Jeremy Hobson: In a few hours, the Agriculture Department is going to give us new estimates for this fall's harvest, and the expectation is: it won't be pretty. Corn prices hit a new record high yesterday, because of fears that the drought could shrink supply by 15 percent. Corn is America's biggest crop, though some experts are questioning whether that should still be the case.
From the Marketplace sustainability desk, Scott Tong reports.
Scott Tong: Corn is not the toughest crop for droughts, its roots are shallow. Yet it occupies one quarter of America’s cropland. The U.S. the world’s largest producer, by far.
Thing is, most of it goes to ethanol or to feed animals.
Jon Foley: Very little ends up at corn on a dinner plate. Most of it is turned into cows or cars.
Jon Foley directs the Institute on the Environment at the University of Minnesota. He estimates corn gets at least $5 billion in subsidies, creating distortions. More and more corn grown, less of everything else.
Foley: So this year when there’s a bit drought, we have a very vulnerable system. We have this one crop, covering most of the country. Imagine a mutual fund with only one company in it.
Many think the drought will restart a conversation to change that. Won’t happen overnight. Corn interests argue their product provides food and energy security.
But already, some ethanol subsidies have expired. And direct payments to farmers could end, too, when a tight-fisted Congress gets around to a farm bill.
In Washington, I’m Scott Tong for Marketplace.