Corn is the the largest crop in the US, and 40 percent of that is used for ethanol production. Maybe a prudent step would be to turn less into ethanol, and more to food stockpiles (or plant wheat)
The US has a lot of land that just lie fallow to control food prices, I believe (the government pays farmers not to farm). So I’d imagine there’s a way to buffer, though you’d probably get short-term shocks (it’s too late to plant winter wheat, for instance, which is what the wheat planted in Ukraine is).
This has been largely untrue since the 1996 "Freedom to Farm Act" which simplified many farm subsidy programs and did away with most of the acreage restrictions.
There is a program today called the Conservation Reserve Program (CRP) in which the government pays farmers to take mainly marginal lands out of production and plant it with more natural cover. There were nearly 22 million acres of (again, marginal) lands in the CRP program in 2020. These lands could be broken out and replanted but, as Noah mentioned, you are looking at at least one year of lead time for planting. Also, many of these lands under the CRP program are under multi-year contracts and it would be quite the bureaucratic challenge to unscrew all of that.
At this point, it's pretty much too late to increase wheat production in the Northern Hemisphere. Winter wheat areas are already planted and will be harvested starting in June. Producers in more northerly latitudes could plant additional acres of spring wheat in April/May but this will, as Noah noted, come at the cost of reduction of other cops, mostly corn and soybeans.
The best case scenario is that the Russo-Ukraine war ends within the next few weeks before planting season begins in the black earth region. Even then, the infrastructure is so ravaged as to make planting and eventual transportation of the harvest doubtful.
Dr. Sarah Taber, who appears to be an expert on farm economics based on having a popular Twitter account where she says she is one, often points out that US farmers don't respond to incentives properly because they're not actually trying very hard. They're mostly rich people in it for the tax writeoffs running lifestyle businesses.
This might not apply to grain farmers if they're more corporate.
First, it's not just wheat but the *variety* of wheat that matters. The Pacific Northwest tends to grow the type of wheat that Asian markets prefer for making noodles--that's a big part of the PNW inland dryland export wheat crop. I don't know that Russian wheat is that particular variety.
Second, US wheat cultivation is in areas that are significantly impacted by either extreme drought or aquafer issues. Last year's heat dome in the PNW cut crop production by 1/3 to 1/2, in part because much of it is in dryland--ie, non-irrigated--production, especially in the Palouse country of Eastern Washington. Now the forecasters keep saying that heat domes are not going to be a regular thing--but should the once-every-five-to-ten-years-event happen for two years in a row, that's an issue.
The Midwest didn't have a heat dome but they've had high temperatures and drought.
The other day I was in the feed area of my local Grain Growers co-op, listening to a couple of grain farmers talk--and the tone was worried, not exulting over potential profit. Add to that increased weed resistance to herbicide treatment and there's a delicate balance between carbon-capture friendly methodologies (no-till) and plowing/cultivating to knock the weeds down.
(Herbicide resistance is not an issue I heard much about until I talked to wheat farmers as part of the research for my agtech-based science fiction series. It's very real).
But heat isn't the only issue. Two years before, an early wet fall caused mold on some grain crops--and kept others from being harvested (grains have to be harvested at a particular level of dryness, and no, despite what is claimed by some, the practice of spraying glysophate on grain crops as a dessicant is not common in the US and Canada).
So let's hope the weather cooperates this year....
Yes this is right. People don't understand how specialized things are. Not so easy to switch. Also, the Palouse region is on the cusp of not being able to grow wheat because fertilizer use has acidified the soils. And wheat income is so poor historically (and even now with high fertilizer prices) farmers can't afford the lime applications to correct, i.e., raise, the pH. The soil scientists in the region are resigned to ever shrinking areas for crops and advocate going back to native grasslands where maybe some sheep and cattle can eventually graze.
One very unlikely policy the USA can try is repealing the onerous tariffs on imported sugar, which as of 2010 raises the price of sugar in the USA to about twice the world average.
I don't know whether sugar is a complement or substitute to wheat so general equilibrium is hard to parse out, but it would seem prima facie at least that such a policy should lower overall food prices.
If we're worried about people not having enough food, then shifting fields from soy to wheat is the clearly correct choice. Only about 1/4 of the calories of US crops are directly eaten: the rest are used for animal feed and biofuels [1]. If our only goal is to have enough food, the US could quadruple its food production. We won't and don't need to do that much of a change: it would mean no meat and no ethanol. But there is slack in the system due to high American meat consumption. Higher food prices mean less meat consumption, so farmers who expect this should plant less soy (mostly used for animal feed) and more wheat (mostly used for food).
This seems to suggest that the US should be setting a price floor for US-grown wheat, somewhere slightly above the level it was trading at before the war started -- i.e. "No matter how much wheat you produce, farmers, we promise that the government will make sure you can't hurt yourselves by causing a glut; in extremis, if you heroically bring the price back down to where it was absent Russian aggression, we'll buy up the excess and figure out what to do with it."
For corn and soy, most goes into livestock feed, basically chicken and pork. And while the post focused on wheat, Ukraine is a big corn exporter too. So not mentioned is a strategy of cutting back significantly on chicken and pork production to free up corn and soy. Wheat and peas are used in livestock feed too, just not nearly as much. Pasture-based meats like beef and lamb might be emphasized instead (and forget finishing them with corn). Also, I see talk of putting more land into production. That is possible, but actually most of the land that is taken out of production is less valuable, often sensitive to tillage like wetlands and erodible slopes. The government pays farmers to remove these so-called marginal lands and they are the least productive anyhow so smart farmers take the money. In eras of high fertilizer prices it isn't profitable to put crops in them, especially wheat which is a hungry plant. BTW..I am a farmer.
The other side of this equation is still there, right? Russia's share of wheat production (experiencing the same delays more or less) is still there and will be a surplus for them. So it's mainly Ukraine's production that's been axed, along with any capital equipment that is or will be destroyed up until this ends. (Although I hear they still have tractors..)
Inciting people to eat less meat might help ? Animal fodder calories are in part fungible.
Of course, this means culling part of the livestock this year. Support for the breeders will be needed to alleviate the impact on them and will have to be maintained until the livestock returns to it's previous level.
Why couldn't Egypt, Nigeria etc. simply start buying wheat from Russia again (at reduced prices since richer countries aren't bidding for it) if their people start going hungry?
What caused the spike in prices from 2008-2010? Feels like the GFC should have reduced prices if anything (though does help explain the Arab Spring)
Also to win this war we need Republicans to show some patriotism and not campaign on higher prices being Biden’s fault but that is just not going to happen
Noah; if you have not already written one, how about an article on oil pricing? Why is the price of oil "set" internationally? How much variance is there in the pricing of oil; in the price of gasoline?
Corn is the the largest crop in the US, and 40 percent of that is used for ethanol production. Maybe a prudent step would be to turn less into ethanol, and more to food stockpiles (or plant wheat)
The corn ethanol fuel subsidy is idiotic and should be ended regardless.
this is a good idea, but will then likely cause MORE inflation of oil, which will help food (which is more critical) but hurt energy
Again as Noah said: no good options
Only in the short term.
The US has a lot of land that just lie fallow to control food prices, I believe (the government pays farmers not to farm). So I’d imagine there’s a way to buffer, though you’d probably get short-term shocks (it’s too late to plant winter wheat, for instance, which is what the wheat planted in Ukraine is).
Yeah, was thinking about fallow land. How long can we keep that up for, though? Here's where I suffer from not being an agronomist.
This has been largely untrue since the 1996 "Freedom to Farm Act" which simplified many farm subsidy programs and did away with most of the acreage restrictions.
There is a program today called the Conservation Reserve Program (CRP) in which the government pays farmers to take mainly marginal lands out of production and plant it with more natural cover. There were nearly 22 million acres of (again, marginal) lands in the CRP program in 2020. These lands could be broken out and replanted but, as Noah mentioned, you are looking at at least one year of lead time for planting. Also, many of these lands under the CRP program are under multi-year contracts and it would be quite the bureaucratic challenge to unscrew all of that.
At this point, it's pretty much too late to increase wheat production in the Northern Hemisphere. Winter wheat areas are already planted and will be harvested starting in June. Producers in more northerly latitudes could plant additional acres of spring wheat in April/May but this will, as Noah noted, come at the cost of reduction of other cops, mostly corn and soybeans.
The best case scenario is that the Russo-Ukraine war ends within the next few weeks before planting season begins in the black earth region. Even then, the infrastructure is so ravaged as to make planting and eventual transportation of the harvest doubtful.
Dr. Sarah Taber, who appears to be an expert on farm economics based on having a popular Twitter account where she says she is one, often points out that US farmers don't respond to incentives properly because they're not actually trying very hard. They're mostly rich people in it for the tax writeoffs running lifestyle businesses.
This might not apply to grain farmers if they're more corporate.
Couple of issues to keep in mind here.
First, it's not just wheat but the *variety* of wheat that matters. The Pacific Northwest tends to grow the type of wheat that Asian markets prefer for making noodles--that's a big part of the PNW inland dryland export wheat crop. I don't know that Russian wheat is that particular variety.
Second, US wheat cultivation is in areas that are significantly impacted by either extreme drought or aquafer issues. Last year's heat dome in the PNW cut crop production by 1/3 to 1/2, in part because much of it is in dryland--ie, non-irrigated--production, especially in the Palouse country of Eastern Washington. Now the forecasters keep saying that heat domes are not going to be a regular thing--but should the once-every-five-to-ten-years-event happen for two years in a row, that's an issue.
The Midwest didn't have a heat dome but they've had high temperatures and drought.
The other day I was in the feed area of my local Grain Growers co-op, listening to a couple of grain farmers talk--and the tone was worried, not exulting over potential profit. Add to that increased weed resistance to herbicide treatment and there's a delicate balance between carbon-capture friendly methodologies (no-till) and plowing/cultivating to knock the weeds down.
(Herbicide resistance is not an issue I heard much about until I talked to wheat farmers as part of the research for my agtech-based science fiction series. It's very real).
But heat isn't the only issue. Two years before, an early wet fall caused mold on some grain crops--and kept others from being harvested (grains have to be harvested at a particular level of dryness, and no, despite what is claimed by some, the practice of spraying glysophate on grain crops as a dessicant is not common in the US and Canada).
So let's hope the weather cooperates this year....
Yes this is right. People don't understand how specialized things are. Not so easy to switch. Also, the Palouse region is on the cusp of not being able to grow wheat because fertilizer use has acidified the soils. And wheat income is so poor historically (and even now with high fertilizer prices) farmers can't afford the lime applications to correct, i.e., raise, the pH. The soil scientists in the region are resigned to ever shrinking areas for crops and advocate going back to native grasslands where maybe some sheep and cattle can eventually graze.
Another possibility for the U.S.: Stop using 25-40% of corn to produce ethanol (mostly used as fuel).
An entire article on food price inflation that does not mention Ethanol?
Possibly because the article wasn't about food price inflation.
One very unlikely policy the USA can try is repealing the onerous tariffs on imported sugar, which as of 2010 raises the price of sugar in the USA to about twice the world average.
I don't know whether sugar is a complement or substitute to wheat so general equilibrium is hard to parse out, but it would seem prima facie at least that such a policy should lower overall food prices.
If we're worried about people not having enough food, then shifting fields from soy to wheat is the clearly correct choice. Only about 1/4 of the calories of US crops are directly eaten: the rest are used for animal feed and biofuels [1]. If our only goal is to have enough food, the US could quadruple its food production. We won't and don't need to do that much of a change: it would mean no meat and no ethanol. But there is slack in the system due to high American meat consumption. Higher food prices mean less meat consumption, so farmers who expect this should plant less soy (mostly used for animal feed) and more wheat (mostly used for food).
[1] https://www-vox-com.cdn.ampproject.org/v/s/www.vox.com/platform/amp/2014/8/21/6053187/cropland-map-food-fuel-animal-feed
Russia and Belarus also produce a lot of fertilizer, prices for which are also soaring.
There's a great joke in there just waiting to waft out.
This seems to suggest that the US should be setting a price floor for US-grown wheat, somewhere slightly above the level it was trading at before the war started -- i.e. "No matter how much wheat you produce, farmers, we promise that the government will make sure you can't hurt yourselves by causing a glut; in extremis, if you heroically bring the price back down to where it was absent Russian aggression, we'll buy up the excess and figure out what to do with it."
For corn and soy, most goes into livestock feed, basically chicken and pork. And while the post focused on wheat, Ukraine is a big corn exporter too. So not mentioned is a strategy of cutting back significantly on chicken and pork production to free up corn and soy. Wheat and peas are used in livestock feed too, just not nearly as much. Pasture-based meats like beef and lamb might be emphasized instead (and forget finishing them with corn). Also, I see talk of putting more land into production. That is possible, but actually most of the land that is taken out of production is less valuable, often sensitive to tillage like wetlands and erodible slopes. The government pays farmers to remove these so-called marginal lands and they are the least productive anyhow so smart farmers take the money. In eras of high fertilizer prices it isn't profitable to put crops in them, especially wheat which is a hungry plant. BTW..I am a farmer.
The other side of this equation is still there, right? Russia's share of wheat production (experiencing the same delays more or less) is still there and will be a surplus for them. So it's mainly Ukraine's production that's been axed, along with any capital equipment that is or will be destroyed up until this ends. (Although I hear they still have tractors..)
Superbly helpful piece, thank you.
Inciting people to eat less meat might help ? Animal fodder calories are in part fungible.
Of course, this means culling part of the livestock this year. Support for the breeders will be needed to alleviate the impact on them and will have to be maintained until the livestock returns to it's previous level.
Support the war effort : cook maize and soy !
Why couldn't Egypt, Nigeria etc. simply start buying wheat from Russia again (at reduced prices since richer countries aren't bidding for it) if their people start going hungry?
What caused the spike in prices from 2008-2010? Feels like the GFC should have reduced prices if anything (though does help explain the Arab Spring)
Also to win this war we need Republicans to show some patriotism and not campaign on higher prices being Biden’s fault but that is just not going to happen
Noah; if you have not already written one, how about an article on oil pricing? Why is the price of oil "set" internationally? How much variance is there in the pricing of oil; in the price of gasoline?