Posted on 07/27/2012 3:58:23 AM PDT by IbJensen
After a year full of victories for big government legislation in Congress, the forces of statism seemed to have met their Waterloo with the farm/food stamp bill. The more people learned of the profligate food stamp spending and the market distorting, risk-inducing agriculture programs contained in the bill, the more they spoke out against this monstrosity. Speaker Boehner has refused to bring the bill to the floor so far.
Seeing their political stock rapidly diminish, the bipartisan coalition of government-run agriculture took a page out of Rahm Emanuel’s playbook and decided not to let the crisis of the summer drought go to waste. They are using evocative imagery of dead crops and the fear of higher food prices to shove this $957 billion behemoth through Congress. Amazingly enough, the Washington Post of all news outlets has injected some much-needed clarity into this narrative:
But keep the potential hardship to producers and consumers in perspective. “U.S. farmers face this drought in their strongest financial position in history, buoyed by less debt, record-high grain and land prices, plus greater production and exports,” reported Christine Stebbins of Reuters, after a thorough canvassing of industry and government experts. Farm losses should be far smaller than those suffered in the last big drought 24 years ago.
In fact, the Agriculture Department estimates that government-subsidized crop insurance covers more than 80 percent of farmland planted with major field crops — at least two of which, wheat and cotton, appear pretty much unaffected by the dry weather anyway. Dairy farms are the least likely to be in drought-ravaged areas, the USDA reports. And many of them enjoy federally subsidized insurance against rising feed costs. […]
And before Congress rushes through the farm bill, it’s worth reflecting on all the ways existing policies worsen the drought’s impact. More corn would be available for animals if not for federal ethanol mandates. One reason for drought- and flood-related crop losses is that federally subsidized crop insurance encourages farmers to cultivate marginal land and engage in other risky practices, knowing that taxpayers will, in effect, bail them out. Both the House and Senate versions of the farm bill would increase subsidized crop insurance, thus accentuating this moral hazard.
I’m not sure whether the Washington Post is only supportive of urban welfare or whether they stumbled upon a random appreciation for market forces. Either way, they are 100% correct.
Undoubtedly, a severe drought is going to bring some pain to both farmers and consumers. There’s no way around that. However, commodity prices are higher than ever, farmers are richer than ever, and most of their losses will be covered by existing crop insurance. If government would stop subsidizing overly risky behavior, that insurance could be administered by the private sector. But the single most damaging factor in distorting the crop market, particularly the corn crop, is the government’s ethanol policy. Over the past decade, ethanol has been the poster child for the worst aspects of big-government crony capitalism. The ethanol industry has used the fist of government to mandate that fuel blenders use their product, to subsidize their production with refundable tax credits, and to impose tariffs on more efficient sugar-based ethanol from Brazil. These policies have distorted the market for corn to such a degree that 44% of all corn grown in the country is diverted towards motor fuel blends. If we would literally flush half the corn harvest down the toilet, we would be better off than using it to make our motor fuel less efficient.
Thankfully, we have rid ourselves of the 45-cent per gallon Volumetric Ethanol Excise Tax Credit (VEETC) and the 54-cent-per-gallon import tariff. Although the farm bill grants more subsidies through the Biomass Crop Assistance Program – a program in which the taxpayer provides up to 50% of a farmer’s expenses used to plant biomass crops. But the most egregious part of the three-legged ethanol beast –the mandate – is still intact. There is no worse form of tyranny than using the boot of government to force consumers to purchase a particular product. It is especially egregious to make our corn crop so scarce during a time of drought. We should have an abundance of corn from US Reserves, but the ethanol boondoggle has drained out our bountiful harvests.
If supporters of centrally-planned agriculture want to use the crisis to push through a massive farm bill, most of which goes towards the food stamp program, we should use it to eliminate the ethanol mandate.
They want to feed the hungry....fine, let them all become missionaries or join the peace corps. Do it with their own money, not taxpayers.
But the small engine repair shops are booming from all the damage caused by ethonol-laced fuel.
The ethanol eats rubber fuel lines.
The damage sends particles of the inner rubber into filters and carbureters and fuel injection systems, stopping them up and reqiring expensive repairs,
Ethanol can be manufactured from natural gas and coal 30% cheaper than corn based ethanol. We can use our coal and gas reserves to cut down on foreign oil, lower the price of fuel for everyone, and divert our food to food uses.
ethanol cannot exist without government subsidy... so screw the rubber eating acid. Corn alcohol is for drinking and not running in engines... period!
LLS
Worse than forcing consumption of corn ethanol is to force blenders to buy cellulosic ethanol - and then penalizing them when there is no cellulosic ethanol on the market, forcing gas prices higher yet since consumers ultimately pay for the non-existent fairy dust.
The entire central socialist govenment and much of the state governments suffer from dementia and need to be placed in padded cells. At any rate they need to be kept away from the populace.
Does any one have any hope of getting this crap out of our gas?
. . . major field crops — at least two of which, wheat and cotton, appear pretty much unaffected by the dry weather anyway.
Anecdotal evidence for this - we just drove through L.A. (Lower Alabama for those of you not familiar with the South) last Sunday. Definitely saw a few fields of burned-out corn that simply was gone, not going to be a crop this year. Saw lots of healthy looking cotton as well in the same areas.
What an article filled with absolute freaking bald faced lies.
First off, those higher corn prices have come with higher input prices for fuel and ammonia, so the profit isn’t that great. And higher land prices add to that with higher property taxes and capital costs for farmers buying/renting land to farm. The wealth-hate in the article is obvious even if it is misplaced.
The byproduct of ethanol is DDG. It is used as both animal and human food, and if the stillage is kept out as it should be, it is a fine product to feed to animals as it is high in protein and lower in carb and fat than corn.
The paranoid delusion rantings about the supposed farm lobby juggernaut seem hilarious in light of the fact that somehow, despite all their power, the blending and import subsidies expired unceremoniously. The other credit they mention, I doubt most farmers know about it or can take it, as their corn goes direct to market and not directly to ethanol production.
I hate mandates as much as the next person, but don’t cloud the issue with a bunch of other ideologically driven BS.
And how about getting the price of diesel back where it belongs. India pays only 2,39/gal for diesel. Doesn’t everyone wonder why the price of groceries and other goods are so damned high? The federales are playing games with the fuel!
A local farmer said that's all he grows now....corn for the ethanol plant....no beans, no eating corn, no grains....
We are a stuck on stupid. People have always asked...What if we have a drought....Well, we're going to pay for it.
When's the lst time you had a GOOD cut of beef??
You got that right. The first time I took one of my small engines into the local repair guy, he laughed and said his business is booming thanks to ethanol. Since I now only use premium for my small engines, I expect to see a lot less of him in the future.
Where’s the link?
Diesel fuel is heavily subsidized by the Indian government.
Do you want the US Fedgov to create more Baraqqi/Bernanke/Geithner minibucks to do the same?
Does premium fuel in your area have less/no ethanol?
Ethanol plants here in Indiana are closing up faster than K-Marts in the 1990s.
With the repeal of the domestic subsidy and the repeal of the import tariff, I’m assuming Brazilian sugar cane derived ethanol is taking the place of domestic production.
Say what?
Around here (Atlanta), premium is also polluted with 10% ethanol.
no ethanol in the premium. The other two fills, regular and some higher octane blend, have ethanol. The regular can have as much as ten percent. Across the river in Minnesota along with the three grades of fuel I mentioned, they have something called E-85 which can have up to an 85% denatured ethanol and gasoline blend. Not available in Wisconsin where I live.
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