I said they paid farmers to not grow.
I didn't say it payed farmers to “stop growing crops”, but that it paid farmers to not grow, to keep the prices artificially higher.
So shouldn't coal be cheap in Newcastle?
OK, to properly use quotes:
“So shouldn’t coal be cheap in Newcastle?”
No. Coal should be no cheaper “in Newcastle” (whatever that means) than anywhere else, modulo transportation costs. If you can’t ship the coal out of “newcastle,” then OK, coal might be cheap there.
As soon as you’re dealing with a global market, you’re no longer in control of pricing.
Farmers’ prices for their crops are cheaper than the quoted futures’ markets, and are adjusted by “basis,” which takes into account how much it costs to ship their crop to a delivery terminal. Once their crop is at a delivery terminal, it is priced like any other crop commodity, even if the delivery terminal is the middle of Iowa.
If the Chinese put in huge bids for hundreds of metric tons of corn, then corn futures go up and the price of corn sitting in an elevator in the middle of Iowa goes up.
Here’s a completely domestic example, tied to your quote about coal:
I can get sub-bituminous coal relatively cheap right now, because the economy is still sub-par with respect to electrical generation in the midwest. If I get my MSHA card, I can go up into Decker, MT and fill my pickup with coal at cheap prices - but the price varies according to power generator demand for that coal. It is not an “always cheap” price, unless I work for the mine (in which case one of their employee benefits it free coal for domestic use).
When the midwest (Wisconsin and Michigan) economies were doing much better, coal at the mine just up the road here (in Decker, MT) was higher in price than it is now (nearly double the current price, in fact) - because the demand in the midwest was setting the price, not local demand. The locals have to deal with the price of coal as set by the demand of electrical generation in the midwest, coupled with railroad transportation costs.