What’s That Have to Do With the Price of Corn?

The rising price of corn due to ethanol demand will have a variety of unintended consequences. As noted earlier on this blog, it might even make Americans skinnier, since food manufacturers may start using a cheaper (and less fattening) substitute for corn syrup.

Along these same lines, I heard a story not long ago at an event full of bankers and currency traders. It should be said that there was a good bit of drinking going on at the time — but it should also be said that the story probably would have been just as well-received even if everyone had been dead sober. It goes like this:

One night, a trader gets home from work, late as usual. As he’s getting undressed in the bedroom, for some reason he is overcome by curiosity and decides to go snooping in his wife’s dresser. In the very first drawer he opens, he discovers something truly strange: $12 in cash and three loose kernels of corn.

Downstairs, he admits to his wife that he went snooping.

“Oh, so you found it,” she says.

“Yes,” he says, “but what is it?”

The husband and wife have not been close for years, and now the wife admits that she has had affairs, and that in remembrance of each affair, she stashed a kernel of corn in her drawer. The husband is taken aback, but also relieved. He, too, has had affairs — and so he says, quite slickly: “Well, look, I’m willing to forget about all this if you are.” After all, he has had far more than three lovers on the side.

“Fine,” she says.

There is an awkward silence. Then he asks: “But what about the $12 in the drawer along with the corn?”

“Oh, that,” she says. “When corn hit $4 a bushel a month ago, I decided to cash in.”


T.H. Williams

Reply to #16: If all Americans fasted just one day each month global starvation would be significantly reduced. The overall physical and mental health of Americans would also increase phenomenally. I've done so for 30 years and enjoy spectacular health, allowing me to complete 26 marathons!

Shan

I've heard the same joke, except that instead of a woman hiding corn in a drawer, it's a man hiding beer bottles in a secret box. He has some cash in there too, since the recycling people pay 5 cents for every bottle.

lalaland

Will the price of corn ever get high enough that cattlemen start feeding cattle GRASS rather than corn, which they cannot digest and necessitates the huge amounts of antibiotics? I sure hope so! Long live switchgrass!

kathyw

People who fast, such as Jews on Yom Kippur, just stockpile food for right after the fast - there probably is no effect on the economy for that one day. Look at Ramadam, which lasts much longer, and during which time Muslims fast.

Enviro-mom

Kudos to "lalaland," I was waiting for someone to note the terrible effects of feeding corn to livestock. Add to that 1)the ridiculous effects of making ethanol from corn and 2)the corn syrup debacle, I am at a loss as to why the Corn lobby hasn't been exposed as being as big a threat to our wellbeing as the Tobacco lobby.

Nathan

The scary part about the rising cost of corn is seen in other countries where it is a dietary staple. As its price rises so do costs of things like tortillas, perhaps you remember the large tortilla protests in Mexico awhile back. Nonetheless, the Economist had an article on this awhile back where they concurred with an op-ed written by Fidel Castro (which doesn't happen too often) that if corn is used to make ethanol, rather than sugar, it would significantly affect consumption levels in poorer countries. This is problematic as Bush calls for improved ethanol consumption, but from corn, rather than sugar.

Alias

reply to #21. Except it won't significantly reduce global starvation. All starvation issues are political in their root cause. There is NOT a shortage of food in this world.

Dr. Troy Camplin

I loved the math with the joke. DIdn't ruin it for me. Made it even funnier -- 20 guys a day? now that's a slut! Estrangement may not be the real problem in that marriage.

E.B

#21
Fasting for one day a month does not make you capable of competing in marathons. Yes, fasting has benefits when done in moderation. If you are competing in marathons however, you probably eat differently and exercise more than most Americans. You can't claim that one day of fasting per month will create a star athlete... which you did.

Also, If all Americans stopped eating just one day a month, and we were somehow able to coordinate things so that literally everyone did this fast on the same day together, it would do nothing to alleviate hunger in other regions of the world. We send billions of dollars worth of food into poor areas, only to see it taken by the governments of those areas, or to see it left sitting on a loading dock to rot while people starve less than a mile away.

Understand the complexities of the issues and resist the temptation to oversimplify things. The planet can and does produce enough food for everyone. It does not always get distributed to those who need it sadly.

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MD

Forget ethanol. Americans will be healthier from eating less salt, once we start powering our cars from saltwater:

http://www.cbc.ca/cp/science/070911/g09119A.html

E.B.

Just remember MD, salt is also necessary in the human diet. So is iodine, the lack of which is causing a sharp rise in the nuber of reported cases of thyroid disorders... and most Americans use iodized salt.

Americans will be healthier when they learn balance, and not before. Though, the way things are going, we'll have the government telling us what we can eat before my children start their own families, so maybe it's not worth worrying about?

Question about the salt water: changing the make-up of the ocean would damage life on a gloabal scale. Has anyone considered this? The idea is neat, but is it worth saving gas to destroy the entire human race?

J.J.

Great comments! We could stand to loose a good 10 lbs in the US, so diverting HFCS away from beverages and snacks and into machine power, will definetly force using, hopefully better alternatives in food, making us all a bit skinnier.
However, there are no cheaper substitutes than those currently dervied from corn or sugar that would be "healthier" or make us skinnier. More so, we need to look for more sustainable alternatives, and by paying a little more upfront, we GAIN a little more health and LOOSE a little more weight. Another approach, skipping the healthy note; we pay more for the snacks, therrefor we tend to eat less, consuming less yiealds nicer thighs:)

BTW: Nice number crunchin' #4, and the support on grass feed beef #23! Imagine if all of America consumed even 33% locally produced and organic certified foods, what a positive impact this would have on our economy. #4, can you work some numbers on this, using long term and macro approach? I guarantee, trasnportation saving alone from this movement, would increase our energy supply alone.

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mgroves

Bah duh da dah dada....bwaaaaaaaaaaa

Matt

I don't necessarily believe this will make Americans skinnier. If a substitute is involved (and there are always substitutes), wouldn't it make America even fatter?

For instance, look at longer shelf-life foods and produce. The reason the food is preserved for so long is because of the cheaper (and more fattening) ingredients. Same thing with fast food. Cheaper substitutes = more fat.

Take the pricing of food in general: fruits and vegetables (healthy food) usually tend to cost more than cookies and chips (unhealthy food). Maybe I'm off base here but it's just a theory.

Lee

I've heard variations of this joke when I was actively trading grains. One includes a trader's wife showing him a brand new sports car and when asked how she got it, she told him that she earned it while "husking corn" while he was so busy and obsessed with making money.

On a serious note, Brazil is not the only country that has advances ethanol production from corn and sugar cane. South Africa also made huge strides in trying to be self-sufficient in energy when there were embargoes imposed due to apartheid. This is another angle that is worth exploring. As far as the hydrogen economy is concerned, we don't need to re-invent the wheel but take a look at Iceland and learn how to scale their production and distribution system.

Adam

Since John Allen Paulos isn't a regular commentator on this blog, I thought I'd chime in with some numeracy to ruin the joke (which I enjoyed, by the way, despite its familiarity).

$12/$4 per bushel = 3 bushels

1 bushel of corn weighs about 56 pounds and contains about 72,800 kernels (at least - I assume a bushel would include the cob and husk, but let's leave that aside for now)

72,800 kernels/bushel x 3 bushels = 218,400 kernels, +3 = 218,403 (and how big is this drawer that it held 168 pounds of corn -- and how apathetic is her husband not to have noticed?)

218,403 kernels = 218,403 lovers/affairs/love-making episodes

218,403/365 days in a year = 598.364 years of one lover/lovemaking episode per day. I doubt they're that old.

So, assume they've been married but not close for 30 years:

30 years x365 days/year = 10,950 days

218,403 affairs/10,950 days = 19.945 lovers/day. Every day. For 30 years.

Love the blog, though. :-)

Best regards,
Adam Frank

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Darrell

"Cheaper substitutes = more fat."

The idea is that corn syrup is more fattening than any possible substitute, which in this case sugarcane is the likeliest substitute. Your correlation is a bit off because, up until recently, corn syrup was the cheapest sweetener product in the US. It's not being replaced by an inferior, fattier product, but by a superior product that is now relatively cheaper.

jonathan

Another question is whether the rising price of corn will enrich Latin America, which depends much more on corn for subsistence, or cause more poverty. It's not just our waistlines which matter.

Salvador

@Jonathan

Latin America is not that great of a producer of corn. In fact, Mexico is a net importer of corn, buying a large amount from the United States. So, no enrichment here...

Jason

Coca-Cola is already planning to rotate out of corn syrup and into sugarcane because of cost.

This brings up a discussion I was having today with a colleague about $80 oil and whether or not technology always evolves when a commodity becomes too expensive to continue to use. Hybrid car demand and electric alternatives are a direct response to the price of oil. Fiber optics were invented when the price of copper became too high. And if this correlation exists that in the end, commodity prices, while finite in quantity and seemingly built to become more expensive as they become more scarce, actually become cheaper over time because technology relieves our dependance on, and demand for, that commodity. Maybe this is obvious stuff, but my colleague insisted that there was no top for oil so I brought up this argument.