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(apparently there is not an agriculture substack so I'm asking here)

I am researching homescale production of grains and vegetables and when it comes to grains in general I keep scratching my head because I see little reason to do so other than really liking to eat them.

Take maize: it is a huge eater of nutrients, so it needs plenty of fertilizers or rotating it with nitrogen fixating plants and at the end of the day is ridiculously cheap. A napkin calculation using market prices and yields(I take here a price of 250 USD / metric ton and ) and a standard productivity of 10.88 metric ton / ha leads to some meager 2712 USD per harvest per ha, well below minimum wage without even accounting the costs. I've done calculations with some other grains and results are not much better.

Although I know there can be self-sufficiency reasons for it, those do not apply to current industrial agriculture which only cares about the profits. I'm no professional farmer and am not pretending to give advice to them but, as far as I can see, even for selfish economic reasons it seems that abandoning a lot of farming land wasted on grains makes the most sense.

Is there a hidden reason why grains are produced so much that I'm not seeing it?

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  • do you actually know any small farmers who produce grains for market? Where I live, many small farms are being bought up by agribusiness, who can use different costs and command different prices. The remaining ones grow grains to feed their animals because it's cheaper than leaving the land empty and buying grains to feed their animals. Did you take that into account in your calculations?
    – Kate Gregory
    Commented Mar 21 at 20:57
  • I don't know grain producers, so that's why I am asking. "[...] who can use different costs and command different prices" Can you provide a specific corn example of a price they can command at which production is profitable? The quick calculation was done with zero cost and still came up short. "[...] it's cheaper than leaving the land empty and buying grains" This is a better than nothing argument, at this point sow anything else that is more profitable. Unless the grain basically grow by itself with no work needed other than sowing and harvesting, it's an argument hard to buy.
    – javert
    Commented Mar 22 at 16:49
  • you think a cattle farmer should plant like watermelons or strawberries or something and sell them, then use the money to buy grain to feed the cows? Even though they don't know how to grow those other crops and don't have special equipment that might be needed? This is not how most people make choices in my experience.
    – Kate Gregory
    Commented Mar 22 at 16:57

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You are correct that for small farms it makes little sense to grow grains, especially corn. It is neither sustainable nor profitable - the only grain I've known small farms to grow in my area (the northeast US) is sweetcorn, which is sold to specialty markets. Because grains are labor-intensive without expensive machinery, heavy nutrient feeders, and so cheap, on a home scale it makes sense to focus on higher-value crops.

However, the calculus is entirely different for industrial growers than it is for smallholder farmers. There are several factors that make grains very profitable for industrial growers:

(I'll focus on corn here, since it is the most produced grain in the US, but other grains follow similar patterns. I'll also focus on the US, since you used USD for prices, but much of this is applicable to other countries.)

The Green Revolution

With the advent of synthetic fertilizers, it became possible to sustain the intensive production of corn (a nutrient-heavy crop as you note) by adding large amounts of cheap fertilizer. Farmland that would be depleted by corn in a few years can now be kept in production indefinitely. Most industrial corn farms still rotate with soybeans, but grow corn most years. Fertilizers and new, expensive farm machinery favors large producers that can make use of economies of scale.

Farm Subsidies

This is probably the biggest "hidden reason." In the Great Depression, the US started subsidizing corn and other crops, but payments were made in exchange for farmers limiting production to keep prices high. In the 1970s, Secretary of Agriculture Earl Butz overhauled these policies so that farmers receive more subsidies for growing more acreage. Additionally, federally-subsidized crop insurance reduces the financial risk of crop failure. These subsidies make corn profitable despite the low prices that you point out - even if farmers are selling corn at a loss, the subsidies can make up for the difference and then some.

The policies of Earl Butz, along with the technological advancements of the Green Revolution, greatly favored large farms over small farms. You estimate a revenue of $2,700 per ha = $1,100 per acre, but most farms are now over 1,000 acres, meaning a revenue of over $1.1 million, not including subsidies.

Expanded Markets for Corn

The increase in production brought around by Earl Butz started a positive feedback loop, in which new markets are created to make use of the cheap corn. Some of these were engineered by the federal government, such as the export of grains overseas, and corn-derived ethanol. Over 30% of corn grown in the US now goes to producing ethanol fuel, which was initially subsidizes by the federal government. Additionally, the use of corn for livestock feed (instead of pasturing) has increased in response to the low price of corn. High-fructose corn syrup production is now also major market for corn. These markets further incentivize the production of corn.

For a more detailed overview of US policy surrounding grain production, see "Corn, Carbon, and Conservation: Rethinking U.S. Agricultural Policy in a Changing Global Environment" by Mary Jane Angelo (2010).

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