As a schoolboy in rural Illinois, I learned the story of the early Pilgrims and how a Native American man called “Squanto” helped them survive their first years in the Massachusetts Bay area. Sent by the tribal leader a few months after the arrival of the Pilgrims and their grim first winter, he befriended them. Evidently, he could speak English, having been taken captive and shipped off to Spain a few years earlier. He had also lived in England before returning to North America. Squanto was their guide, interpreter and advisor. An agreement was reached between the tribal leadership and the immigrant group, pledging mutual friendship and peace.
One particular detail of that school lesson remains with me today: Squanto showed the Plymouth Colony how to raise Indian corn, among other vegetables. He taught them to put a fish into the bottom of a shallow hole and fill it with dirt, preparatory to planting three or four kernels of corn. He showed them how to care for their corn plots, too.
Later, after the corn stalks grew, producing an ear or two on each, he taught them to harvest it and how to save the grain for food through the season. Squanto’s assistance saved the lives of these early settlers. Governor William Bradford was particular in his praise of Squanto and his corn growing advice in the reports he sent back to the Old World. As the seasons passed, the Pilgrim colony grew more corn to feed their expanding populace. Additional Pilgrim families arrived from the Old World and quickly adapted to life in the Plymouth Colony. As pioneers spread out across the land in later years, corn production went westward with them.
Corn was not native to Massachusetts. It is theorized that tribes in what is now Mexico began to develop it as a crop about 7,000 years ago from wild plants. Gradually the primitive corn crop was shared with other tribes throughout North and South America.
I was fascinated by the story of Squanto, the Pilgrims and the role that corn played. I could relate to the production of corn. My family raised hundreds of acres of it on our central Illinois farm. We stored ears of corn in cribs and fed it to livestock all during the year, refilling the cribs each harvest. Back in those days the leftover corn remaining in the cribs each summer was shelled from the cobs and hauled to market to make space for the next crop of corn in our cribs. A portable sheller system was brought out and set up in our barnyard. It separated kernels from the cobs and corn shucks. When the shelling was completed we had piles of cobs and shucks to play in.
A dozen years ago most of the American corn crop was being fed to cattle, hogs and poultry. USDA numbers show that 58% of the crop was fed to livestock in 2004 while 17% was exported and 17% was processed into food and fuel. The big change since then stems from the aggressive expansion of ethanol-making. It has become a fundamental ingredient for gasoline blenders. They use it to boost octane ratings in automobile fuels. The increased demand spurred corn prices to lofty levels. Farmers have responded by planting more corn acres.
Four hundred years have now gone by and Americans are still producing corn – prodigious quantities of it. According to recent USDA estimates, our farmers will harvest more than 14 billion bushels of corn this season, or more than 360 million tons. Approximately 85% of that will be consumed here in the USA. Livestock feeding will account for about 40% of the total use. Food products, sweeteners and ethanol-making will consume 45%, but the by-products from such processing are fed to livestock, too. Only about 15% of the corn crop is exported to foreign corn users.
With three pronounced categories of corn use in our modern world, we have three different degrees of need among all the users. These were on stark display when the corn crop was reduced by drought in 2012. Supplies had to be rationed. Generally, we found that corn export demand dropped immediately and very sharply as prices spiked higher. Livestock feeding was also slowing and shrinking, but at a rate that was less dramatic. Procurement managers for corn processing operations continued to buy corn despite the strong price rise.
These unequal responses to price change ration demand unevenly. Economists refer to this as the elasticity of demand. Processors are the least flexible in their corn buying. It is less expensive to operate plants at a short-term loss, buying high-priced corn, than it is to shut them down and then re-start them. Export demand has the greatest elasticity. That is, when prices go up, the number of cargoes being booked drops off sharply. Livestock feeders are somewhere in the middle. The graph compares how each category fared after the 2012 drought sharply reduced the American corn supply. When American corn farmers harvested a big crop the next year, dropping prices back down, demand rebounded in these approximate proportions.
The corn industry has had dynamic growth in the past. Looking forward, it seems very likely that this commodity is going to continue to flourish. The non-feed portion of the US corn industry has been dominant these past few years. The global market for corn may be headed in that direction, as well. It is something to ponder in a world that is becoming more inter-connected every season.