—Lancaster Farming, Saturday. Nov. 20. 1976
16
Pa.’s questions on com market answered
By. H. LOUIS MOORE
Penn State University
University Park - Com is
now and has always been the
dominant crop in the United
States. Until recent years
com was grown as a crop to
be fed to livestock, often on
the farms where the com
was produced. But today
com has become very im
portant to people living
elsewhere in the world. As
the export market has grown
sharply, more fanners are
now raising com as a cash
crop.
The trend toward selling
more corn rather than
feeding it to livestock has
caused frustrations for some
of Pennsylvania’s corn
producers. They see changes
taking place and ponder
these questions: (I) Have
the growing export markets
been good for local
producers? (2) Do Penn
sylvania producers have any
impact on the market? (3)
Can Pennsylvania producers
compete as price premiums
decline?
Cora Production
Increases
A record 5.8 billion bushels
of com were produced in the
U.S. in 1975. Mid-year
estimates place the 1976 crop
at 6.2 billion bushels, up 7 per
cent from 1975 and 32 per
cent larger than the drought
reduced crop of 1974, The
United States is one of the
few nations which produces
com greatly in excess of
domestic needs and it
provides over 70 per cent of
the com which enters world
trade. When it comes to
producing and exporting
com the U.S. has no peer,
accounting for about 45 per
cent of the world’s com
production.
Pennsylvania ranked 14th
among the states in com
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production in 1975, with a
crop of 88.5 million bushels.
The 1976cr0p is projected at
a record 95.8 million bushels.
In the 1962-66 period, Penn
sylvania ranked 15th with an
average production of 47
million bushels. Despite
Pennsylvania’s relatively
high ranking as a com
producer, with production
exceeding the combined
production of New York and
Virginia, the Commonwealth
accounted for just 1.5 per
cent of the U.S. com crop in
1975. In the 1962-66 period
Pennsylvania produced 1.2
per cent of the national crop,
a slightly small share than at
present. With such a minor
part of the crop produced in
the state, it is evident that
local producers have little
impact on the market.
A changing industry
In the 1950’s and 1960’s the
com industry was charac
terized as one which'con
stantly overproduced,
received low 1 prices, and
depended on the Commodity
Credit Corporation of the
USDA for survival. The CCC
bought com, provided loans,
and controlled acreage to
support prices at levels felt
necessary to maintain an
adequate supply of com and
to reduce the number of
foreclosures of faims. Cora
production grew in spite of
the various programs
designed to reduce
production. In 1964 the
Commodity Credit Cor
poration had under loan or
owned 1.3 billion bushels of
com. In the 1958-62 period
U.S. farmers averaged just
$1.07 per bushel for the com
they sold. During this period
of low prices, farmers
maximized returns from the
com crop by feeding the
grain to livestock or poultry.
Consumer demand for meat
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was growing and producers
received favorable returns
on livestock in most years.
But 1972 brought a new era
to the com industry. Surplus
stocks of com had finally
been reduced to manageable
levels. Then severe drought
hit the Soviet Union, forcing
them to buy large quantities
of grain from the West.
Buoyed by Russian pur
chases, the U.S. exported
35.8 million metric tons of
feed grains in 1972, up 73 per
cent from 1971. New export
records have been set every
year since 1972 except 1974.
From a record 1.3 billion
bushels of com in govem-
ment hands in 1963, the
dropped to a mere 8
million bushels in 1973, and
the government now holds no
feed grain stocks.
Since 1972 supply and
demand factors, rather than
government programs, have
been establishing the price of
corn. U.S. fanners averaged
$l.OB per bushel in 1971, but
prices increased sharply in
the following year, and
reached $2.95 in 1974 before
dropping slightly to an
average of $2.70 in 1975.
These high prices brought
abvious farmer reaction: (1)
it became fashionable and
profitable to sell cash com
rather than feed livestock for
many farmers, and (2)
farmers planted more
acreage in an effort to in
crease production and
profits. The nation’s com
producers harvested 66.9
million acres of com in 1975,
up 2% per cent from 1974 and
8 per cent above 1973.
Farmers planted 84.1 million
acres to com in 1976, up 8 per
cent from 1975 and the
largest acreage since 1949.
The 1949 acreage yielded a
crop of 2.9 billion bushels,
less than half the projected
crop for 1976, demonstrating
the technological advances
made in com production in
the past quarter century.
Implications of the'
export boom
The world’s hunger for
animal protein is partly
measured by its purchases of
U.S. feed grains, mostly
com, to feed to their ex
panding livestock herds.
Most countries prefer to
import livestock feed rather
than meat, thus developing
their own livestock in
dustries. In the two decades
1955-75 com. exports from the
United States showed more
than a 14-fold increase.
The leading export market
for U.S. com in the past
marketing year was the
USSR which took 29 per cent
of the exports from the 1975
crop. Soviet com imports
have been unusually high
because of their 1975 crop
failure. Com use in the USSR
has expanded sharply in
recent years as livestock
production was expanded.
Yet the Soviets have limited
ability to produce com for
grain. Only 5 per cent of the
grain produced in the USSR
is com, whereas com ac
counts for about two-thirds
of total grain" production in
the U.S. The short growing
season in the USSR sharply
limits the acreage which can
be used to produce com for
grain; therfore, about 85 per
cent of the Soviet com
acreage is used for silage.
Com imports by the Soviets
are likely to grow as they
move into large scale
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production of livestock and
poultry.
Exports of U.S. com have
grown beyond all ex
pectations in recent years
and have become an im
portant factor in supporting
prices. On the surface, it
would appear that increased
exports would assist Penn
sylvania producers in ob
taining better markets for
their com. Pennsylvania is
located nearer to important
ocean ports than are the
states in the Com Belt, in
cluding the 'ports of
Philadelphia and Baltimore.
As the volume of grain
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(717) 464-3374i0r Home 464-3127
Eric Hemsohn
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Lynn Gardner
Paul Herr
James Charles
Lamar Witmer
Robert Kayhart
Robert Greider
Paul Martin
Marvin Jomes
Ira Boyer
Gerald Hall
Maurice Stump
exports has grown, the ports;
have had to make changes to
handle a larger number of
ships, which are of much
greater capacity than in the
mid-1950'5. Two decades ago
a typical grain ship had a
capacity of 10 to 12 thousand
metric tons of com (394,000
to 472,800 bushels at 39.4
bushels per metric ton).
Many of today’s ships have a
capacity of 25 to 40 thousand
metric tons (985,000 to
1,576,000 bushels). A 40,000
ton capacity ship would
require 400 rail cars of 100
(Continued on Page 20]
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