“Only twice in my life have I ever seen a record corn crop and prices rise,” says Don Smith, an octogenarian farmer in Lake View, Iowa. With federal mandates requiring 9 billion gallons of ethanol production and ethanol subsidies of 51 per gallon, farmers in Iowa are finding it profitable to plant corn instead of beans and wheat. Don has a small farm and plants 80 acres of corn and 80 acres of beans rotating his acreage so his land remains fertile. “For some, it’s corn, corn, and corn,” says Smith. “Soon the land will become so dry from all of the chemicals that the ground will become like a road.” With over $25 billion in agricultural subsidies this year, the crops in Iowa fields are beginning to look like the yellow brick road.
Corn and wheat are a few of commodities that have seen their price increase as part of America’s push to be free from dependence on foreign oil. The effect has been a spike in prices with corn increasing by 77% and wheat growing to 80% over the last year. Iowa farmers have responded to these signals by planting more corn even in low-laying flood plains near the Mississippi River. Corn yields have increased from 40% by using chemicals like Roundup and corn drilling to plant rows closer together. “Used to be that you could drive at night and the corn bores were so thick that you’d have to use your windshields to clear them off. Now, they use chemicals to kill the weeds. They got (insecticides) built right into the corn now. You don’t see corn bores anymore,” says Smith. With corn production up 15%, prices should be falling—not growing.
Smith received subsidies even though corn prices are up. “Why I got a subsidy with the corn prices they way they are, I don’t know,” he says.
Agriculture has a long history of using subsidies to insulate the family farm from spikes in commodity prices due to severe weather and to protect an American institution that teaches the value of hard work, honesty, thrift, and family values.
The price supports created a surplus of corn and other agricultural commodities like butter and wheat. Often the surplus was placed on the world market. In recent years, the surplus has been used in ethanol to reduce U. S. dependence on foreign oil. Federal mandates to blend more ethanol, federal subsidies of 51 cents per gallon, import tariffs, and a depreciating U. S. dollar have pushed the price of a bushel of corn well over $5. Senator Charles Grassley, D, Iowa, has led the effort for a Senate resolution calling for a national renewable energy goal of producing 25 percent of the nation’s energy supply from renewable sources such as ethanol, wind, and biodiesel by 2025.
During a presidential debate in Iowa, Senator John McCain said, "I want to tell you the things that you don't want to hear, as well as the things that you want to hear," McCain said, "those ethanol subsidies should be phased out," he went on. "And everybody here on this stage, if it wasn't for the fact that Iowa is the first caucus state, would share my view that we don't need ethanol subsidies." 1
Legislators point out that the U. S. imposes an import tax of 54 cents per gallon on ethanol imported for fuel. The tariff, then, pays for the subsidies. The farm subsidies protect the small farmer like Don Smith from large-scale corporations that farm thousands of acres.
Critics of farm subsidies argue that federal initiatives has lead to a world wide increase in food prices and using growing genetically manufactured food has adverse environmental effects that are nonpecuniary.
The tariffs also lead to a higher domestic price critics argue and encourage a greater portion of land devoted to corn and away from wheat. The net effect is higher food prices for both commodities.
Corn and wheat are a few of commodities that have seen their price increase as part of America’s push to be free from dependence on foreign oil. The effect has been a spike in prices with corn increasing by 77% and wheat growing to 80% over the last year. Iowa farmers have responded to these signals by planting more corn even in low-laying flood plains near the Mississippi River. Corn yields have increased from 40% by using chemicals like Roundup and corn drilling to plant rows closer together. “Used to be that you could drive at night and the corn bores were so thick that you’d have to use your windshields to clear them off. Now, they use chemicals to kill the weeds. They got (insecticides) built right into the corn now. You don’t see corn bores anymore,” says Smith. With corn production up 15%, prices should be falling—not growing.
Smith received subsidies even though corn prices are up. “Why I got a subsidy with the corn prices they way they are, I don’t know,” he says.
Agriculture has a long history of using subsidies to insulate the family farm from spikes in commodity prices due to severe weather and to protect an American institution that teaches the value of hard work, honesty, thrift, and family values.
The price supports created a surplus of corn and other agricultural commodities like butter and wheat. Often the surplus was placed on the world market. In recent years, the surplus has been used in ethanol to reduce U. S. dependence on foreign oil. Federal mandates to blend more ethanol, federal subsidies of 51 cents per gallon, import tariffs, and a depreciating U. S. dollar have pushed the price of a bushel of corn well over $5. Senator Charles Grassley, D, Iowa, has led the effort for a Senate resolution calling for a national renewable energy goal of producing 25 percent of the nation’s energy supply from renewable sources such as ethanol, wind, and biodiesel by 2025.
During a presidential debate in Iowa, Senator John McCain said, "I want to tell you the things that you don't want to hear, as well as the things that you want to hear," McCain said, "those ethanol subsidies should be phased out," he went on. "And everybody here on this stage, if it wasn't for the fact that Iowa is the first caucus state, would share my view that we don't need ethanol subsidies." 1
Legislators point out that the U. S. imposes an import tax of 54 cents per gallon on ethanol imported for fuel. The tariff, then, pays for the subsidies. The farm subsidies protect the small farmer like Don Smith from large-scale corporations that farm thousands of acres.
Critics of farm subsidies argue that federal initiatives has lead to a world wide increase in food prices and using growing genetically manufactured food has adverse environmental effects that are nonpecuniary.
The tariffs also lead to a higher domestic price critics argue and encourage a greater portion of land devoted to corn and away from wheat. The net effect is higher food prices for both commodities.
Farm subsidies have had unintended consequences on food prices and distribution of income yet legislators turn a deaf ear to the market.
you are wildly brilliant
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