We pop them, we grill them, we butter them. We mix them in salsa, in salads, soups. We drink syrupy substances derived from them in colas, even dry them for decorative purposes, and yes, fuel our cars with bi-products of them. We’re talking kernels, that is—CORN.

 

Once just that old staple crop many gave little thought to, the one we thank the Native Americans for introducing to the Pilgrims, corn is now HOT.

It’s so hot that in the last year, prices for the commodity (measured in bushels) have jumped almost 50 percent, which apparently caused the price of tortillas in Mexico to spike 400% earlier this year. Even popcorn makers are feeling the heat.

What’s behind the hotness?

In a nutshell, ETHANOL—an environmentally friendlier fuel made from corn (or sugar or even grass) that many see as a fuel of the future. Even President Bush called for more focus on ethanol and other renewable energy sources in his State of the Union speech back in January.

The majority of ethanol made in the United States is made from corn. Already there are over 100 ethanol plants in the U.S., and 70 new ones are expected to come online this year. With ethanol producers looking for corn to make their product in addition to everyone who wants and uses corn, demand is soaring, supply is tight, and prices are skyrocketing.

The increased demand in turn is spurring a demand for land to grow more corn, pushing farmland prices to record highs.

The Big Picture

Corn will again be front and center this fall as Congress seeks to pass a new, five-year farm bill. Just how much the government subsidizes corn growers and four other main crops that have been subsidized in the U.S. since the Great Depression (rice, soybeans, wheat and rice) will be a hot point in the debate. Some believe the subsidies should be reduced, particularly for corn and soybeans, which constitute a large portion of highly processed foods, one culprit of obesity, and also for environmental reasons. Stay tuned.