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How the U.S. became a global corn superpower

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The United States has just about 90 million planted acres of corn, and there’s a reason people refer to the crop as yellow gold.

In 2021, U.S. corn was worth over $86 billion, according to calculations from FarmDoc and the United States Department of Agriculture.

According to the USDA, the U.S. is largest consumer, producer and exporter of corn in the world.

“We’re really good at [corn production],” Seth Meyer, chief economist at the USDA, told CNBC. “And that’s why you see big acres, big demand, export competitiveness.”

It’s not just what we eat.

“We turbocharged the value of corn through the application of science,” Scott Irwin, agricultural economist and professor at the University of Illinois, told CNBC.

Corn is in what we buy, including medications and textiles, and corn is turned into ethanol, which helps to fuel cars across the nation.

The rest of the world relies on U.S. corn, too. 

At $2.2 billion in 2019, corn is the most heavily subsidized of all crops in the country.

“A lot of these subsidies … do get embedded into the cost of farmland and they essentially bid up the price of farmland marginally,” Joseph Glauber, senior research fellow at the International Food Policy Research Institute and former USDA chief economist, told CNBC. “So the benefits accrue largely to those who own land.”

The federal crop insurance program’s net spending is forecast to increase to nearly $40 billion from 2021 through 2025, according to the Congressional Budget Office.

At the same time, farmland values have reached all-time record highs.

“Do we get the corn acres because we’ve got the support, or do we have the support because we have the corn acres?” Meyer said, posing the chicken-and-egg question about the nation’s grain superpower.

Watch the video above to learn more about how corn fuels the U.S. economy from its people to its vehicles, the power of the corn belt states, the role of subsidies and where government policy for the industry may go from here.



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Goldman Sachs CEO David Solomon gets 29% pay cut to $25 million

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David Solomon, Chairman & CEO of Goldman Sachs, speaking on Squawk Box at the WEF in Davos, Switzerland on Jan. 23rd, 2023. 

Adam Galica | CNBC

Goldman Sachs CEO David Solomon will get a $25 million compensation package for his work last year, the bank said Friday in a regulatory filing.

The package includes a $2 million base salary and variable compensation of $23 million, New York-based Goldman said in the filing. Most of Solomon’s bonus— 70%, or $16.1 million, is in the form of restricted shares tied to performance metrics, while the rest is paid in cash, the bank said.

Solomon’s pay, while large by most any measure, is about 29% lower than the $35 million he was granted for his 2021 performance. Meanwhile, Goldman’s full year earnings fell by 48% to $11.3 billion, thanks to sharp declines in investment banking and asset management revenue, the company said last week.

While the bank was primarily hit by industrywide slowdowns in capital markets activity as the Federal Reserve raised interest rates, Solomon also faced his own set of issues last year. Goldman was forced to scale back its ambitions in consumer finance and lay off nearly 4,000 workers in two rounds of terminations in recent months.

Solomon’s pay package is smaller than that of rivals Jamie Dimon of JPMorgan Chase and James Gorman of Morgan Stanley, who were awarded $34.5 million and $31.5 million respectively.



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Fiji fires police commissioner and end security deal with China

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Police operate a security check point in the Fijian capital of Suva in December following general elections. The Pacific island nation has played an important regional role amid competition between China on the one side and Australia, New Zealand and the United States on the other.

Saeed Khan | Afp | Getty Images

Fiji’s president on Friday suspended the commissioner of police following a general election saw the first change in government in the Pacific island nation in 16 years, after the military earlier warned against “sweeping changes.”

President Ratu Wiliame Katonivere said Commissioner of Police Sitiveni Qiliho had been suspended on the advice of the Constitutional Offices Commission, “pending investigation and referral to and appointment of, a tribunal.”

The Supervisor of Elections Mohammed Saneem was also suspended by the commission, the statement said.

Qiliho declined to comment to local media because he said he will face a tribunal over his conduct. He was seen as being close to former prime minister Frank Bainimarama, who led Fiji for 16 years before a coalition of parties narrowly won December’s election and installed Sitiveni Rabuka as leader of the strategically important Pacific nation.

The day before a coalition agreement was struck, Qiliho and Bainimarama called on the military to maintain law and order because they said the hung election result had sparked ethnic tensions, a claim disputed by the coalition parties.

The Pacific island nation, which has a history of military coups, has been pivotal to the region’s response to competition between China and the United States, and struck a deal with Australia in October for greater defence cooperation.

No more China policing deal

On Thursday, Fiji Times reported that Rabuka said his government would end a police training and exchange agreement with China.

“Our system of democracy and justice systems are different so we will go back to those that have similar systems with us,” the prime minister was quoted as saying, referring to Australia and New Zealand.

The prime minister’s office did not immediately respond to a request for comment.

Republic of Fiji Military Forces Commander Major General Jone Kalouniwai earlier this month warned Rabuka’s government against making “sweeping changes,” and has insisted it abide by a 2013 constitution which gives the military a key role.



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Inventory glut and underused factories

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Intel CEO Pat Gelsinger, with U.S. President Joe Biden (not pictured), announces the tech firm’s plan to build a $20 billion plant in Ohio, from the South Court Auditorium on the White House campus in Washington, January 21, 2022.

Jonathan Ernst | Reuters

Intel’s December earnings showed significant declines in the company’s sales, profit, gross margin, and outlook, both for the quarter and the full year.

Investors hated it, sending the stock over 9% lower in extended trading, despite the fact that Intel did not cut its dividend.

The earnings report, which was the eighth under CEO Pat Gelsinger’s leadership, shows a legendary technology company struggling with many factors outside of its control, including a deeply slumping PC market. It also highlights some of Intel’s current issues with weak demand for its current products and inefficient internal performance, and underscores how precarious the company’s financial health has become.

“Clearly, the financials aren’t what we would hoped,” Gelsinger told analysts.

In short: Intel had a difficult 2022, and 2023 is shaping up to be tough as well.

Here are some of the most concerning bits from Intel’s earnings report and analyst call:

Weak and uncertain guidance

Intel didn’t give full-year guidance for 2023, citing economic uncertainty.

But the data points for the current quarter suggest tough times. Intel guided for about $11 billion in sales in the March quarter, which would be a 40% year-over-year decline. Gross margin will be 34.1%, a huge decrease from the 55.2% in the same quarter in 2021, Gelsinger’s first at the helm.

Read more about tech and crypto from CNBC Pro

But the biggest issue for investors is that Intel guided to a 15 cent non-GAAP loss per share, a big decline for a company that a year ago was reporting $1.13 in profit per share. It would be the first loss per share since last summer, which was the first loss for the company in decades.

An inventory glut

Dropoff in gross margin

Underpinning all of this is that Intel’s gross margin continues to decline, hurting the company’s profitability. One issue is “factory load,” or how efficiently factories run around the clock. Intel said that its gross margin would be hit by 400 basis points, or 4 percentage points, because of factories running under load because of soft demand.

Ultimately, Intel forecasts a 34.1% gross margin in the current quarter — a far cry from the 51% to 53% goal the company set at last year’s investor day. The company says it’s working on it, and the margin could get back to Intel’s goal “in the medium-term” if demand recovers.

“We have a number of initiatives under way to improve gross margins and we’re well under way. When you look at the $3 billion reduction [in costs] that we talked about for 2023, 1 billion of that is in cost of sales and we’re well on our way to getting that billion dollars,” Gelsinger said.

The not-so-bad news: Dividend and self-driving

Long-term investors have always closely watched how the company balances the near-term need to placate shareholders with the massive capital spending needed to stay competitive in the semiconductor manufacturing business.

If Intel is cutting costs and still needing to invest in chip factories to power its turnaround, analysts say it may want to reconsider its dividend. Intel spent $6 billion on dividends in 2022, but did not cut its dividend on Thursday.

Meanwhile, the company said it wants to cut $3 billion in costs for 2023 and analysts believe it wants to spend around $20 billion in capital expenditures to build out its factories.

Read more about electric vehicles from CNBC Pro

Gelsinger was asked about this dynamic on Thursday.

“I’d just say the board, management, we take a very disciplined approach to the capital allocation strategy and we’re going to remain committed to being very prudent around how we allocate capital for the owners and we are committed to maintaining a competitive dividend,” Gelsinger replied.

There was at least one bright spot for Intel on Thursday.

Mobileye, its self-driving subsidiary that went public during the December quarter, reported earlier in the day, showing adjusted earnings per share of 27 cents and revenue growth of 59%, to $656 million. It also forecast strong 2023 revenue of between $2.19 billion and $2.28 billion. Shares rose nearly 6% during regular trading hours Thursday.



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