From Reuters, May 11:
U.S. corn farmers are facing steep losses this year as prices collapse to the lowest in more than a decade after they had purchased seeds and fertilizers and started planting the second-biggest crop since the Great Depression.One reason farmers are able to hang in there despite very, very low nominal, relative and real prices is the fact that input prices, mainly oil but also fertilizer, have come down so far.
At the same time, demand for corn in the world’s largest producer has plummeted with the collapse of the biofuel market, normally the destination of over a third of U.S. corn, as residents stay home during the coronavirus pandemic.
The price slump portends another year of financial hardship for farmers who have seen their income sink 22% during the past seven years as supplies burgeoned and demand sunk. The mountain of corn will likely drag on the rural economy even as farmers seed their crops next spring.
It is a cruel twist for farmers who had hoped to make money in 2020 after a U.S.-China trade deal promising many more exports - including corn - was signed in January....MORE
From 2012:
The Interplay of Food and Fuel In Jacking Everyday Expenses
A reminder of how interconnected everything is.
This nasty positive feedback was first seriously explored in relation to the '73 oil price spike with more scholarship after the late 70's commodity boom. By the time of the 2008 food inflation the mental paradigm had filtered down to yours truly, to the point I was computing diesel usage per acre for a couple of fancy models.
See also 2008's "What Proportion of Food Price Increases is Attributable to Ethanol?"
If I recall correctly it takes about five gallons of fuel to plant and harvest an acre of corn (I just spent 60 seconds trying to remember if that was conservation tillage or traditional. Then I realized that farm management was not the focus of this post, I'll go with 5 gal./acre), so the argument that rising input prices is a factor has merit....
