Caution: this article is more food for thought, than real analysis that anyone should rely on to make decisions. It isn't in my area of expertise, but I hope it stimulates conversation among people who do have the expertise to comment knowledgeably about it.
If you've read my posts and comments enough, you'll inevitably learn that my wife and I own a small farm in the rolling hills of the aptly-named region of Trent Hills, Ontario. We own it for a host of reasons, but mostly because of its 28 acres of gorgeous forest with a creek running through it. We have a little tiny house "bunkie" back in the woods, which is comfortable four seasons but which has no plumbing and only enough solar for lighting and to charge cellphones. An old farm building that we restored from near total collapse, serves as my workshop, and it has a more serious solar/battery system to provide power for tools and refrigeration. We have a few shipping containers to securely store our tractor and implements. We have no well, no septic system, and no grid connection.
We make maple syrup the old fashioned way- by boiling 40 litres of sap for every litre of syrup, over a wood fire, which also consumes whatever deadfall we clean up from our camping area as firewood. We're growing a small orchard and tend to the wild apple trees on the forest margin, which I use to make cider. My wife has glorious gardens that grow more beautiful with every year. And I have a bandsaw mill, which allows us to build everything we need from, for the most part, trees which have fallen or are damaged by storms.
The place is gorgeous, four seasons. The spring with the riot of new life- the trout lillies, trilliums and marsh marigolds, then the sweet flowers of the black locusts, marred only by the blackflies. The summer with the wildflowers and the deep, cool foliage down by the creek. The fall, with the unworldly colours of the maples and the sumacs, worthy of a Group of Seven painting. And the winter, with the snow hanging in the eastern hemlocks...And the wildlife- wild turkeys, grouse, deer, otters, beaver, a host of different bird species, and the coyotes, who we've never seen but who we hear loud and clear every night. And a sky far enough away from major cities to make the Milky Way visible on a moonless night. We're very lucky!
We lease the 20 acres of arable farmland to our neighbour, who farms them along with his own 100 acres. Three of the four fields grow hay for his family's horses and another neighbour's beef cattle. And the 4th is in the usual rotation in that region: soybeans, as a cash crop and to put nitrogen into the soil; corn, which is the most lucrative cash crop, and winter wheat. A cover crop of winter rye is also used. We get some of the neighbour's cattle manure back again, but he keeps most of it for use on his own fields.
The lease has nothing to do with money, and everything to do with making sure that this productive farmland continues to be tended. And our neighbours will tell you the same thing- that they farm for love, because there's no money in it! The beef farmer has a full-time job...the other guy has a string of other gigs.
Our other neighbour, who has 2000 acres under management, likely makes his living from farming. He's got the scale to make it pay- in a good year.
But here's the part you likely didn't realize- or, maybe, like me, you merely suspected: to an amateur like me, it seems that farming isn't lucrative for a reason. Farming seems to me, to have a bad case of untreated parasitism.
The Value Chain for Corn: an Examination
Let me explain what I mean with some numbers- you know, the thing I've become known for. Come for the amusing anecdotes, the adequate writing and impolite language, but stay for the numbers! (All figures are in Canadian dollars unless otherwise noted- today the $CDN is about $0.75 USD.
Let's take corn for example. Last year's corn made farmers about $325 per tonne, or $0.35 per kilogram. That's revenue, mind you- it's a long way from profit! Out of that, you need to pay for seed, fertilizer, crop maintenance (herbicides etc.), tax (or leases) on the land, equipment and its upkeep and fuel, and transport of the crop to the purchaser. Corn in Ontario yields about 166 bushels per acre, and each bushel is about 56 pounds. Our 7.5 acre field yields up to 32 tonnes of grain per year when it's in corn (which is impressive to me), or about $11,000 in revenue. Out of that, the farmer gets a small return for a lot of hard work, up-front cost, risk, and the stress that goes along with that risk. You can plant too early, or too late, and be screwed either way. You can have a bumper crop, only to see prices plummet because everybody else got great yields too. Or you can just have a bad year, without enough "heat units", or too little rain, or early snow, or what have you. A hundred perils.
But here's where it gets really interesting: what happens to the cost of that food as it goes down the supply chain?
I bought a 50 pound sack of cracked corn from the local feed store the other day. The retail cost was $11.90 plus tax, which seemed to me quite a bargain. That's $0.52 per kg, or 1.5 times (150%) of what the farmer was paid. It's been through a few hands by this point: the "elevator", who dried and stored the product, and a feed mill, who cracked and bagged it, and then the local feed and farm supplies store who retailed it to us. Everybody has some costs, for transport and drying fuel etc., and labour, and each takes their cut. Fair enough, everybody's got to make a living! So far, I'm not feeling too put out.
But now let's look at corn products at the local grocery store here in Toronto. I'm cheap, and proud of it, so I shop at the Food Basics down the street, not at the trendier grocery stores with the higher markups. But even there, we have some interesting things going on:
First off, why is cane sugar so cheap? To me, it seems likely that it's one of those "loss leader" products (like bananas, milk, and rotisserie chickens, apparently) that retailers know people keep an eye on the price of, and use (inaccurately) to determine if the store is ripping them off on all the other products they're buying, so they take a lower margin on it- but you bet, they're not taking a loss selling you sugar. And second, whatever is going on with sugar, the fact that it is cheaper by far than "poly-sugar" (starches like corn flour) is likely a reason we're all so darned fat!
Let's take the corn meal for our comparison here, because it's the least processed and the cheapest. It's been to a mill- maybe the same mill that cracked my sack of corn, maybe a different one that specializes in human food. Then it was no doubt packaged by somebody else, then sent to a distributor/wholesaler, then on to the retailer. But $3.26/kg for meal is almost exactly ten times what the farmer is paid for the corn. Mind you, the bran and germ (around 20% by mass) are likely removed in the milling process, with the meal being made only from the endosperm of the corn, but those products also have value- they're not a waste. But being generous, that's still eight times the farmer's price, by the time it gets to the retailer.
While everybody in the supply chain has costs and has to make a living, something seems to be amiss here. A mark-up of 800 to 1000% seems just wrong, even for a commodity product with some processing involved.
Isn't competition supposed to get rid of this sort of thing?
I wonder what my neighbour thinks, when he buys corn meal at his grocery store! If it were me, I know I'd curse, within earshot of the poor cashier. Well, fortunately, there's nobody to hear any more, at the self checkout...
Is it any wonder, then, that farmers are dying to find new markets for their products? Why, for instance, my beef farming neighbour, sells his beef direct to customers (like us) as much as possible, after it is professionally slaughtered, graded and butchered? We're grateful he does- his grass-fed cattle are delicious!
This is so brutal, in fact, that another relative did a calculation and discovered that he'd be better off to burn his own barley in his pellet stove, than to pay for wood pellets to feed it. But he refused to do so- burning food, even food for his cattle, just seemed wrong.
If food is too expensive for poor people to afford, who is to blame? Not greedy farmers, surely- and not the people providing alternative markets to farmers for their products, either, would be my best guess.
There would seem to be considerable margin available to improve farming practices so they're easier on the land and the environment, and on farmers too. It just needs to be better distributed in accordance with the real value being created! That's not to say that we're complaining about farmers treating our land badly- our soils are in top-notch shape, and our neighbour is a smart and trustworthy caretaker of those soils. He's not interested in mining them for a short-term gain.
And remember this, when considering whether or not green hydrogen, for instance, will be available at retailers for anything near the wholesale costs people are dreaming they will make it for. Hydrogen distribution already costs an absolute fortune, and unlike with corn, most of that is very real costs for transportation and equipment, rather than just a tidy mark-up from each person in a long series of middlemen.
Implications for Corn Ethanol Production
I hear this constantly: how dare we use food as fuel? What about all those starving people? And if we let people grow fuels, won't they just deforest more of the Amazon to do it? Etc. etc.- you've heard this all before, no doubt.
Well, if the foregoing is at all accurate, I'd suggest that you have a talk to all those "middlemen" in the corn supply chain, before bothering my neighbour with that concern!
I find it fascinating, our attitude toward this issue. Some of us seem to feel quite within our rights to tell farmers that it's OK for the product of their land and their labour, to be used to make tortillas or Budweiser (which can hardly be considered to be either a food or a beer in my opinion), but they get incensed about corn being used to make fuel ethanol. I don't see them complaining about wallpaper paste, which is made from corn starch, but that's a different matter I guess.
A few things to note about corn ethanol:
1) We make a lot of it, as it makes up 10% of gasoline in Canada and the US and in some other places as well. And it's being used for an application which will 100% come to an end. As we decarbonize land transport by electrifying it (which is inevitable), we will no longer need ethanol for that purpose.
2) Ethanol is a nearly perfect replacement for gasoline. It is only modestly lower in energy content per unit volume than what it displaces. Ethanol, along with biodiesel, is about as good as it gets, in a biofuel, in terms of "drop in" fossil fuel substitution. And by a few high yield steps (dehydration to ethylene, then short oligomerization), it can be made into a perfect replacement for jet fuel. LanzaJet is doing that at the demonstration scale, as one example. Long distance jets and long distance ships both need liquid fuels, and that will remain true post decarbonization- at least until batteries get another order of magnitude better.
3) Agriculture is optimized around generating food calories, not biomass. Accordingly, corn is favoured because it yields a large mass of easily moved and stored, concentrated food caloric energy in the grain. The "corn stover" (cobs, stems and leaves) isn't generally of much use once the grain has been harvested, unless the whole plant (grain and all) is harvested to make silage to feed cattle. Corn stover can be made into biofuels, but it's more difficult, costlier, and involves moving a large mass of low value, high moisture junk (stover) as a feedstock. Making cellulosic biomass (with average formula C6 H10 O5) into fuels like jet fuel which have an average formula -(CH2)-, requires extra hydrogen from somewhere. That can come by wasting feed or product to make hydrogen, or from green hydrogen made from water and green electricity.
4) When corn is fermented to make ethanol, there is a significant byproduct referred to as "distiller's grains plus solubles' (DGS), a high protein feed for cattle. Forgetting about that co-product is rather like pretending that a barrel of oil produces only gasoline, and forgetting about diesel fuel etc. Wrong conclusions result.
5) The decarbonization potential of ethanol is often downplayed, and rightly so. Corn ethanol is pushed into the market at present by a fuel blending mandate, not by carbon taxes. Accordingly, farmers use fossil-derived nitrogen fertilizers (ammonia, urea and nitrates derived from fossil-derived hydrogen) on their fields, which generate N2O emissions while also boosting yields. Farmers use fossil diesel in their tractors, as do all the trucks hauling the product to the distillery. And the steam to run the stills and dehydrators is made by burning fossil natural gas, not corn stover. All of that would change with better policy, i.e. carbon taxes. But even without that better policy, good studies indicate that corn ethanol offers a 50% reduction in GHG emissions relative to the fossil gasoline it displaces. That's not good enough, and can be way better, but it's a much cheaper and less intrusive option than many other decarbonization strategies that are being pitched today.
Recommended next reads
OK, that's it. I'm interested what real farmers and participants in the broader agricultural industry have to say about this issue, so I'll shut up now and watch the comments.
I hope you found it interesting, and that it at least made you think- even if I'm wrong and have to go back and edit the text- with gratitude to those who correct my mistakes, as usual.
I'll add a line or three from Bertolt Brecht's "What Keeps Mankind Alive", from the Threepenny Opera- best to imagine this being sung in Tom Waits' inimitable Cookie Monster voice. to Kurt Weil's weird and wonderful melody:
"You gentlemen who think you have a mission
To purge us of the seven deadly sins
Should first sort out the basic food position
Then start your preaching, that's where it begins
You lot who preach restraint and watch your waist as well
Should learn, for once, the way the world is run
However much you twist or whatever lies that you tell
Food is the first thing, morals follow on
So first make sure that those who are now starving
Get proper helpings when we all start carving"
Disclaimer: this article was written by a human, who is also not a farmer himself, nor involved in the food distribution value chain in any way. It's likely I've made some mistakes in here. Please find them, provide good references, and I'll correct them.
I doubt I've taken a dump on anyone's precious ideas in this piece, but if I have done, feel free to contact Spitfire Research Inc., who will be happy to tell you to get lost and write your own article.
