Many of you, like me, have been sucked into Corn-Tok. It started with a 90-second video of a young kid describing why he loves corn — it’s a big lump with knobs that has the juice, and he can’t imagine a more beautiful thing — and it’s exploded into hundreds of auto-tuned, memed takes.
If you haven’t seen it, here’s the cutest thing you’ll watch all year. You can thank me later.
Outside of TikTok, you’ve probably seen commodities get an unusual amount of attention as well. Oil, natural gas, wheat, corn — they’ve all surged in price this year. And in the fight against inflation, food-flation may be the most stubborn and pernicious.
Why corn matters
We’ve all probably noticed our grocery bills increasing as the year has gone on. That’s happened for a bunch of reasons, but it’s mainly due to the meteoric rise we’ve seen in commodity prices. Raw food is scarce in parts of the world due to low supply in the Russia-Ukraine conflict (both are big commodity exporters). The world has also suffered from historic heatwaves this summer, and US drought conditions are the worst in nearly a decade.
Gas and fertilizer prices have soared, so it costs more to grow and transport fruits and veggies. Labor shortages have required farms to pay crop harvesters more. All of that put together has been the perfect storm for a shock in the produce aisle.
Corn itself has been a big contributor to the food-flation, too. Corn prices are up more than 20% over the last year. And its byproducts — corn syrup, corn meal, corn starch — seem to be in everything, too.
Corn is in more than 4,000 grocery store items, including some you probably wouldn’t suspect: shampoo, toothpaste, marshmallows, and gum. There are lots of different types of corn — not just the ones with the knobs and the juice — and many are used to make industrial products like ethanol as well.
By the way, how corn became so intertwined in our diets is a story in itself. Corn rose to popularity during the industrial revolution with the invention of plows and trains, and it became the crop of choice because it’s cheap and genetically malleable.
Its importance then led to a cycle of self-fulfilling prophecy. The government started subsidizing corn, which meant farmers wanted to grow more. The more they grew, the more cheap, excess corn there was — and the more ways we figured out how to work it into every part of our lives, making it even more important.
The problem with food-flation
For now, corn is everywhere, and your food prices are rising fast. In July, food prices rose 10.9% year over year — the biggest jump in 43 years, according to Consumer Price Index data. And food-flation is a big source of overall inflation, with food accounting for about 13% of CPI. Federal Reserve chair Jay Powell might even be watching Corn-Tok for tips on what to do with rate hikes.
Food-flation is a serious problem. It’s not just about economics and Fed-watching, it’s about how you fuel your body to stay alive. For most of us, food-flation looks like higher grocery bills and tough choices on what brands to buy. But for millions of people around the world, it’s a choice between eating or not. Food insecurity disproportionately affects emerging economies. According to 2016 data from the World Economic Forum, people in countries like Kenya, Nigeria, and the Philippines spent at least 40% of their income on food, while Americans spent just 6.4% on food. Soaring food prices may be a humanitarian crisis as well as a financial issue.
Corn-tok may be bringing us together, but the price of corn is driving a wedge in global inequality and causing a huge headache for the Fed in its desperate attempts to control inflation. Higher commodity prices, in general, are an insidious problem with no easy solution, because fixing them requires cooperation from both lawmakers and Mother Nature.
*Data sourced through Bloomberg. Can be made available upon request.