Corn in the United States accounts for more than $15 billion per year in sales. A combination of an emerging resistance to genetically modified Bt corn and the end of ethanol subsidies, however, means that corn could be getting more expensive.
A resistance to Bt Corn
In 2003, large agro-businesses introduced a product called Bt corn. This corn allowed for higher crop yields by producing a toxin that kills many pests that feed on corn. This allowed for corn crops to be grown without as many pesticides or fertilizers because the plant itself produced the pesticide. Bt corn came with instructions to rotate crops to help keep pests under control. Some farmers, however, have discovered that root worms were eating the Bt corn, which is supposed to resist and kill root worms.
Ethanol subsidies end
Corn is the biomass used to create most of the ethanol that is blended with gasoline in the United states. This year, the subsidy on ethanol corn expired, which adds up to $6 billion a year or more. The indirect subsidy paid energy producers to purchase corn, which drove up the cost of corn. The lack of subsidies may drive up the cost of fuel or corn in the near future, but the effect has yet to be seen, because corn prices are currently at near-record levels.
The effects of high prices
Combined, the end of ethanol subsidies and the discovery that widely planted Bt corn is losing resistance to root worms and other pests could drive the price of corn even higher. Corn is currently at record-high prices, and that is driving up the cost of both food and fuel. High corn prices trickle down to meat, dairy, wheat and soy crops because corn is used extensively in the production of most of these. When corn prices go up by as little as 10 percent, meat prices go up by as much as 25 percent.
USA Today: http://www.usatoday.com/money/industries/food/story/2011-12-09/corn-food-prices/51763238/1
New York Times: http://www.nytimes.com/roomfordebate/2011/02/15/is-the-world-producing-enough-food/corns-domino-effect
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