The Opportunity Cost of Corn

Higher relative tobacco prices signal Midwestern farmers to grow tobacco instead of corn. From yesterday's Wall Street Journal:

As laborers from Mexico and Honduras used axes to chop down 6-foot plants and hang them on wooden planks to dry in the sun, Mr. Barbre explained the attraction of the crop. Even factoring in higher labor and other costs, he's netting up to $1,800 an acre from his 150 acres of tobacco, compared with $250 an acre from his corn. He credits tobacco with boosting his annual income by about 35% since he started planting the crop three years ago.

Although corn is flirting with near-record prices at around $4 a bushel, "there's no way corn can get high enough" to compete with tobacco, says Mr. Barbre, shaking his head. "There's just too much money in tobacco."

[Full article here.]