Iowa farmers continue to push productivity higher, but new demand has not kept pace with that growth. Iowa Renewable Fuels Association Executive Director Monte Shaw told members that agriculture is once again facing a familiar challenge: more grain than existing markets can absorb.
During his remarks, Shaw pointed to the success of renewable fuels over the past two decades, saying ethanol blends helped create new demand that supported farm income and rural economies. But with E10 now saturated and corn production continuing to climb, he said agriculture is entering another period where supply is growing faster than demand.
Shaw said history shows agriculture typically faces three options when production outruns markets. The first is reducing supply, similar to policies used during the 1980s farm crisis that idled acres but forced many producers out of business and weakened rural economies. The second is relying on large-scale government payments to stabilize markets, an approach he said farmers themselves often view as a last resort.
Instead, Shaw argued that expanding demand through renewable fuels and new markets offers a path that allows productivity to continue growing while supporting prices. He pointed to rising corn ending stocks and long-term price projections near the cost of production as signs that agriculture cannot rely on existing markets alone.
According to Shaw, the question facing farmers and policymakers is not whether American agriculture can produce more, but whether demand can expand fast enough to keep pace with that productivity.
