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business newsWill There Ever Be Enough Food to Feed the World?
By
Justin Rohrlich
Jan 20, 2011 2:30 pm
Yields are flat, acreage is maxed out, and genetics have reached a plateau. Where do we go from here?
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Corn is also used to manufacture drywall, sparkplugs, lacquer, rubber tires, fireworks, carpeting, and least usefully (though Archer Daniels Midland (ADM) would likely dispute this), fuel.
But, as concerns over global food riots and the potential for mass famine grow more intense every day, the amount of corn grown has not, for lack of a better word, grown, in several years.
“We’ve hit a plateau and we’re going to be at a ceiling for a while,” says Shawn Hackett, president and CEO of Hackett Financial Advisors, a Boynton Beach, Florida money-management firm with a special focus on agricultural commodities. “Corn yields have been down since 2004, which is also when plant density started to flatline.”
The latest available USDA chart below shows the trend, and, though it only extends to 2007, Hackett says the situation has not improved up to the present time.
Companies like Pioneer Hi-Bred -- a unit of DuPont (DD), Monsanto (MON), Switzerland-based Syngenta (SYT), and China’s Origin Agritech (SEED), who all develop transgenic seed, have managed to develop corn strains that resist drought, survive in nutrient-poor soil, and withstand stronger and more powerful herbicides. However, the focus on crop protection and yield loss prevention has taken precedence over pure yield increase.
“If we’re not producing more ears per acre, are we producing bigger ears? No, we’re not,” Hackett says. “If genetics alone were having the desired effect, we would be seeing ear weights going up.”
Hackett says he is “sure there will eventually be a breakthrough, but when, I don’t know.”
Corn has a notoriously complex genome (32,000 genes in 10 chromosomes, as opposed to a human being’s 20,000 genes in 23 chromosomes) that was finally decoded in November, 2009 by the Genome Center at Washington University School of Medicine in St Louis.
Much of the “yield renaissance has just been farmers doing a better job,” Hackett explains. “GPS systems, precision farming, they’ve got it down to an absolute micro-science, mapping out acreage almost millimeter-by-millimeter.”
The major seed companies also realize that genetic modification is only one component involved in meeting their yield-increase goals. Monsanto is attempting to double corn yield by 2030, and Pioneer is aiming for an increase of 40% by 2018.
“Our 40% is an incredibly challenging goal,” Dave Bubeck, Pioneer’s corn research director, told Wisconsin’s Agri-View newspaper last week. “It will take a combination of genetics, biotechnology and agronomic improvements to reach that goal.”
Kendall Lamkey, chair of the agronomy department at Iowa State University, agrees. As he told Farm Journal magazine in 2009, “I find it interesting that as a country we’ve invested only in genetics. There’s no investment in soils or management. That’s why I think we won’t get to 300 bushels per acre by 2030. The best soils in the world, the Corn Belt soils, are rapidly degrading at a rate that will have an impact unless we do something about that. If you got the top agronomists at a table and asked what limits yield, you wouldn’t get a single answer. The emphasis on genetics lulls the public into a sense that everything is going to be all right.”
In less-developed countries, Hackett asserts that soil quality matters only if adequate infrastructure is in place to support the industry.
“Globally, there’s land that can be brought into production in certain African countries, Russia, Brazil,” he says. “But it’s going to take a long time to bring new regions into production. You’ve got to get the ground ready to produce, which takes several years. You have to build roads, processing facilities, storage facilities -- just keeping some of those crops from rotting would add up to big yield increases.”
Hackett also brings up the issue of price as a key factor in an overall yield increase. While further food inflation strikes fear into the hearts of many, he -- and others -- say it may be just what’s necessary in the long run.
“Politicians all say they want to lower prices, but to lower prices, you need to produce more,” Hackett says. “To produce more, you need to invest more. To invest more, you need to earn more.”
Ken Ferrie, Farm Journal Field Agronomist, concurs.
“Is it 300-bu. at $2 per bushel or $7 per bushel? At $2 corn, a lot of marginal areas will not raise corn, which would help the national average,” he says. “If it’s $7, you start throwing in a lot of acres that never were in corn, and that’s a bigger hill to climb. The learning curve is steep on those acres.”
“We can’t currently handle the current rate of growth,” Hackett concludes. “We need to slow down and allow the market to work. Ultimately, we don’t have enough corn because of bad policy.”
Number One on his list in the Bad Policy Department?
“You can make ethanol out of almost anything,” he says. “Why in the world do we insist on making it out of corn?”
No positions in stocks mentioned.
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