Not exactly, food corn varieties are not ideal for ethanol production, so most farmers intending for the ethanol market grow ethanol preferred varieties. They are different commodities but still corn.
Farm subsidies are definitely on the table, and definitely should be. The free market should prevail wherever possible, but farmers are not all bad guys, and farming has specific risks that need to be addressed.
There are three types of corn grown in the US: Seed corn (which we need not discuss here), field or dent corn and sweet corn.
Sweet corn is what you eat as corn-on-the-cob. The number of acres planted to sweet corn is low; I doubt that the total acres for sweet corn in the US reaches 100,000 acres.
Field/Dent corn: This is the “industrial” corn, used for feed, HFCS, corn meal, grits, ethanol, HFCS, etc. This is what is planted on usually at least 85 *million* acres of farm ground in the US.
For all those people pontificating on this thread about ethanol, here’s a couple clues:
1. The farmers receive no direct subsidy “for ethanol” unless they’re part owners in an ethanol plant (and some farming co-ops are). The per-gallon blenders credit goes to the oil companies to put the stuff into your gasoline. Ethanol is merely another market buyer for their corn, along with feedlots, pig feeding operations, HFCS suppliers, etc. That’s it. The same field corn will go to any of these outfits.
2. As long as there is the correct differential between gasoline and corn prices, making corn into ethanol will be profitable. Want a free market where corn for ethanol becomes non-viable? Crater the price of gasoline while you keep the price of corn high. Ethanol disappears overnight.
Since the commodities markets are moving mostly in relation to the plummeting value of the USD, that’s not about to happen. Since we’ve having widespread flooding preventing farmers from planting corn this season, I would expect corn prices to remain high or go higher - even if you could wave a wand and make ethanol disappear overnight now. If the ground continues wet for another three weeks, you’ll see the price of soybeans go through the roof too. When we sold our hay farm in 2007, premium dairy hay was running $130/ton. Right now, that exact same type of hay is running $200+/ton *at the farm* (ie, the cost of transport has gone up too, but those numbers I just quoted are pre-trucking) and there is NO futures market on hay. There are no speculators to blame for hay prices, there are no manipulations by Goldman Sachs, there are no subsidies on hay, etc. Hay is a cash-only crop, and in that area, has absolutely NO subsidies whatsoever.
Americans have gotten used to cheap food. Well, I’m here to tell you, thanks to Ben Bernanke and his magic helicopters, your days of cheap food are over. Our crop prices look so damn cheap overseas that China et al are buying HUGE stocks of our crops and taking away all prior assumptions of year-to-year surpluses (called “carry-out” in farmer lingo).
If you want a truly “free market” in American ag, here’s my suggestion for people: Get used to much higher food prices. The producers who can’t make it go without higher prices will have to drop out of farming, and that will remove some of our carry out. Without a significant increase in the value of the US dollar, “free trade” exports of our crops to countries with huge trade surpluses or strong currencies will finish the job. You will be paying double what you’re paying for food now.
Now, I, as a former farmer who existed and penciled an operation with NO subsidies, I would like to see subsidies gone. But I also know what all the consequences of this will be. You won’t hear me whinging about the high price of food.... because I know that farmers still aren’t getting HALF of the per-unit commodity prices they received for foodstuffs in 1973, when we last had any tie to the gold standard. Corn would be over $14/bu today if food prices were the same as late ‘73, adjusted for inflation. Instead, they’re less than half of that, in inflated dollars, with diesel fuel climbing through the roof. But I do know that without subsidies, there will be significant increases in food prices now, from corn through beef, you name it.