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Ecornomics: America's Favorite Crop

Economics of corn in America (Click to Enlarge)

The Big Numbers:

Over the last decade, corn has become the most dominant crop on American soil. It is in a quarter of our everyday foods, and it is being used to fuel our cars as well. Why is America so attached to this crop? Here is some insight into the popularity of America’s addiction to corn.

Net Returns for Crops

One reason that America uses so much corn is that the net returns for growing corn are higher than the net returns of growing soybeans, wheat, sorghum, barley and oats. The net return for growing corn has grown rapidly in the last few years, going from about $175 an acre in the ‘96/’97 season to about $275 in the ‘09/’10 growing season.

Corn Consumption Breakdown

The vast majority of the corn crop is used as feed. The next largest use of corn is for ethanol. The third largest use of corn is for the high fructose corn syrup that has grown ever-more pervasive in the American diet. Corn is also used as glucose and dextrose, starch, cereal and alcohol.

The Fuss About Ethanol

In the last several years, ethanol production and consumption has tripled. As of October 2007, the U.S. has the capacity to produce 7 billion gallons of ethanol a year. This has begun to limit our dependence on foreign oil while saving a lot of money.

Total Corn Subsidies

Total corn subsidies have risen sharply, adding billions to the production of corn in the U.S. In 1995, corn subsidies were almost $3 billion. In 1996, corn subsidies were almost $2 billion. In 1997, corn subsidies were almost $3 billion. In 1998, corn subsidies were about $7.5 billion. In 1999, corn subsidies were about $7.5 billion. In 2000, corn subsidies were close to $8 billion. In 2001, corn subsidies were about $5.5 billion. In 2002, corn subsidies were about $2 billion. In 2003, corn subsidies were almost $3 billion. In 2004, corn subsidies were about $4.5 billion. In 2005, corn subsidies were more than $9 billion. In 2006, corn subsidies were about $5 billion.

The total invested in ethanol since 1978 is $20 billion. The total saved in foreign oil purchases is $100 billion.

Corn Production

Corn production occurs across the Unites States, from New England to the Southwest. The top five corn-producing states produce more than half of the corn that is produced in the United States. The highest corn-producing state is Iowa. Number two in corn production is Illinois. Number three in corn production is Nebraska. Number four in corn production is Minnesota. Number five in corn production is Indiana. All of the U.S. corn production equals about 40 percent of the world’'s corn production.

It’’s in Our Food

Of the 10,000 items in a typical grocery store, at least 2,500 use corn in some form during production or processing. About 25 percent of the products on the shelves use corn in some capacity.

There are also unnoticed uses of corn, including hamburger, in which the corn was used in cow feed. Corn is also used as chicken feed, contributing to the eggs. Corn oil, corn meal and corn starch are all used in processed foods. Soda and sweetened drinks use high fructose corn syrup as the sweetener.

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