Dl4—Lancaster Farming, Saturday, November 7,1981
On food
Prosperity is just around the
comer.
How many times have
America’s farmers heard that?
And here it comes again.
A midwest agricultural
economist, author of 21 books and
more than 750 articles on
economics, believes farmers are
about to enter their most
prosperous period of this century.
Earl Heady, director of lowa State
University’s Center for
Agricultural and Rural
Development, says the
agricultural sector in general has
the most optimistic outlook for the
last 80 years.
He bases this optimism on these
four factors:
✓ Growth in the world’s demand
for food;
✓ Rising energy prices that will
limit food production;
v An increase in the world’s
population and its per capita in
come that will allow developing
countries to purchase more food
and that will create increased
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and fuel
trade with the Soviet Union and
China;
✓ A decrease in the use of
chemicals because of rising energy
costs that will restrain the rate at
which the world and domestic
agricultural production increases
Heady points out that there’s a
steady demand for agricultural
commodities, and he believes farm
prices will be relatively higher as
output increases more slowly with
population and income level. He
also feels that increasing costs of
energy will restrain the level of
world agricultural output. The
outcome will be relatively higher
prices for farmers.
“Sure, each U.S. farmer would
be better off if his fuel prices were
lower and commodity prices
remained at higher levels. But he
will still be better off to have high
energy prices, restrain total
output, and result in higher prices
even though his fuel and fertilizer
prices have increased,” according
to the economist.
The lowa economist expects
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inflation to continue increasing the
price of farmland. He also thinks a
considerable amount of land will
be shifted to nonfarm uses. Those
factors will combine to make land
relatively scarce and higher in
price.
The whole spectrum of farm
produced fuel raises an issue that
farmers and the agricultural
community in general really
hasn’t come to grips with. Heady
supplies figures that make the
whole food-fuel issue look a little
frightening.
His data show that the alcohol
required for the average annual
use of an American automobile
would utilize enough food com
modities to feed 23 people for a full
year. He goes on to show that
Americans have been exporting 30
percent of their corn, 45 percent of
their rice, 58 percent of their
wheat, 40 percent of their soybeans
and 35 percent of all grains.
If those exports had been used to
produce ethanol, it would have
provided 11M billion gallons. But
that is slightly less than 10 percent
of the U.S. annual gasoline con
sumption, and it equals about
seven percent of America’s annual
oil imports.
“If we were inclined to go all put
in producing energy from
agriculture, 300 million acres of
corn would be required to produce
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just 10 percent of the nation’s total
energy usage,” the economist
says.
That turns out to be about three
times our recent acreage of com,
and more Jhan 75 percent of the
nation’s cropland usage. “We
couldn’t produce this amount of
ethanol and energy from con
ventional cropland and meet ouf
domestic food requirements. If we
tried it, food prices would
skyrocket and divert grains back
into food uses,” according to the
economist.
Heady thinks a considerable
amount of ethanol could' be
produced to substitute for gasoline.
But it would require an important
change in America’s eating habits.
And it would also mean backing
out of our ongoing commitment to
alleviate world hunger. The
economist says there is some
potential of producing ethanol
using land not currently devoted to
crop production. But there are
serious limitations to that
philosophy.
“I don’t believe that agricultural
profitability depends on energy
production from grain in the long
run,” the economist says. “World
food demand is likely to grow fast
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enough so that U.S. agricultural
capacity can probably serve
mankind best through its'grain
exports.”
So it all boils down to the simple
fact that American farmers are
best suited to producing food and
feed crops for the billions of
hungry people around the world,
while somebody else produceajhe
fuel. That assumes that somebody
else is willing to share their fuel
with us while we produce food for
people who probably don’t have
any fuel to trade us.
Wouldn’t it be nice if the Arabs
were short on com, rice or wheat,
or any of hundreds of crops that we
produce so well in this country?
But it doesn’t seem to work that
way. We produce soybeans and sell
them to Japan and buy oil from the
Arabs. And in the long run, ac
cording to the lowa economist and
many others, that’s probably
American agriculture’s best hope.
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