Category Archives: over-production

Remarkable Graphs of Corn & Soybean Profitability


Blue blocks: Profitable time periods. Note that I’ve altered the graph by adding red and blue blocks to show profitable years vs. profit-loss years. Source: Ag Cycles: A Crop Marketing Perspective By Chad Hart/Iowa State.

The remarkable graph above, showing corn profitability since 1972, says it all.

The article in which the graph is embedded, by Iowa Ag economist Chad Hart, begins like this… “Over the past seven years, corn and soybean producers in the United States have enjoyed their best run of returns in history.”

Hmmmm. Let me think. What happened about seven years ago?

After that he explains that profitability is cyclical in a competitive industry such as commodity farming, and that “economic theory indicates the long-run profitability of a competitive industry is zero.”

Hart says, “When we examine the average return to a bushel of Iowa corn over the entire time period from 1972 to 2012, it is a positive 5 cents per bushel. However, if you looked at 1972 to 2011, the average return was negative.” !!!

He then warns of a near-term downward cycle of lower commodity and farmland prices.

It’s already happened. Corn prices have fallen. This year’s producers who are renting land that is priced according to yesterday’s profits, may see a tough bottom line.

Unfortunately, from there on out in this paper, Hart goes off on economist tangents about interest rates and input costs during recessions that aren’t as relevant as what I see as the biggest story when one talks about an over-produced commodity crop, which is policy. Furthermore, policy is what has driven down exports and feed demand for corn in recent years.

If we were dealing with a commodity that feeds the world’s growing populations, like Jim Rogers always tells investors, the price of corn would go up because of natural, growing demand. Instead, we’ve had overproduction of corn for decades on end, and it feeds agribusiness, not the world’s growing populations. The Energy Independence and Security Act of 2007 created a new and rapid demand for this input-heavy crop, rewarding the producer, the machinery maker, the fertilizer, seed, and chemical companies. Policies have supported corn growing both on the demand side, and through direct payment programs and crop insurance.

If we really wanted food and energy security, we’d promote fuel efficient vehicles instead of Chevy Tahoes and F350s that burn E85, and we’d preserve our soil, waterways, biodiversity, and aquifers so that future generations have healthy land on which to grow food.

Corn and soybean production in America today is mostly all about policy.


Also interesting is the same information on soybean profitability as viewed on the following graph:

Source: Ag Cycles: A Crop Marketing Perspective By Chad Hart/Iowa State.

We can generalize that soybeans have, on average, had more profitable years than corn. They have enjoyed a boost in price, too, as a consequence of ethanol’s recent, large demand for corn. Plus, around 15 percent of our nation’s soybean crop is going to produce biodiesel these days.


SOURCE: Ag Cycles: A Crop Marketing Perspective

Synthetic Biology. What Does it Mean for Agriculture?

Today’s post was prompted by an invitation from Andrew Revkin to join in on a discussion spawned by his recent post at NYTs “Dot Earth” titled, “Will Synthetic Biology Benefit or Threaten Wild Things?”. A recent conference at Cambridge University brought together two unlikely groups for a groundbreaking conversation between conservationists and synthetic biologists over the subject of synthetic biology. The two groups attempted to discuss all aspects of the subject — including ethics, the science, concerns, regulation, purpose, and the technology’s potential. The groups also speculated as to whether synthetic biology that utilizes plants for food, energy, and medicine might lead to an increase or loss of biodiversity. The framing paper for the conference was “How will synthetic biology and conservation shape the future of nature?

I’ve read through the lengthy paper and will share with readers here a few of the key points and statements made. The framing paper for the gathering was a very worthwhile read and the authors did a good job of at least touching upon many of the issues surrounding the use of this new science. The importance of global awareness concerning this subject cannot be overestimated since today’s DNA lab technology which is becoming very accessible and less expensive makes for a great deal of future uncertainty, with the potential for really good or really bad to come of it.

Underlying questions from the conservationists are, “do we really need this technology?” and “do the scientists really know what they are doing?” This new field of biological engineers appears reckless at times to the conservationists because of their prevailing enthusiasm and optimistic outlook about a technology that is so difficult to predict at this point. Both sides see that it is coming at us rapidly and is unstoppable, however, and so the discussions need to begin.

First, the paper’s three “concepts” of synthetic biology:

● “the design and construction of new biological parts, devices, and systems and the re-design of existing, natural biological systems for useful purposes”
● “a scientific discipline that relies on chemically synthesized DNA, along with standardized and automatable processes, to address human needs by the creation of organisms with novel or enhanced characteristics or traits”
● a scientific focus on the design and fabrication of biological components and systems that do not already exist in the natural world, and on the re-design and fabrication of existing biological systems

Or, as explained by Paul Freemont of the Centre for Synthetic Biology at Imperial College in London, “We can now chemically synthesise very large sections of DNA, and that allows us to design biological systems from scratch, just as an engineer designs and builds a piece of equipment starting from basics.”

The paper also sums up the six sectors in which innovation of synthetic biology will have an important role to play:

● bioenergy: synthetic fuels, biofuels, electricity, hydrogen, etc.
● agriculture and food production: engineered crops, pest control, fertilizers, etc.
● environmental protection and remediation: restoration, monitoring, detection, etc.
● consumer products: computers, sporting goods, cosmetics, etc.
● chemical production: industrial compounds, high-value compounds, plastics, chemical synthesis, etc.
● human health: medical drugs and devices, over-the-counter medicine, clinical therapies, etc.

This field has taken on a life of its own due to economic incentives:

In 2010, U.S. revenues from genetically modified systems reached over $300 billion, or the equivalent of more than 2% of GDP. These impressive revenues are generated within three sub-sectors: genetically modified drugs (i.e., “biologics”) at $75 billion; genetically modified seeds and crops at $110 billion; and industrial biotechnology (e.g., fuels, materials, and enzymes) at $115 billion. U.S. biotech revenues are growing at an annual rate of approximately 15%. Global revenues are similarly growing at a rapid clip; China and Malaysia may each have biotech revenues in excess of 2.5% of GDP, and both countries plan to at least double that share by 2020. These revenues are primarily generated through the application of more than three decades of experience with recombinant DNA technology. In this context, a very generous estimate of 2012 total international revenues from synthetic biology would be $1 billion, primarily consisting of engineering tools and reagents, including synthetic genes.

The paper points out that our own Obama administration has embraced “garage biology entrepreneurs” here in the U.S.

The relevant document, signed by President Obama, can be paraphrased as “garage biology is good and necessary for the future physical and economic security of the United States.” This position acknowledges the historical analysis that because entrepreneurs and small organizations – i.e. “garages” – have been critical drivers of diverse technological innovation in the U.S. for several centuries, so are garages likely to be critical for future innovation in biotechnology.

And it really entered the Star Wars realm when it quoted this, by Freeman Dyson:

“Genetic engineering, once it gets into the hands of housewives and children, will give us an explosion of diversity of new living creatures, rather than the monoculture crops that the big corporations prefer. Designing genomes will be a personal thing – a new art form, as creative as painting or sculpture.”

So much of this discussion potentially relates to agriculture. The authors of the paper, Kent H. Redford, William Adams, Georgina Mace, Rob Carlson, Steve Sanderson, and Steve Aldrich, admit that a discussion of conservation and biodiversity as it relates to synthetic biology must address the topic of land use changes, and so far, the most important category for land use change has come from biofuels policies.

A few things that synthetic biology might bring to us in agriculture are: the ability to raise crops using fewer pesticides; an offer of greater food security; improved nutrition; livestock which produce medications or biological substances such as spider-silk; and an optimal source of biofuel. For our health, we may see new ways to target infectious diseases and cancer, develop vaccines and cell therapies, enable regenerative medicine, or make cancer cells self-destruct. The potential seems limitless.

The paper’s bioethical discussion was on target for including this key paragraph:

Synthetic life delivers private benefits. Many forms of life being developed by synthetic biology are being patented. The benefits provided by these organisms will reflect the economic interests of those able to invest in and develop them. This may well favor applications in existing industrial processes and commodity chains (energy, agriculture, aquaculture) and the operations of large business corporations. Impacts on the wider environment will tend to be treated as an externality. Corresponding impacts on price and other economic changes for smaller producers (e.g. smallholder farmers) will affect their decisions about land conversion and management, and hence future patterns of biodiversity loss. How will a balance be struck between private risk and gain versus public benefit and safety?

One point that the conservationists make is that good conservation means preservation of the natural evolutionary process of natural selection. Yet, progressive conservationists recognize that there is potential for synthetic biology to increase biodiversity, too.

Not to be overlooked, the paper noted that “population growth (and corresponding consumption) are key macro-scale drivers of biodiversity loss. It is unclear what role synthetic biology and its products will play in these relationships.” But in fact, I might argue that a bigger driver is the opportunity to profit from using land for production purposes.

Science writer Julie Gould covered the conference here. Gould said that the new phrase which is catching on is “biology is technology”. She reported that the conference included mention of an impressive science project by Christopher Schoene from Oxford University, who was part of an Imperial College team of undergraduates that entered the iGEM competition. In a period of ten weeks the team created a bacteria, Auxin, that they believed would be useful in solving desertification which is a huge problem in the poorest agricultural regions of the world. They engineered E coli bacteria to contain sets of genes with growth hormone and also with malate, a root detector. The bacteria were able to swim towards roots, become absorbed by the roots, and then release hormones to stimulate growth.

Ed Yong also wrote about the conferenece. He said that synthetic biology is “grander in scope than most genetic modification, which involves modestly changing a few genes. By contrast, synthetic biologists work with large networks of genes,” thus a new acronym, SMO. I enjoyed Yong’s quote of conference organizer, Kent Redford, from the Wildlife Conservation Society, “Conservationists get more pessimistic when they drink, but synthetic biologists only get more optimistic.” After all of the reading that I did about the event, the subject, and its take-aways, that statement summed it all up as well as any.

The Guardian covered the conference by focusing on a recent lab achievement to produce the anti-malarial drug, artemisinin, which has heretofore been obtained from leaves of wormwood grown by African and Asian farmers. Re-engineered yeast can now do the job in vats, so the farmers have lost their product. Along with that loss may come the loss of the plant’s diversity and a new, less desirable “monotherapy” drug. Critics say the new drug production method is potentially damaging, entirely unnecessary, and causes harm by taking away the livelihood of poor farmers. The Guardian goes on to say that similar stories will soon be told for vanilla farmers, patchouli farmers, rubber producers, coconut farmers and saffron growers. Synthetic biologist, Jay Keasling, says that “anything that can be made in a plant can now be made in a microbe”.

While many of these vats of production may help save biodiversity in some regions, they clearly come with new economic winners and losers and have an impact on human jobs.

Finally, here is the twitter feed from the event for anyone interested.

This story is obviously huge for agriculture and has the potential to change it immensely. Is the sky the limit? I’m glad to be in new media and not a book writer, because any book written today would surely be old news by the time it was published.

An article by Eric Hoffman, “Food Made from Scratch”, tells us that Monsanto has recently joined with Sapphire Energy in an algae venture, and that J. Craig Venter has formed a new company, Agradis, which will use synthetic biology to create higher-yielding castor and sweet sorghum for biofuels, among other things. He also reports that researchers at the Department of Energy’s National Renewable Energy Laboratory (NREL) believe that they will be able to improve the efficiency of photosynthesis, using amino acid building blocks to build plants from scratch.

But skeptics at the conference also questioned how much is really possible. My impression is that Venter’s life ambition a few short years ago was engineering algae to solve our energy problems. It would now appear that since that started looking too difficult to him as suggested in this recent Rex Tillerson interview by Charlie Rose, he’s moved on to working with other crops. Biologists, even if some of them see their new role as technologists and engineers, do still have to work within the laws of physics. How much improvement is actually possible for increasing the efficiency of plant photosynthesis?

I was very intrigued by one of Julie Gould’s quotes from the conference:

It was interesting to see how the developed and developing countries saw the situations in very different ways. When it comes to land use for agriculture, the developed countries said that farming should intensify on the land being used already, so that no more needs to be used. People from developing countries said that the demand for food should be reduced.

If developed countries are suggesting that by further crop intensification they can reduce land use, that certainly is not what has happened so far, not since GMOs were introduced and not since biofuels policies were set in 2008. This is a false pretense and I would hope that someone at the conference pointed that out. If the developing world wants to see the demand for food reduced, I’d interpret that to mean they’d like to have lower food prices, and less food for fuel. But, developing world food producers do benefit from higher food commodity prices, too, as explained in this Stanford presentation about how biofuels policies have changed the economics of global agriculture and the global ripple effect that they have.

Next, let’s look at some statistics that have resulted from business related to synthetic biology using the historical time period available to us so far.

● In the past six years, since U.S. ethanol mandate became law, 123 million new acres around the world have gone into production. Most of those acres were in China, India, Africa, and South America. This is one of the ripple effects of the new demand and consequent higher prices created by biofuels policies.

● Also in the past six years since U.S. ethanol mandate became law, we saw our U.S. Conservation Reserve Program (CRP) land diminish by almost ten million acres. The economic incentive to grow crops on marginal land now outweighs what the government is willing to pay landowners to idle their land.

● Genetically modified crops have been used for commercial production since the 1990s and today, 29 countries are growing GM crops on a total of 160 million hectares according to ISAAA. And, that number is growing very rapidly.

Biofuels and industrial methods of agriculture using biotech seeds go hand in hand. With the cost of agricultural inputs headed ever higher, at today’s production levels neither biofuels nor industrial methods of agriculture could survive economically without the other. For this reason, lobbyists are motivated to see that the economic benefits for agribusinesses provided by biofuels policies remain in place. So, in a sense, overproduction of biotech monoculture crops has led to a government policy prescription demanding their use.

Synthetic biology is also selling itself because of its potential for greater efficiency. Let’s look at what greater efficiency has done to society recently. In agriculture, production efficiency leads to less profit, begging for more production and continually squeezing out the smaller players. That’s why farms continue to trend larger and the number of people farming continues to decrease and get older. In industry, the efficiency created by robotics is contributing to the loss of much needed jobs. At what point do efficiency gains become self-defeating?

How can we extrapolate the biofuels story to predict how other uses of synthetic biology will play out? One thing is for sure, we are adding new layers of complexity to our agricultural production system by using synthetic biology. And complexity, because the public is unable to understand it (we need look no further than the banking world) creates opportunity for political opportunism motivated by economics.

Will the added complexity eventually make us more or less secure? I expect many wonderful and useful technologies to emerge from the scientific applications of synthetic biology which we will be grateful for once we have them. Some could even “save the world”. Or destroy it. But, these achievements may come at a steep price and greatly challenge our human value systems.