
a chance to adjust? Personally I find the idea incredible, in the older sense
of "not credible".

~~~
falsedan
> _do you really think that removing the automation today would have no impact
> on the price?_

I haven't considered that! I know it would affect production speed, which
could be addressed by increasing capex to build more factories, and which
could be funded by increased revenue or investment.

But here's the thing: this car talk doesn't help me understand how
agricultural automation caused grain prices to drop. That's my question & what
I continually seek clarification on.

BTW you can just ask me what I think instead of offering me some strawman
claim to take under my wing. Argue in good faith! If a point of view sounds
incredible to you, just go right ahead and assume I must have a more credible
point of view that I haven't communicated effectively yet.

~~~
jerf
"Argue in good faith!"

The reason I posted is that you did not seem to be. People kept giving you
reasons, and you basically discarded them with "But that's not the reason I'm
looking for"... or something like that. I'm not even sure how to accurately
characterize it. But you definitely seemed to be just unilaterally dismissing
the people trying to help you understand and putting no effort into
understanding what they were saying. Your second paragraph of this very post
reads like that once again.

If that is not the case, well, consider this useful feedback then.

~~~
falsedan
I don't need help understanding how the analogy to car automation is wrong, I
get that. I gave it as an example of how automation did not reduce prices.

The 'good faith' part which the responders are failing at is badgering me to
accept their explanations of car manufacturing in place of farm automation. I
accept their explanations but it does not help me understand this:

Why does the GP think that agricultural automation caused the decline in
prices?

If I again get a response talking about cars: I don't get it. I don't
understand. I can't work it out. I need help to see the connection. It doesn't
make sense to me.

Please, help me understand instead of deriding me for not accepting an
explanation about car manufacturing as an substitute.

------
Brendinooo
Any legs left in the ethanol initiative? Could be a decent place to direct a
glut of supply.

~~~
microcolonel
It seems to me that it serves no environmental or pragmatic purpose, and may
increase the corrosiveness (and decrease the stability) of fuel.

~~~
nhorob67
Growing one acre of corn takes approximately 8 gallons of diesel fuel
(directly) and produces enough corn for 485 gallons of ethanol.

~~~
microcolonel
The direct combustion emissions can be about half in the right powertrain, but
ethanol fermentation produces CO₂ on its own, as does the distillation
process, as does the machinery involved in cycling and drying (possibly
actively, consuming more energy to heat them, or passively, consuming more
energy to transport them) the molecular sieves used to separate the azeotrope
of H₂0 and ethanol. Furthermore, Ethanol is, gallon for gallon, about half as
energy dense as gasoline.

~~~
kbutler
Not a fan of ethanol production, but CO2 released fermenting and burning bio
fuels is carbon neutral - the CO2 was bound in the plant by photosynthesis,
then released by these processes.

~~~
mirimir
Some of it is, yes. But some of it depends on nitrogen fertilizer, which is
made using energy from petroleum.

CH4 + H2O → CO + 3H2

CO + H2O → CO2 + H2

3H2 + N2 → 2NH3

~~~
Robotbeat
As your homework shows, nitrogen fertilizer comes from hydrogen which comes
from natural gas, not petroleum.

Maybe if we were all aware of this, we'd be setting up clean hydrogen to be
converted into ammonia instead of just burning it in hydrogen cars.

~~~
mirimir
> hydrogen which comes from natural gas, not petroleum

That's a rather subtle distinction ;)

I mean, natural gas is just a natural cracking product of petroleum, which
gets captured under impermeable geological formations.

~~~
Robotbeat
Not a subtle distinction as in the US, natural gas is essentially all domestic
(and is starting to be exported as well). The decision to grow ethanol is
geopolitical at least as much as it has anything to do about the environment
(remember, serious ethanol mandates started under Bush II) as part of the
effort for energy independence, so trading natural gas for gasoline through
ethanol (even if we wrongly assume it's as bad as 1:1) is still desirable.

Also, gasoline (C8H18) has a carbon to hydrogen ratio of approximately 0.44,
compared to 0.25 for natural gas (CH4) (and natural gas has a higher specific
energy), so from a carbon emissions perspective is still superior.

Additionally, natural gas in not "just a natural cracking product of
petroleum." There are other significant geological sources of natural gas, and
it is produced through decay of just about any organic matter.

