Replies

Ethanol is less of a subsidy, and more of a market outlet for much of the annual overproduction of corn.

Sometime back I wrot a piece about how farm subisides affect food prices. If you are interested, here it is:

The programs, as briefly described below, were designed and refined to provide the most plentiful food ever, at the lowest prices in human history, not to help the farmers.

If you care to read it, here is how, and it is a tribute indeed to the skilled bureaucrats who put it all together.

For the past 50 years or more the farm programs (really food programs, as they were designed primarily from the food available angle) have been carefully crafted and annually refined.

The final acreage allotments, price supports etc. aren’t put into place until the very last moment, so that the desired crop size can be more precisely met. The goal is to produce just enough excess food stuffs to keep the price down, but not so much as to drive too many farmers out of business in that crop cycle. .

Price supports are in place so that farmers can count on a certain ‘floor’ price for their crop, sort of a minimum wage. This money will allow them to plan to be in business for the next year.

Acreage allotments set by the USDA allow for a big crop, more than the consumers can use. As a result, there has always been a surplus, often a huge surplus, hanging over the market, keeping prices down, sort of a maximum wage.

Imagine some guy standing in your boss’s office asking for your job everyday, willing to work for just a bit less than you are. Not at the employment agency, but actually in your boss’s office, ready to take your job on a couple minutes notice. With that kind of situation, it’s going to be hard for you to ask for a raise, and it’s also hard for crop prices to rise significantly with the surplus that the government has arranged to be hanging over the market you compete in.

Fifty years ago, when this was just beginning, a lot of farmer didn’t enroll. As the years passed, these programs began to squeeze every farmer. It is now to the point where nearly every farmer in the United States is enrolled. Very few farmers have the financial resources needed not to enroll, because a particularly large crop can force prices so low they can be driven out of business within one crop cycle without the assurance of the government floor on prices for those enrolled in the program. That means that the government has control over nearly every aspect of crop size, how long the farmer will store his crop after harvest, and at what price he will sell it for.

All of the above is designed primarily to keep food stock supplies up, prices down, and food cheap for the consumer. Secondarily, it’s designed to keep farmers poor, so they will be forced to enroll in the program next year.

A quick trip through the Midwest, our breadbasket, will reveal the accuracy of the success of that Secondary target. Small towns, which rely on the financial earning of the farmers to survive, are poor. A trip through the countryside where the farmers actually live will show farm families who live a very simple life. I’m not asking you to feel sorry for any of them, anyone could move elsewhere. I did.

Ethanol has been the straw that broke the back of the cheap food train, but it could have been just about anything.

With the introduction of ethanol, prices rose and farmers found an escape route from their predicament. No longer is there enough money and power in the farm program subsidies to keep them trapped. .

Farmers are now free to do what their hearts have desired to do for decades, produce enormous crops……. And then get paid for those crops by willing buyers who will pay a price that ensures a fair profit.

Now that the complainers about the farm program subsidies have gotten their wish, and the farmers don’t need to government programs, they are now complaining that food prices are too high.

It seems we can not have both at once, low food prices and no government programs.

Rush has asserted that the most expensive commodity traded in the United State is ignorance. The ignorance, even here at Free Republic, about where and how our food is produced, and how it comes to our tables, and how the farm programs have affected our food supply and food prices is a good example of that assertion.