2023-07-07 08:20:26
The largest importer of corn, China, has started buying from Brazil and the Republic of South Africa
In the plains of USAknown as the Corn Belt, farmers spend their days and nights growing, tending and praying for the well-being of this common but globally significant food.
Scott Haer harvesting 4,000 acres (1 acre equals just over 4 acres) corn every year, is one of them. In a massive grain silo on his farm in western Ohio, the third-generation farmer examines kernels of corn from last year’s crop. “This is really good corn,” he says, sifting through a handful, the BBC reports.
But while the quality of last year’s crop may have been good, the quantity produced by American farmers was not.
Higher fertilizer and fuel prices pushed the number of planted acres down 3.4 million compared to 2021. In addition, drought in the Western Plains is fueling the increase in the price of US corn in the international market.
“We had a reduced crop due to the weather, and we had a dry Mississippi River last fall and early winter, which slowed our exports significantly,” says farmer Haer. “Because of that, the price of corn went up, which made us less competitive.
The hard work and technological expertise of American farmers has cemented their place at the top when it comes to corn exports. Each year, tens of millions of tons are shipped from the US to more than 60 countries around the world.
But the states’ status as a corn superpower may be coming to an end. In fact, after decades at the top, the country is about to be overtaken as the world’s largest exporter of the crop.
Buyers in China – the world’s largest corn importer – are canceling orders from the US, largely because there are cheaper alternatives elsewhere.
In January, US corn sales to China were as much as 70% below year-over-year levels. And in May, China began buying South African corn for the first time. This is a worrying trend for American farmers.
It’s not just China pulling away from US corn: Reuters recently reported that exports to all destinations except China were the second lowest in two decades. Mexico, which buys about $5 billion worth of U.S. corn each year, is moving away from the genetically modified variety, much of which comes from its northern neighbor.
One country stands to gain from this trend – Brazil.
In recent years, farmers there have been converting swathes of farmland from pasture to cornfields, experts say. Brazil’s added advantage is that its farmers can harvest not one but two crops of corn per year.
“Last year in particular, they had a lot more in stock for export than we did here in the U.S.,” said Frain Olson, a crop economist at North Dakota State University.
China moved accordingly, significantly increasing its orders for Brazilian corn. The two countries also signed a series of agreements that will allow more corn to be shipped from Brazil to China.
China’s move to diversify food imports is likely driven by a combination of factors. In addition to price advantages, heightened tensions between the US and China are prompting Beijing to quickly diversify in case things turn sour.
In the US, corn prices were high for many of the same reasons that most other products and services are expensive today: inflation.
“When you look at the biggest difference in the cost of producing corn in the U.S. versus Brazil, South Africa or Argentina, it’s probably the land,” says Frain Olson.
The price per acre of land in Iowa, the largest corn-producing state in the US, has increased by 29% in 2021 and another 17% in 2022, the highest on record. In Illinois, the second-largest corn producer, farmland rents hit record highs last year.
But economists say Brazil’s rise likely won’t have much of an impact on Americans’ daily lives — agriculture doesn’t carry the same economic weight it has in decades past.
“But we’re ready to turn around if we have to,” says farmer Scott Haer. He believes there is little that can be done to stop Brazil’s rapid rise, but that doesn’t mean American farmers are out of the export game.
“Currently, Indonesia does not import any corn, but their potential for ethanol (made from corn) is huge,” he says. Earlier this year, he and other Ohio corn growers toured countries in Southeast Asia to hear firsthand what buyers wanted.
“We have to make sure we’re trying to develop new markets,” he says.
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