We can both agree that farmers are not stupid, in fact, generations of them have been smart enough to figure out that they can make more money farming the "gubmint" then they can farming the land. Biofuels subsidies are a classic case of farming the government. The distortions and our agricultural system by the government have been a classic case of government meddling.
No one on this board would agree that we have suspended the laws of supply and demand. If the government increases demand by increasing subsidies to divert feedstocks for fuel, either the price of those feedstocks must rise or supply must increase. You have now suggested that the supply has increased. I am sure that it has for that is fully in keeping with the law of supply and demand. The problem is that the government' s subsidy arrangement is nearly infinite in its appetite. As I understand it Senator Hutchinson's bill was designed not to eliminate biofuels subsidies but to cap the amount of diversion away to biofuels. The projected diversion is breathtaking in its scope unless capped.
Our clever farmers must decide whether their feedstocks will generate more money by feeding it to their cattle or cows or by feeding it to the government. For example, if the government with its subsidies drives up the price of feedstocks, and the increase in supply is not nearly enough to offset the increase in demand created by the government, a farmer, seeing the price going up, is likely to decide that his feedstocks will go to biofuels unless the price of beef and milk rises high enough to warrant feeding it to animals. As long as the government keeps raising the bar, supply cannot catch up so the price must adjust. This is exactly what is happening.
"If the government increases demand by increasing subsidies to divert feedstocks for fuel," You keep making a fool of yourself by stating something is being "diverted' to make fuel at the expense of food for something.
Nothing could be futher from the truth.
Do yourself a favor and read:
how ethanol is made
"Our clever farmers must decide whether their feedstocks will generate more money by feeding it to their cattle or cows or by feeding it to the government. For example, if the government with its subsidies drives up the price of feedstocks, and the increase in supply is not nearly enough to offset the increase in demand created by the government, a farmer, seeing the price going up, is likely to decide that his feedstocks will go to biofuels unless the price of beef and milk rises high enough to warrant feeding it to animals. As long as the government keeps raising the bar, supply cannot catch up so the price must adjust. This is exactly what is happening." You haven't a clue what your talking about.
What are "feedstocks"?
Government subsidies drive DOWN commodity prices.
Ethanol production PRODUCES "feedstocks". Ethanol producers have been major suppliers of "feedstocks" for many decades.
As I said, there isn't a shortage of "feedstocks" anywhere, and ethanol production isn't the cause of any price increase. GASOLINE is.
You haven't a clue about beef or dairy farming. A dairy farmer would NEVER EVER sell off his silage ingredients (grains, corn) to "cash in" on higher commodity prices.
He grows field corn, FEED- which is indigestible to humans. this stuff is ground up,cob and all, mixed with other grains, alfalfa and shot up into a silo, where it ferments slightly, turning into a high protein sweet feed dairy cows like.
If he has extra airable land,(most do) THEN he grows crops especially for that commodity market.
Dairy farmers have a MILK QUOTA. That is their bread and butter. This they protect at ALL COSTS. No dairy farmer in his right mind would cut his herd and give up his milk contract quota just to sell a few bushels of corn o the commodity market- for what, a lousy 4 bucks a bushel?? THAT is INSANE.
Those milk contracts quotas are NOT EASY to come by. If you loose it, you will probably NEVER get it back. Some have been in their families for generations.
Do some reading, and you'll see why ethanol producers are complimentary to the feed industry, especially for poultry, pig and stock yard cattlemen.
Any increase of ethanol creates an increase of "feedstocks" animal feed production, vital to their businesses. This tends to drive DOWN those costs, not up.