Role of land quality in corn acreage response to price and policy changes: evidence from the Western Corn Belt

Abstract

Abstract Land quality influences how farmers allocate croplands in response to market forces. Farmers in the Western Corn Belt (WCB) have historically utilized the highest quality lands for corn cultivation, putting lower quality lands to other uses. This paper questions whether high corn prices influenced expansion of corn cultivation on lower quality lands, and the role played by US biofuel policy in such land use change. Using three decades of data, I estimate that the proportional change in corn acreage to rising corn prices is nearly three times larger in counties with lowest land quality versus those with the highest land quality. This variable response, however, is driven by the changes in cropland use for corn cultivation after 2006, the period following the change in US biofuel policy, and punctuated by two crop price spikes. Marginal agricultural lands and other lower quality lands, such as grasslands used for range or pasture, are therefore prone to conversion into corn cropping disproportionately during high price periods. High price responsiveness of lower quality lands also suggests these lands may cycle in and out of corn cropping opportunistically. This has implications for marginal land availability for bioenergy crops, and poses environmental concerns to the extent lower quality lands are also more environmentally sensitive.