This Blessed Earth Page 3

  But no sooner had industry begun to move away from petroleum than the world’s largest oil reserve was discovered in Saudi Arabia in 1938. The barrel price of crude oil fell precipitously, and the demand for petroleum substitutes waned. Ford continued to extol the virtues of soybean products, but the industrial applications for soybeans were now seen as impractical. But during the years when grain crops were failing, animal feeders had discovered that livestock fed on an oil-rich soybean diet bulked up quickly. With demand from Ford and other automakers no longer elevating prices, milling companies, hoping to capitalize on their existing supply and marketing structures, were eager to get into the soybean trade.

  At the time, America’s milling industry was still centered on St. Anthony Falls at the headwaters of the Mississippi River in Minneapolis, Minnesota. In the nineteenth century, the city had taken advantage of the strong current of the falls to turn millstones and its geographical location, upstream from nearly all of the United States, to bring its milled goods cheaply to market. General Mills and Pillsbury shared an undisputed hold over the flour market, so their smaller competitors were eager to find ways to capture similar shares of other grains. Chief among these new competitors were ADM, which, in addition to producing linseed oil for Ford’s paint, also milled, processed, and stored vast quantities of crop-based products, and Cargill, which specialized in milling grains as feed for livestock producers. They eagerly built new soybean-processing plants, along the rivers and the Great Lakes from Minneapolis to Chicago, where the great stockyards were buying unprecedented quantities of soybean meal as animal feed.

  In 1939, Shreve M. Archer of Archer Daniels Midland announced the construction of a new modern soybean plant and elevator in Decatur, Illinois. Again acquiring its extractor from Germany, this time ADM ordered a Hansa Muehle unit that employed the Paternoster design, carrying flaked beans in buckets on a moving chain. The unit, which had a daily capacity of 400 tons (roughly four times the size of any that had been used in Europe), made ADM the largest soybean processor in the world. In November 1939, the plant was ready for operation. The solvent unit occupied a five-story tower; storage capacity for 5 million bushels of soybeans was provided.

  At the same time, Cargill launched an aggressive, even desperate, bid of its own into soybean processing. Company president John MacMillan, Jr., had inherited the family-run business just five years before and expanded so forcefully into corn processing during the corn-poor Dust Bowl years that the U.S. Commodity Exchange Authority and Chicago Board of Trade accused the company of trying to corner the market. When government investigators demonstrated a pattern of overbuying—acquiring as much as 80 percent of the total market share—in order to artificially drive up prices, the Chicago Board suspended Cargill and three of its officers from the trading floor. (The company would not rejoin the Chicago Board until 1962, after MacMillan’s death.) The company established a downriver soybean-processing facility, which they dubbed Port Cargill. Not to be outdone, Pillsbury entered into a partnership with an independent miller who was preparing to open a new plant in Mankato.

  By the harvest of 1939, soybean mills dotted the Mississippi River from one side of Minnesota to the other. Now the problem was supply. Before the end of the year, the American Farm Bureau Federation sponsored hundreds of events to encourage farmers to plant soybeans and instruct them on how to achieve top yields. For the first time, the Midwest was the center of soybean production in America, with ADM leading all processers with six soybean plants in Decatur, Chicago, Minneapolis, Milwaukee, Toledo, and Buffalo. With harvesting and processing now at full capacity, the soybean producers were well positioned to take advantage when the United States was pulled into World War II.

  When Hitler began his march across Europe, there were sudden scarcities of edible oils and fats—nearly 40 percent of which had previously been imported from Mediterranean countries. After Pearl Harbor, the U.S. government pushed agricultural production to achieve record output—and soybeans increased from 78 million bushels in 1943 to 193 million bushels in 1945. Yet Cargill and ADM had a terrible time fully capitalizing. While the production—and consumption—of soy products nearly tripled, President Roosevelt and Congress worked together to pass price-control legislation, creating the Office of Price Administration (OPA). Meat and poultry were hard to come by, so the OPA established fixed prices on animal feed.

  After the war, however, when the government slowly started to roll back its strictures, feed prices rose sharply. As Ford had always feared, government involvement, instituting price controls and later subsidies, made farmers subject to the whims of federal farm policy—and the agribusiness interests that controlled that policy. But by then, Ford was too sick and old to keep up the fight. He turned the company over to his son, and barely a year later, Henry Ford died of a cerebral hemorrhage at his estate in Dearborn. Without his guiding vision, soybean production for industrial purposes waned sharply for several decades, but the grain millers saw a different opportunity.

  Wartime rationing officially ended in 1946, and the American public was eager to celebrate. Like never before, they wanted French wine and a good steak. In the early months of 1947, national consumption of meat rose by more than 20 percent—a real increase of more than 1.7 billion pounds. Prices climbed so high that New York’s mayor called for a congressional investigation. But the New York Times concluded that it wasn’t price-fixing. “Americans are meat-hungry,” the reporter explained. “There are just more persons consuming more meat than ever before in the history of the country.” To ease high prices, the federal government began subsidizing corn and soybean production. Ever since, the prices of commodity grains have risen and fallen according to the demand of livestock feeders.

  Ford may have failed to create a future of plastic cars and biofuels, but he successfully created a steady market for soybean producers—only now, their profitability was once again tied to the whims of the livestock market.

  RICK WASN’T pleased. “Not good,” he said, “not good.”

  It was past eleven in the morning, the sky still overcast and threatening. With the remaining fields near the home section too wet for work, Rick had loaded the combine onto a flatbed and brought it to a quarter section of dry land south of Interstate 80 where he had planted more very short-season soybeans. The wind seemed to be picking up enough to bring the moisture down to where he could harvest. He had asked Dave to run a test patch, just to be sure, only to find that an unusual number of the bean plants were “laid down”—that is, their stems were so flat to the ground that the spinning reel of the John Deere couldn’t prop up the stalks for the cutting blades. So many beans laid flat meant a measurable loss of yield, but it also suggested the possibility of something even worse.

  “We had a couple of hailstorms come through here this summer,” Rick said, kneeling in a furrow next to one of the flattened plants, “but our insurance adjustor didn’t expect the loss to be near this bad.” He plucked one of the plants, roots and all, out of the ground and flipped open his buck knife. Slicing longways, he split the stalk in half. “Aw, man, look at that,” he said, showing the hollowed-out insides to Kyle and Dave, who had come down from the cab of the combine to see what was wrong.

  With one glimpse of the stem, they each set to pulling up their own plants and cutting them open. After a few tries, Rick called out. “Here we go,” he said. He called Meghan over too, then held up the sliced open stem for everyone to see: a tiny larva, a narrow white caterpillar, nestled right where the stalk meets the roots. “Stem borer,” Rick said. “They warned us to be on the lookout for them this year, but we’ve never seen them here before.” He turned and cursed, then flipped open his clamshell cell phone, and in a minute had the crop insurance adjustor on the line. “Yeah, we need you to come out and have a look,” he said as he wandered back toward the road. Rick kicked clods of dirt as he went, sending up tiny brown clouds.

  Meghan shook her head. “You spend all fucking year trying to get thes
e crops the best yield,” she said. “It’s ready to be harvested. They’re done, and when they’re done, you got to get them out.”

  But now, this field would have to wait for the adjustor, which could be days or even a week, depending on how many claims were already waiting. When a call like this goes out, the adjustor comes with a tape measure and marks off 15 feet. Then he counts every standing plant and every dead plant to tabulate an estimate of the overall percentage of loss. Different levels of insurance pay out at a variable rate. You can insure 50 percent of loss for a relatively low premium, all the way up to 75 percent for the highest premium. If your damage is less than 25 percent, you just have to eat the loss.

  You can also get supplemental coverage, but it only kicks in if there’s at least 14 percent crop loss across your entire growing region. And even if you make your deductible and the supplemental insurance kicks in, you’re not only sustaining at least a 14 percent loss but the payout on the difference—the loss above and beyond that threshold—is figured according to an adjusted price, calculated from the average of the spring and fall prices. So whether you were forward contracted or hoping to make a little extra by marketing at harvest, it’s impossible to catch the price at its peak. And in a year like this, when Rick was hoping to bin as many beans as possible and wait out the market, there was no chance to catch a rebound. Even with the best insurance, the Hammonds were going to take a substantial hit on this field—and while they waited, there was the chance of still more loss.

  “Hail, wind damage, snow,” Kyle explained. “Right now those crops are really vulnerable.”

  “Eight inches of rain,” Meghan said.

  “Yeah, they just got big rains in southeast Nebraska,” Kyle said. “It wiped out a lot of fields. They say a two-hundred-year event.”

  “It’s also driving the price,” Meghan said.

  “That’s right,” Kyle agreed. “In the week since those rains, beans went up a dollar. That’s probably how much yield has been lost. Because the beans are really sensitive. High wind will just knock the beans right out of the pod.”

  Rick clamped his phone closed and started back toward the field, moving quickly. “Tell Dave that we’re not going to get it out, so that he can just bring the combine in,” Rick said. “Let’s get the head back on the trailer.” He told Kyle that they would move everything over to a nearby neighbor’s property. The neighbor, Seth, had gone in with them on the rental for the combine. Rick had thought that his short-season beans would be ready first, but that wasn’t going to happen now. They could make the most of what remained of the day and then hope to find another field that was ready tomorrow. For now, Seth’s half section was dry, so they might as well get everything over there.

  Kyle and Dave went right to work unhooking the head of the harvester.

  “We’re at least two weeks behind,” Rick said in my direction but almost to himself. “And it’s just killing us.”

  FAILURE IS everywhere on the farm.

  It hides in the long shadows cast by the barn at last light. It waits amid the dark stalks shifting in the fields before dawn. It’s all around you, always lurking, always palpable but just out of view.

  These farm failures can be dramatic and sudden: the death of a patriarch, his chest rolled over while repairing a tractor or his overalls twisted into a choking knot by the auger in the grain bin. With no will or simply no clear plan for succession, the farm can go under. Just as shattering can be a divorce or the death of a spouse. Legal bills and the stress of unsettled assets can turn a farmer’s attention from keeping the books or watching the markets and somehow the business slips away. And, of course, failure can come from the fields, appearing like an undetected cancer—cobs stunted by drought, beans infested by cutworms.

  More often, though, it creeps up, not one major disaster but a series of smaller missteps. Too little insurance in a drought year. Borrowing to build a hog barn just before the bottom drops out of the market. Buying more ground and more seed only to see commodities prices plummet. Often as not, failure comes from nothing more than a farmer overestimating his ability to service a loan.

  Some would say that this is no accident. In the early 1970s, Secretary of Agriculture Earl Butz told farmers that a new day was dawning. They had to “get big or get out.” He urged those who heeded his call to acquire as much land as they could afford and plant “fencerow to fencerow.” Butz wanted American farmers to produce a steady oversupply of key grains, in order to undercut and control commodities markets to the disadvantage of our Cold War enemies. But the United States had considerably less landmass than either the Soviet Union or China. So the only way to outproduce them was to invest in every possible method of intensifying production—chemical fertilizers and pesticides, ending crop rotation in favor of monocultures, consolidating farmland and agricultural companies, and ultimately tinkering with the genetics of row crops to make them resistant to various herbicides but also tolerant of denser planting as a way of increasing per-acre yields.

  Butz promised to use the emerging global economy to bolster prices. If we faced harvests in which supply outstripped demand, the United States would simply negotiate trade deals, using our economic might to artificially create a market. If we could flood global trade partners with massive quantities of grains, pushing sale prices below the cost of production, then Butz believed the world would have no choice but to buy from us. We could make our enemies—and even our friends—dependent on us to feed themselves.

  In January 1972, Butz sold what amounted to our entire grain reserve to the Soviets. The following month, Nixon went to China and brokered a deal with Chairman Mao Zedong, allowing the importation of American corn and securing contracts for American companies to build thirteen of the world’s largest ammonia-processing plants for producing fertilizer on Chinese soil. America’s Communist foes regarded these moves as an agreement not to wage war through food. But Butz discussed the new agreements in terms of “agri-power” and stated it plainly: “Food is a weapon.”

  The trouble, as many critics saw it, was that producing at that volume meant relying on agribusiness, making us beholden to a handful of companies. Where family-owned farms had been numerous and diverse, the kind of small operations that had to produce a variety of high-quality products to insulate themselves against market fluctuations, multinational grain companies were centralized and large enough to capture extensive portions of critical commodities and turn a profit by doing nothing more than capitalizing on market uncertainties at strategic moments.

  The most famous example came in 1973, when Cargill, which had only been allowed to return to the Chicago Board of Trade a little over a decade earlier, now placed huge orders for U.S. soybeans via a Geneva-based affiliate, Tradax, making it appear that there was a pending soybean shortage. Prices skyrocketed—and eventually rose so high that President Nixon ordered a halt to all soybean exports to prevent domestic scarcity. With prices at record levels and foreign countries desperate to find new sources of soybeans, Cargill filled the canceled orders of other American companies with supply from their South American subsidiaries, commanding artificially inflated prices. When the U.S. embargo was lifted, Cargill canceled its Tradax purchases and by year’s end saw their annual profits jump from less than $20 million to more than $150 million, despite an overall decrease in its volume of production that year. In short, knowing that food was now a matter of national security and that the government would intervene to protect it, Cargill (and soon other major agribusinesses) recognized that they could manipulate the market to produce greater profits, regardless of the success of each year’s harvest—and regardless of the impact on American farmers.

  A few years later, farmers saw firsthand the risks they now faced. At the end of December 1979, President Jimmy Carter enacted a grain embargo against the Soviet Union after Leonid Brezhnev ordered the invasion of Afghanistan. Ever since buying our national granary, the Soviets had been acquiring huge quantities of American grain—incl
uding 25 million tons of wheat and corn contracted that October for the coming year. Carter bristled at the idea that the Soviets thought they could stage an invasion when we controlled their food supply. “They think I don’t have the guts to do anything,” he told an aide. “You’re going to be amazed at how tough I’m going to be.” Carter announced the embargo and canceled the outstanding grain orders for some 17 million tons of corn and wheat. He issued a freeze on trading in grain futures for two days to allow the market to stabilize, but when it reopened, prices plummeted anyway—losing 20 percent of market value. Angry farmers marched on the USDA. One protest leader said, “We planted fencerow to fencerow like they wanted, and now this is what happens.”

  The Soviets found other grain suppliers to circumvent the embargo and lessen the impact of any future trade sanctions. As commodities prices fell, it became apparent: instead of making the world dependent on our grain supplies, we had grown reliant on their demand. American farmers continued to carry heavy overhead and service high-interest loans, preventing them from competing with foreign grain producers, even after the embargo was ended. American agricultural exports declined by more than 20 percent between 1981 and 1983, which, combined with decreased market prices, ended up meaning a nearly 40 percent reduction in farm income in a matter of just a few years.