Contrary to popular belief, the Corn Belt now is just as economically diverse as it was more than 80 years ago, a University of Illinois economist writes for farmdoc daily.
Economist Todd Kuethe says that in the Corn Belt – defined as Illinois, Indiana, Iowa, Missouri, and Ohio – livestock's share of the value of ag production has declined from 76.3% to roughly 37.3%, or about 39%.
At the national level, the animal sector's share of value of production has remained relatively stable, declining slightly from 57.4% in 1930 to 45.5% in 2013.
Kuethe says many interpret the Corn Belt's shift away from livestock as declining diversity. The trend has been criticized for a number of reasons, he says, including adverse environmental impacts and increased vulnerability to crop price cycles.
But economically, Kuethe says the diversity of commodities produced in the Corn Belt has changed very little since the 1930s. He points to the results of a calculation known as Shannon's Diversity Index, which tracks the abundance of various species in a given location.
The Index increases when the number of species increases, or when animals are spread more evenly across species.
For farmdoc daily, Kuethe calculates the Index using cash receipts for various commodities as provided by the USDA Economic Research Service. This calculation "measures the degree to which the agricultural economy is comprised of one or many commodities and the relative share of total cash receipts by commodity," he explains.
Ultimately, the diversity index would suggest that the farm economy in the Corn Belt region has been relatively stable, decreasing in diversity from 1930-1970, but increasing through 1970 to the early 2000s.
"A slight uptick in 2013 showed that, in that year, Shannon's Diversity Index for cash receipts by commodity type was the same as it was in 1930," Kuethe writes, noting that while the Corn Belt is less diverse than the U.S. as a whole, the difference has been consistent.
For more corn, wheat and soy news, commodity marketing recommendations and daily commodity charts, subscribe to Farm Futures' free e-newsletter, Farm Futures Daily, and keep up during the day with Farm Futures on Twitter.