Skip to comments.Corn subsidies should go down
Posted on 02/18/2008 7:08:09 AM PST by bobconfer
This is one of my recent columns, addressing ill-advised corn subsidies...
From the 10 December 2007 Lockport Union Sun and Journal (Lockport, NY)
CORN SUBSIDIES SHOULD GO DOWN By Bob Confer
Federal subsidization of agriculture has become a necessary evil, more or less out of its own existence. Such is the outcome when government so greatly interferes in capitalistic endeavors: once the dominoes are set into motion by its "invisible hand" the damage is done and the pieces can never be put back to normal. We cannot go back to a true free market economy in regard to our foodstuff because the act of giving money to the farming industry has become so utterly entrenched in the ways of doing things and affects so many facets of our total economy (from food processors to retail establishments to the end consumers) that there is no way the system can be abandoned without unreasonable duress placed upon the entire nation.
But, this does not mean that that the current way of doing things cannot receive some manipulation. The Federal Government uses the same worn-out methods that have been in play since 1933 (the Agricultural Adjustment Act) and improved upon in 1949 (the Agricultural Act), an era when Americans were too amicable to quasi-communist actions (i.e. Social Security, Civilian Conservation Corps) made popular by Franklin Delano Roosevelt. Many of these practices are outdated or their scope too vast.
Among the problems that should be rectified is the determination of what exactly should be subsidized. Subsidies were put into play to lower national risk, offer security for domestic food producers and instill lower food prices in the marketplace to benefit all consumers. The main crux behind all three factors is "food"; subsidies were implemented to keep the creation and purchase of food affordable. That being said, certain subsidies, those not related to foods, should be dropped.
Of all the crops, corn has quickly become the poster child for such reform. A great deal of the corn planted on American soil is deserved of federal funds as it is one of the more significant inputs of our diets, providing not only table corn, but also corn syrup and sustenance for our cattle and chickens. Even so, corn is suddenly and uniquely positioned as a crop thats more than just a food. It has become a renewable resource as well, accounting for 98% of the ethanol (the governments fuel additive du jour) produced in the States. Corn is now a veritable yellow gold, bubbling crudes best friend, with levels of ethanol at 10% per gallon of gasoline and 15% mixes becoming increasingly popular.
Because of this distinction as a non-food, a great deal of current and future corn production should theoretically be eliminated from the corporate welfare rolls. In 2007, American farmers planted an unbelievable 92.9 million acres of corn. Of that, 15 million acres were dedicated to ethanol production, meaning that 16% of all total corn output is not attributable to food. This number will grow substantially in the coming years as current ethanol output is expected to go from about 5 billion gallons this year to 9 billion gallons by 2010.
For all corn planted in 2005 (the most recent year that final data is available) federal subsidies exceeded $9.5 billion. Assuming the same for 2007 which, admittedly, is a shot in the dark because the ten-year average is $5.25 billion over $1.52 billion would have been thrown away this year to farmers who were supposed to feed our citizens but, instead, fed the Big Oil monster. Thats $1.52 billion that was stolen from the mouths of babes and injected into your fuel tank. Without reform, this misdirection of funds will continue because many subsidy payments are nearly automatic and there is no accountability factor in any form of the past, current, and future Farm Bills.
These dollars, if they really need to be used, are better spent on other crops such as soybeans, which are losing ground (figuratively and literally) because American farmers are finding preference in growing revenue-heavy corn.
Another reason that these corn-fuel subsidies should end is that weve already spent more than enough on ethanol through energy-related subsidies. Ethanol producers were paid $7 billion in federal and state monies in 2006 alone. These incentives by themselves amount to freebies that equal $1.40 per gallon. Add to that mix the cheap corn that someone, somewhere is reaping in this mess and the ethanol market looks like a sham, something that a self-serving federal government maintains in an effort to make itself look good in the eyes of our increasingly-"green" populace.
Corn subsidies should not go down. They should end!
As well as the fifty cents a gallon ripoff of tax payers on ethanol.
These subsidies are part of the decades old cheap food policy...........no need to read further, this guy is uninformed.
Which of course do nothing but make food more expensive.
End? Yep. Ditto the tariff on imported sugar.
They have become a necessary evil because the dominoes are set in motion by the hand of communism and there’s no way they we can change what’s been done. Were we to stop subsidies in their entirety now all hell would break loose.
A nice idea, but corn subsidies will go away only after the Oil Depletion Allowance goes away. Those oil producers need all the help they can get in these tough times.
The government should get rid of all farm subsidies. But with ethanol mandates, corn growers are ending up with 2 subsidies. End at least one of them.
Good point on the depletion allowance. They used 2005 for prices because corn was very low. Loan deficiency payments were paid because corn went below $1.86/bushel. Given todays prices and the same loan rate there will be no payments for this. Other than direct payments which are not tied to production there will be no payments.
They are correct when they call this a cheap food policy. These subsidies are for the consumer via the farmer.
You have no idea what you are talking about. Zero, Nada.
We have the cheapest, most abundant, most varied, food supply in the entire history of the world.
Up until now it has been highly subsidized. We have now entered a (possibly) short period of time where real competition for those cheap food stuffs is occurring. Competition that outstrips the price protections, both up and down.
Carefully crafted, finely tuned, annually adjusted government subsidies and acreage controlled price supports are giving way to farmers freedom to do what they have wanted to do since the 50s, grow huge crops, and get paid to do it.
The government programs no longer have enough money to exert the control over farmers production, either in crop or acreage, so the farmers are going where the money is. And it isn't in producing cheap foodstuffs.
This temporary situation may allow a way out of government tinkering. I think that would be good for everyone.
Brace youself, without subsidies, food is going to get much more expensive.
Do you have a working link for your article? What are your credentials in the area of agriculture, besides the fact that you eat?
With any column I write I spend a significant amount of time researching the issues and paging through data. Also, my family operated a farm right through my youth...right up until our factory became so large that we needed to stop farming. And my neighbors operate the largest farm in Niagara County, an ag hotbed.
Up until now it has been highly subsidized.
That depends upon what you mean by "highly". While basic commodities such as wheat, corn, and sugar are subsidized other foodstuffs such as bananas, are not.
As a result of this screwed up system, Americans pay some of the highest prices in the world for sugar for example.
All 'farm subsidies' should be ended immediately. They are nothing more than welfare for a politically favored group.
How about 'oil subsidies'? Should they be ended too?
If you can find the word 'subsidize' in the US Constitution enumerated as a Federal power in Article 3, Section 8, I'll send a $1,000.00 donation to FR.
If you can't find it, you send $1,000.00 to FR.
Care to take my bet?
Subsidy for grains takes the shape of non-recourse loans, counter-cyclical payments or direct payments. All 3 forms of subsidy are intended to increase the supply of a grain beyond that which the market would support, in essence guaranteeing artificially low prices for for farm commodities.
The FSA publishes a "target" price for each program crop, including corn, which triggers the production related subsidies (the direct payment is made regardless of how much is produced and is nothing more than a bonanza paid by the government to speculators to acquire farmland). While the total bill for farm subsidies in the 2005/6 crop year was about $9.4 billion, the market price of farm commodities exceeded the target price throughout the 2006/7 crop year, eliminating production subsidies entirely and reducing the total subsidy cost from $9.4 to about $2.4 Billion.
To be fair, you need to add a chart showing increased fuel and fertilizer costs.
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