Most of the articles published by Farmdoc have thought provoking insights and share a well-reasoned point of view. The current series where the authors argue that the U.S. is in danger of becoming a secondary grain supplier because of changes in land use policy is a challenge to that opinion. The authors seek to ask uncomfortable questions and call for bold responses, but their ideas are dated and lock the U.S. into old trade patterns of lowest price commodities and supply-side policies instead of planning for new export opportunities from an evolving global demand.
In this blog post, I will offer counterpoints to what I believe to be their three main objectives: (1) increase the harvested land area, (2) increase the production from all harvested land, and (3) reduce support of export promotion programs. I will propose an alternative that would increase (not divert) funding to export promotion organizations, focus on delivering value-added products to our export customers, improve sustainability of production by maintaining land conservation programs, and support the private sector as the engines of crop yield improvements.
Increase the Harvested Land Area - “The decline in US share of world production of these crops closely tracks its decline in share of world harvested land.”
This implies that the U.S. should bring more land into production and the authors specifically call out the conservation set-aside. While a technically accurate solution, it ignores the fact that conservation land generally has marginal production potential and will not bring the mountains of grain supply that the authors envision. Secondly, CRP and other conservation programs are attractive because land enrolled in conservation programs provide a more consistent income to the farmer than grain production on that land. This is in addition to providing essential ecosystem services such as nutrient and soil filtration, wildlife and game habitat, pollinator protection, and improved soil health.
Commodity organizations such as the American Soybean Association and the United Soybean Board promote sustainable U.S. production methods as a differentiator in the global marketplace. The American Soybean Association recently released the annual report on the sustainability of U.S. soybean production (https://ussec.org/inaugural-u-s-soy-sustainability-assurance-protocol-annual-report-released/). Page 25 of the report highlights land use change as the key metric of U.S. sustainability when compared to Brazil and Argentina. Important markets for U.S. grains and oilseeds, such as the E.U. and Japan look favorably on U.S. imports because it supports their customer demand for sustainably produced ingredients. The U.S. Soybean Export Council (USSEC) highlights these data to support U.S. soybean growers in the highly competitive export marketplace.
Increase the Production on All Land – “Since 2007, US share of world feed grain, food grain, and oilseed production has declined from 19.5% [in 2007] to 16.7% in 2023, roughly a decline of one percentage point every five years.”
The authors are concerned that increases in the production of U.S. grains and oilseeds are not keeping pace with the rest of the world. An alternative view of this statistic is that the world is better able to feed itself and not be dependent on the U.S. for calories. Agronomists and plant breeders – both public and private – have made great strides in feeding a global population that routinely faced famine, disease, and political instability.
A second point to keep in mind, the U.S. started from a higher yield base than the rest of the world and would not reasonably expect a 5x-10x increase in production that effective fertilization and efficient production methods have provided newer exporting countries over the same period. U.S. growers have more than doubled corn and soy yield since the 1970s, so the idea that U.S. growers have not kept up the yield curve worthy of a Great Power seems less than fair.
Reduce Support for Export Promotion Programs - “Would the US be better served by converting spending on export promotion programs to spending on research to increase production, including multiple cropping of existing croplands?”
As a practical matter, diverting funds from export promotion programs to public-sector research focused upon crop yield is doomed to failure. Export promotion programs are government funded (primarily through USDA grants) and any changes in funding would be directed to USDA-ARS crop research or public institutions such as Land-Grant Universities. The reality is that the public sector ceded commercial plant breeding of major grains and oilseeds to the private sector in the 1980s. Unless the federal government appropriates the genetic stock of private companies (think about the China model), the public sector must turn back the genetic clock to 2000 as existing variety patents expire and forego the yield protection of GMO input traits.
To me, the purpose of “export promotion” is in the second word. To promote your product is to listen to the customer and meet the customer where they are, not where you want them to be. Promotion means asking how U.S. grains and oilseeds suppliers can evolve with their demand. As the customer’s demand changes, how can U.S. suppliers differentiate their product to meet that demand? We must be aware of the marketplace and take opportunities to up-value the offering instead of relying on the least viable product at the lowest possible price.
What Would I Propose?
Criticizing without proposing an alternative is just complaining. Looking at the situation squarely, the U.S. cannot increase land in production, nor can we rely upon government policy favoring the public sector to develop crop varieties with breakthrough grain yield in a timeframe relevant to this discussion. We must continue to supply export customers with commodities of higher quality with better reliability than our competitors, while preparing for opportunities to up-value our products on offer. We must increase (not divert) funding for export promotion to understand how our customer demand is evolving, and to prepare the global marketplace for the value-added products that we will supply in the future, such as soybean meal generated from increased soy crush for oil and soy flour as a high protein food ingredient. The possible ingredients from corn, soybeans, wheat, oats, rice, barley and peanut change how we look at the global marketplace. The list expands as we value-add our commodities in the form of meat and dairy, as well as refined products and by-products that can serve as chemical precursors once the sole realm of hydrocarbons.
Concluding Thoughts
The authors encourage U.S. policymakers to develop a bold response to the competing priorities on land to maintain our position of prominence in the global marketplace for agricultural commodities by producing more of what the U.S. currently supplies. Producing bigger piles of base commodities when your competition can do it cheaper is not a good strategy. Facing this reality, the bold strategy would be to pivot from least-cost producer of base commodities to preparing the marketplace to view the U.S. as the preferred supplier of value-added ingredients from the products of our evolving agriculture economy. The best way to accomplish this is to increase support for export marketing programs, not diverting effort into a production scheme that has challenged rural economies rather than creating the conditions for them to prosper.
For the full article, please see the link.
Zulauf, C., J. Colussi, G. Schnitkey, N. Paulson and D. Orden. "Land, not Exports, is the US Field Crop Problem – Part 1, US vs. World." farmdoc daily (14):65, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, April 3, 2024.
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