Supply Management, Parity Prices, and Ecological Thinking as the Foundation for a Practical Agriculture System

The case of US corn production illustrates the environmental and health liabilities of the current regime of overproduction, subsidies, and lax environmental standards, and the potential of parity and supply management to vastly reduce environmental impacts.

The United States is currently the world's largest corn producer. Annually, more than 90 million acres of land in the US are planted to corn. Of the corn used domestically, nearly half of the nation’s corn crop goes to livestock feed, the bulk of which is used in CAFOs.  Since 2007, the amount going to ethanol production has more than tripled, now accounting for nearly 40 percent of total corn use (with substantial amounts of ethanol byproducts additionally going to livestock feed) (USDA, 2015; USDA ERS, 2020).

Three aspects of industrial corn production are especially degrading to ecosystem services: 1) The conversion of grasslands, wetlands, and diverse agricultural landscapes to corn and corn-soy rotations; 2) The use of synthetic fertilizers and pesticides; 3) Intensive tillage and monocropping. These practices devastate macro- and micro-biodiversity (including complex soil biota that is vital to soil fertility), eliminate natural biological control of crop pest insects, and reduce bird diversity. They also disrupt soil carbon storage and cause the sedimentation of wetlands and streams, the pollution of groundwater, and the eutrophication of lakes and coastal zones.

Corn field by Tim Foster on Unsplash

Corn and the Gulf of Mexico’s Dead Zone

A particularly visible tragedy caused by fencerow-to-fencerow corn in the 13 states of the Mississippi River watershed is the enormous “dead zone” in the Gulf of Mexico.  The dead zone refers to the 8,000 square miles of hypoxic ocean where little or no aquatic life can survive. Corn requires immense quantities of nitrogen to grow, much of which leaches into streams and groundwater, degrading drinking water supplies and eventually flowing down the Mississippi River to the Gulf of Mexico, where it causes the dead zone. Nitrogen fertilizer chokes waterbodies with algae and weeds and causes hypoxia (lack of dissolved oxygen needed by fish and other animals). Since the 1990s, the Federal Government has prioritized solving the Gulf dead zone crisis, targeting a 30 percent reduction in nitrogen flowing from cornfields to the Gulf, with no success. Neither the nitrogen load nor the dead zone show any sign of shrinking.

Scientists from the University of Wisconsin calculated the effects of different corn planting scenarios on the size of the dead zone (Donner & Kucharik, 2008). Essentially, they found that hyperproduction of animal agriculture and federal biofuel mandates – two responses to oversupply – are the primary culprits in causing the dead zone. Meeting both the US biofuel mandate (of 36 billion US gallons annually by 2022) and the Federal target of reducing nitrogen to the Gulf by 30 percent would require reducing red meat consumption by 50 percent, and replacing the corn used to feed those animals with crops supporting a plant-based diet along with riparian buffers adjacent to corn and soybean fields. Without reducing animal production, meeting the ethanol mandate would increase nitrogen to the Gulf by 34-38 percent and grow the dead zone. This study shows the tremendous environmental costs of the ethanol mandate and of CAFO livestock production, as well as the tremendous ecological benefits of reduced corn production, if a supply management policy were to be implemented.

Mississippi River Watershed. Image credit: NOAA

Overproduction of Corn: A Brief History

While it may appear that the enormous US corn harvest is a response to demand from livestock producers and environmentalists advocating biofuels, these are in fact artificial market demands that arose in response to marketing and lobbying campaigns designed to absorb surplus corn.  The real story is perennial overproduction of corn causing low corn prices, which farmers respond to by producing even more corn to break even, creating a landscape where only the largest farms can survive and only because of (often indirect) government subsidies. The number of farms growing corn has fallen sharply, with larger farms increasing acreage and smaller farms closing (USDA ERS, 2020).

This cycle began in the late 19th century with westward expansion of the colonized agricultural frontier. The systematic over-production of corn (and other commodities) was a fixture of US agriculture by the 1920s, causing immense soil erosion, plummeting farmgate prices, and rising farm foreclosures.  Farmers responded by producing more and more to make up for low prices, thus exacerbating the problem. Finally, after much farmer-organizing and many failed attempts, production controls were implemented as part of the 1933 Agricultural Adjustment Act. These supply management policies effectively combatted low prices by reducing corn supply by 15 percent from 1932 to 1936, nearly tripling corn prices, and raising farm incomes by over 65 percent (Winders 2009).

Unfortunately, supply management policies were progressively relaxed (under pressure from consolidating agribusiness corporations), beginning in the 1940s, and completely abandoned after 1996, causing US corn acreage to grow from an historic low of 60.2 million acres in 1983 to over 95 million acres in 2013 (USDA, 2015; USDA ERS, 2020). Effective supply management policies were replaced by a series of band-aid measures like export subsidies, income support subsidies and, since 2005, a series of government biofuel mandates that are supported by farm lobbies but have negative net environmental impacts and are vehemently opposed by environmental groups (Sierra Club, 2015; Yang, Bae, Kim, & Suh, 2012).

Cartographer: Riccardo Pravettoni, UNEP/GRID-Arendal

Surplus Corn and Unecological Band-aids: corn ethanol

The biofuel mandate for corn ethanol represents a tremendous financial transfer from taxpayers and drivers to corn growers and agribusiness input companies, at grave expense to the environment. The Renewable Fuel Standard, first set in the 2005 Energy Policy Act, has increased requirements for biofuels to be mixed into US fuel supplies from an initial target of 7.5 billion US gallons of biofuels annually by 2012, to the current mandate of 36 billion US gallons annually by 2022, of which 15 billion gallons can be produced from corn starch. The ethanol mandate costs taxpayers over $1 billion in subsidies each year and likely costs consumers up to $1 billion annually in increased beef prices (Pimentel, 2003). Ethanol requirements dramatically increased corn prices starting around 2007 and incentivized the expansion of corn acreage, taking land from soy, pasture, grasslands, wetlands, fallow, Conservation Reserve Program (CRP), cotton, and other crops (USDA ERS, 2020).

Ostensibly, the motivation for biofuels is the carbon savings from displaced petroleum use. The tragedy is that corn ethanol delivers at best marginal and sometimes negative net energy savings (energy output from ethanol per energy input in producing it), ranging from 0.78 percent to 1.11 percent (Oliveira, Vaughan, & Rykiel, Edward J, 2005; Pimentel, 2003). Specifically, the greenhouse gas (GHG) emissions savings range from quite modest to negative, depending whether land was converted from a carbon storage land use, such as pasture (Yang et al., 2012). When the intense adverse impacts of industrial corn – from erosion and degraded soil quality, insecticides, herbicides, synthetic fertilizers, land use change, and biodiversity loss – are considered, the environmental footprint of corn ethanol is clearly strongly negative, calculated at between 6 percent to 118 percent greater ecological damage than that caused by filling up with gasoline (Yang et al., 2012). Clearly, corn ethanol is a terrible solution for raising farm incomes.

An ethanol fuel plant in West Burlington, Iowa on Wiki, by Public Domain

Surplus Corn and CAFOs Threaten Human and Ecological Health

As it turns out, so are subsidies and industrial livestock facilities. Through various types of subsidies aimed at supporting farm income, taxpayers have allowed farmers to continue producing corn even when market prices cannot cover production costs. Corn sold below production costs translates into a huge indirect subsidy to industrial livestock operations (large concentrated animal feeding operations, or CAFOs) (Hauter, 2012; Wise, 2005). Starmer and Wise (2007) estimate that from 1997 to 2005, government subsidies to corn growers saved US animal agriculture about $3.9 billion per year in feed costs.

Tragically, the availability of cheap grain unfairly advantages industrial confinement livestock operations that typically purchase most of their feed, over family farms that typically grow some or all of their feed and rely more on pasture, thus spurring the forced exodus of family-scale farms and the growth in subsidized factory farms as the primary source of livestock in the United States (Smith, 2019; Winders, 2009).

This strong-armed shift away from diversified small and mid-scale farms to giant CAFOs has contributed to America’s health problems. Through the subsidized proliferation of high-volume CAFOs, corn oversupply has spurred ever greater surpluses in livestock products – resulting in more meat and dairy than traditional American eating habits could absorb. The response was to create massive marketing campaigns to change the American diet. These “checkoff programs,” managed by the USDA, brought us “Got Milk?” and “Beef, it’s what’s for dinner.” Ultimately, successful marketing, artificially low supermarket prices, and the engineering feats of the processed food manufacturing sector, have dramatically increased consumption of both red meat and dairy, at great cost to society.

In excess, red meat has been linked to heart disease, stroke, type 2 diabetes, cancer, and overall mortality (Clark et al., 2019), totaling $285 billion in excess health costs worldwide in 2020 alone (Springmann et al., 2018). The surplus has also contributed to an epidemic of obesity: in 2003, the average adult was 24 pounds heavier than in 1960, and one in three Americans today is obese (Moss, 2013). While fat is not unhealthy in moderation, since the 1970s, American cheese consumption has tripled to 33 pounds per person per year in 2013 – or more than half the maximum recommended saturated fat consumption, just from cheese (Moss, 2013). Halting overproduction can help correct market distortions that effectively subsidize fat and penalize healthy foods like fruits and vegetables (Carolan, 2011).

On top of these health impacts, the shift from small- and mid-scale farms to giant CAFOs has resulted in environmental calamity. Compared with a wide range of food types and farm scales, CAFO agriculture has the most severe impacts with regards to most environmental indicators – for example GHG emissions, land use, acidification, eutrophication, and groundwater pollution (Clark et al., 2019; Willett et al., 2019). The CAFO agriculture system causes both an increase in total volume of livestock – and thus the total environmental impacts – and also a concentration and intensification of their environmental harms due to the structure and practices of CAFO agriculture.

Cattle Feedlot, SRA project

• use managed rotational grazing on pasture, which has enormous environmental advantages over row crops in terms of soil quality and erosion, species richness and biodiversity, animal health and welfare, and carbon sequestration;
• grow their own feed in a closed system that recycles nutrients, using manure to fertilize crops – thus reducing GHG emissions from nitrogen fertilizer manufacturing, protecting water quality from unnecessary synthetic fertilizers, and turning nutrient-rich manure from a hazardous waste into valuable fertilizer
• build healthy soils through diverse crop rotations of legumes and cover crops, applications of compost and animal manure, less compaction and disruption, and foregoing fertilizers and pesticides that kill soil biota
• promote species biodiversity
• cause substantially less chemical pollution from synthetic pesticides, pharmaceuticals, antibiotics, and hormones.