With U.S. Farmland Maxed Out, Growers Tap Into Reserves

John Roach
for National Geographic News

June 2, 2008

Part four of a special series that explores the local faces of the world's worst food crisis in decades.

Roger Stewart is putting nearly all 2,000 acres (810 hectares) of his farmland northwest of Columbus, Ohio, into corn, beans, and wheat this spring, as he has for the past 29 years.

The only exception is the 3.5 acres (1.4 hectares) around drainage ditches, which are currently locked up in a U.S. government land conservation program.

"The ground is all tillable here, and we farm almost every acre of it year after year," he said.

According to Otto Doering, a professor of agricultural economics at Purdue University in West Lafayette, Indiana, Stewart's situation is common.

Even though soaring commodity prices are bringing new pressures to increase agricultural output, U.S. farmland is maxed out, he said, limiting any response to price hikes and highlighting how agricultural productivity has failed to keep pace with increasing world demand.

"For about the first time in our history—other than the Second World War and after the Russian grain purchase—most of our good quality land in the United States is in production right now," he said.

About 2 million acres (810,000 hectares) coming out of the reserve program will be put back into production this year, according to the U.S. Department of Agriculture.

Another 6 million acres (2.4 million hectares), much of it formerly hay, pasture, and grassland, will be put into corn, soybeans, and wheat, added Doering, who is also the president of the American Agricultural Economics Association.

But that's it, he said.

Most of the land in the conservation program is marginal—such as the drainage ditches on Stewart's farm—and most untilled lands outside the program are undesirable even at today's prices.

"The land base is relatively fixed, and when you get these high prices what you have are the different commodities fighting for acres on the basis of profitability to the farmer," he said.

Conservation Reserves

But even so, duck hunters and conservationists are calling foul over the loss of that land, voluntarily dedicated to wildlife through the federal government's Conservation Reserve Program.

About 35 million acres are currently set aside through the program, which pays farmers to keep their land out of production for decades at a time.

Rising commodity prices are removing the incentive to keep land enrolled in the program, said Neil Shader, a conservation policy specialist with the waterfowl and conservation organization Ducks Unlimited.

A region of the Great Plains spanning Montana and the Dakotas called the Prairie Pothole has lost more than a million acres from the program this year.

"[Farmers] can get a lot of money for planting corn or wheat, and they're not going to get a whole lot of money for planting the native grasses that are going to benefit waterfowl," Shader said.

In the Prairie Pothole region, the program pays farmers about U.S. $50 an acre. The same land is worth around U.S. $150 an acre if used to grow wheat, he noted.

Free Market

Even with the price increases, farmers aren't resting easy. Many are reaping whatever they can sow, convinced the good times won't last.

Christopher Shaffer grows wheat at his S-Lightning Farms in Walla Walla, Washington. Right now, he said, is a good time to be a wheat farmer.

"Things cycle; we've cycled into some times where there's more profit," he said.

Assuming the next harvest season results in a solid wheat crop around the world, however, prices should fall, explained Shaffer, who is a former chair of the U.S. Wheat Associates, a trade group.

He is concerned that calls by groups such as the American Bakers Association for a review of export policies to ensure the U.S. has enough wheat stocks on hand could harm U.S. trade status in the world.

He added that the cost of wheat is just one ingredient causing the price of food such as bread to rise. There's the cost of making flour, shipping the flour to bakeries, and paying wages, for example.

"That's the thing that people tend to forget," he said. "There's so much more that goes in to making those products and the costs that go in there than just the raw commodity."

The rising cost of oil in particular is substantially increasing the overhead expenses of running a farm.

The cost of fertilizer has more than tripled in the past 12 months. Diesel fuel is at an all-time high. The dollar is exceptionally weak. If commodity prices drop, farmers will be unable to cover their costs.

"You're sort of hemmed in there, and you just hope the commodity prices will stay high enough to pay for the expenses," Stewart, the Ohio farmer, said.

According to Doering, consumers may need to get used to the higher prices because of the increasing demand and rising production costs.

"I don't think it's unfair to say we are reaching a different set of relationships for commodity prices and a different level of prices."