Some observations, my comments mainly covered the period prior to the recent run-up in grain prices.
Most farmers I know are ecstatic that they are no longer dependant on the USDA for even a portion of their income. How long that will last is difficult to tell, but for now they are enjoying a freedom that they haven’t had since WWII, and for most of them, until now, they had to ask Grandpa what is was like to be free. They aren’t going back easily.
It seems to be the consumer who is the one who is suffering the withdrawal symptoms you referenced. I think none of them, as judged by the posts here at FR, thought that the transition to government free farming would be so traumatic for them personally, and so freeing for the farmer.
By way ov evidence that ethanol has little to nothing to do with the current grain prices, see this: “Rice prices hit the $1,000-a-tonne level for the first time on Thursday as panicking importers scrambled to secure supplies, exacerbating the tightness already provoked by export restrictions in Vietnam, India, Egypt, China and Cambodia.” http://www.ft.com/cms/s/f21969fe-0ca5-11dd-86df-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Ff21969fe-0ca5-11dd-86df-0000779fd2ac.html%3Fnclick_check%3D1&_i_referer=&nclick_check=1
The recent price spike is world wide, and has very little to do with ethanol. ( I do know that not a single non-farmer here believes that, but time will prove that to be correct)
I think consumers can finally breath a sigh of relief, the market has adjusted food prices to a point that the American farmer will no longer needs the government. Their wish has been fulfilled.
Yes, there is some sarcasm in that last sentence.
I'm not so sure of that. Although no one makes ethanol from rice food is fungible. If corn is too expensive people buy wheat, if that drives up the price of wheat people buy rice. Burning corn is going to increase all food prices.
Ethanol is produced world-wide. The US accounts for one third of the world production. China produced about a third that we did in 2004. The Chinese quadrupled that number by 2007. I doubt if they increased quadrupled grain production but they sure are controlling grain exports:
"Early this year, to control demand, it [China] began curbing grain exports through quotas and taxes. It promised continuing supplies to Hong Kong. But now grain importers there have had to pledge that they will not re-export. Diplomats say that China's caution has even affected the flow of food to North Korea, an old ally heavily reliant on shipments from abroad. Aid workers say North Korea is facing its worst food-supply crisis since a famine in the late 1990s." -- Economist
Ethanol fuel is a world-wide phenomenon. The EU wants to increase ethanol use to 5.75% by 2010.