Next Generation Farming

Why Corn Acres Are Increasing in Western Kansas – Part 2

Crop insurance subsidies discourage wheat production

Here's Part Two in the discussion over the puzzling increase of dryland corn acres in western Kansas: Does this have anything to do with wheat's disappearing act?

Wheat acreage has been in continual decline across the U.S. for the past 30 years with the strongest declines having occurred in the last decade, according to Kansas State University. Here in western Kansas, acres planted to dryland wheat fell from 4.3 million in 1981 to 3.0 million in 2008. Dryland corn, meanwhile, increased from 7,900 acres to 754,000 during the same period. (National Agricultural Statistics Service currently doesn't post wheat numbers at the district level for 2009 to present. Dryland corn acreage in 2011, though, had reached 1.1 million.)

Wheat's lagging yield potential claims a lot of the credit for the crop's inability to compete for acreage. But, how much of this decline has been exacerbated by the market distortion of crop insurance subsidies?

Back to the issue of risk, wheat and sorghum are not only the highest-profit crops to grow in rotation for western Kansas, according to Dan O'Brien and Rob Aiken's economic analysis  at K-State, but they're also the most likely to produce a crop and an income. The abandonment rate for non-irrigated wheat here in the west-central district of Kansas from 2002 to 2008 was 13.9%, according to NASS, while sorghum was 17.8%. Dryland corn was 26.3% despite enjoying technological advantages such as the Roundup Ready trait.

Non-irrigated corn clearly doesn't compete with either wheat or sorghum on producing a consistent crop.  What if farmers had followed market signals planted half of those non-irrigated corn acres in western Kansas to wheat in rotation with sorghum? The total number of lost wheat acres from 2002 to 2008 comes to 2.99 million. 

Where did these wheat acres go when they were replaced with corn? They didn't just vanish. These acres were sent offshore to competitors like Russia and Ukraine who are increasing their acreage and are on their way to bumping the U.S. from its place as the world's top wheat supplier.

If you think no one's paying attention, you're wrong. Nigeria, the biggest importer of U.S. wheat last year at 3.1 million metric tons or 112.8 million bushels, has voiced concern about the disappearance of wheat in the U.S. As Nigerian millers will tell you, they need a reliable and diverse supply of wheat for their growing consumer base. Investing in GMO research for wheat has been at the forefront of that discussion.

But, maybe there's another reason to be concerned. With the help of crop insurance subsidies that make low-risk crops like wheat less competitive to high-risk crops like corn, the U.S. continues to lose its reliability as a wheat supplier. The total number of lost wheat bushels in western Kansas from 2002 to 2008 comes to 56.8 million when figuring average yields. That's 3.4 billion loaves of bread for the consumer.

Our policy of making risk cheaper via crop insurance subsidies ultimately ends up punishing our customers. Is this a policy that helps us compete in the world market? If we can't be a reliable wheat supplier to loyal buyers like Nigeria, there might be a few Russian farmers who'd be more than happy to help them out.

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