Iowa is number one in corn because it has the best soils in the world for corn. There is no third world country that can compete with the native soils of Iowa. You can solve all the other issues (many of which are real) and they still lost the location lottery and cannot compete. (some regions can grow two crops a year though which might make them better than iowa despite not as good of soils)
That would be the nice thing about an open market: different areas could stay focused on what they're particularly good at. Iowa would definitely stay involved in corn.
But as you sort of alluded to, in a free market some areas could put downward price pressure on corn even if they're not as efficient as Iowa. If they've got land that isn't very well suited for anything else, and it's a choice between making a little money on corn and little or no money at all with their arable land, they'll probably go for it...
