A reader suggests a closer look at farm policy:
At the risk of swatting the hornet’s nest, I offer my humble opinion on where this is going.
Corn ethanol is a first-generation biofuel, and as such, is possessed of many repellant features, namely poor fuel economy and a reliance on federal subsidization to “compete” in a free market. Brazil addressed the fundamental problems of ethanol vis-a-vis oil by nationalizing their energy industry, and mandating sweeping changes to favor sugarcane ethanol. That can’t work here, as the U.S. is the driving force in nearly all of the global supply and demand factors relevant to agricultural commodities (not to mention the awful thought of nationalizing any industry). Clearly, we are seeing the net result of a biofuel-centric approach to agronomic policy and subsidization with an attendant increase in prices across the entire commodity spectrum.
This is not the fault of the evil robber barons at ADM, Poet, Abengoa, Verasun, et al. Its genesis is not so easily determined, but my opinion is that the U.S. has been following a disastrous agronomic policy for the last few decades. Let’s face the facts here: 99 percent of politicians are deeply uneducated when it comes to agronomic production and industry. As such, the failed policies enacted over the years have led to a rash of farm consolidations, the ex-farm migration away from rural areas and this emphasis on ethanol as a miracle fuel source. If not for extensive price supports, the farming industry would be much further along in its maturity into a 21st-century business model.
The reality of the agricultural industry is this: four-tenths of 1 percent of all farmers generate 32 percent of all production revenue (2002 USDA census). That number was before a 200-percent increase in land values (my own anecdotal opinion), a nearly 250-percent increase in the price of corn and a heavy spike in input costs associated with agricultural production (fuel, fertilizer, seed, chemicals). Plainly, the average farmer is in trouble. Is there an immediate answer? Maybe, maybe not. The reality is that fewer producers are carrying the bulk of American production demands for the world’s appetite for grain. Ethanol has served as a short-term price-support mechanism to a long-term problem, and also as an indirect impetus to addressing many long-standing complaints regarding federal subsidization of the farming industry.
One further note on subsidies — while the focus of many debates on farming rests on the viability of subsidies for the farmers, do note that in the last two crop years, very few, if any farmers have been receiving subsidies. The overwhelming majority of debt now incurred by farm programs is the various welfare schemes (like food stamps) that sneak in every Farm Bill, that are aimed at buying welfare recipients’ votes.
A better debate for the contributors at Planet Gore would be the following: if ethanol goes away, what then for the American farmer? Do we return to price supports enacted by the government and funded by your taxes, or do we allow the industry to mature under current conditions, derive further advances in technology and environmental usage (such as better corn and soybean genetics that utilize less soil nutrients and water), and perhaps bring American farms into modern business systems and economies of scale?