Injustice. A government policy that hurts the poor the most.

corn fieldThe federal subsidy of ethanol will end with the end of the year if the government does not act to extend it. For the sake of those struggling to make ends meet, let us hope they let it die.

According to analysts from Goldman Sachs, the ethanol industry “will consume about 41 percent of the U.S. corn crop this year, or 15 percent of the global corn crop.” With increased demand comes increased prices, which means everything else that comes after corn in the economic pyramid rises in price.

That means food prices go up, and not only food made out of corn that people eat, but also feed for livestock, thus raising the cost of feeding the cows, chicken, and pigs that we eventually buy wrapped in styrofoam and plastic packages at Kroger.

The mandate also forces fuel companies to blend ethanol into gasoline. Since ethanol is more expensive to produce than gasoline it drives up the cost of a gallon of gas. Ethanol-laced gasoline also reduces gas mileage, thus compounding the problem.

And those hurt most by this wrong-headed policy which lines the pockets of a few lobbyists and industry fat cats are the poor who are forced to pay a larger percentage of their income on basic food staples and gasoline for their car. Especially in economic times such as these when the percentage of people out of work is at about 22.5 percent it is downright wrong to allow such a policy to continue. It is a drag on companies which could hire people with the money they are presently forced to pay for higher fuel costs. It is a drag on our pocket books in higher taxes. And it forces those who have less to surrender more for basic needs.

A bi-partisan group of 15 U.S. senators sent a letter to the Senate leadership calling for the end of the ethanol subsidy and protective tariffs. I hope they are successful.

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5 thoughts on “Injustice. A government policy that hurts the poor the most.

  1. fred says:

    Are you aware that only 1% of corn grown in the U.S. makes its way to the plate? Are you aware that the corn grown for ethanol production is inedible? Are you aware that there are approximately a billion acres of fallow farmland available to plant food, if the nations of the world could agree on some sound energy and food-production policies? Are you aware of the many other by-products of ethanol production? Are you are aware that cellulosic ethanol production, thanks to technological advances of the corn ethanol production, could displace foreign oil by 2030. You argument, though cogent and well-reasoned, is a bit ignorant to the bigger picture about ethanol–not surprising, given the glut of bogus information begin dripped into the consciousness of the world daily by a complicit media.

  2. Cindy Z says:

    I don’t know where Goldman Sachs gets their numbers, but the most recent USDA Supply/Demand report puts 2009/2010 US corn production at 13.1 billion bushels and ethanol use for that time period at 4.5 billion – about 34 percent. Projections for next year at this moment are about 37 percent. Not factored into that equation is that one third of the corn used for ethanol production – approximately 1.5 billion bushels – is returned to the livestock market as feed in the form of distillers grains.

  3. John Powers says:

    The food shortage argument sounds like a red herring to me. There is so little value of grain in basic food stuffs like corn flour or oil, that the end price to the consumer is not effected that much by a change in raw grain costs.

    For example, Corn Tortilla’s go for 15 cents an ounce at the grocery. White Corn (humans eat white corn) goes for US $195 per ton, or .006 cents per ounce. Say corn went up 50% in price…then its .009, or still less than 1/15 the price to the end user. The other 14/15 of the costs are related to overhead, profit, transportation etc.

    Also, isn’t most of the “subsidy” actually a tax abatement. Ethanol is shielded from the 55 cent a gallon gasoline tax. It’s an important point, corn has quite a few uses, but does not have that much effect on the price of edible end items.

    JBP

  4. Larry R. says:

    50 years ago, when my dad was growing up in north central Kansas, there was very little in the way of wildlife – deer, turkey, antelope, you name it,most all of it had been driven off by intensive farming and population increases. Nowadays, that same area is virtually overrun with wildlife, to the extent that the number one cause of automobile accidents in that county is deer strikes. What has happened? About 1/3 of land that used to be farmed is now fallow, because so many family farms have closed up due to low prices. A bushel of wheat, in 1970, went for about $4, today, not much different, on average. It is true that grain prices have generally increased over the past several years, but it is also true that a tremendous excess capacity is now dormant in the US agriculture industry. If prices remain high, eventually that excess demand will come back into play (provided we do not have government policies that prohibit that, which at present, we sort of do), and prices will eventually level out at some point below the peak. Just something to consider – the US could probably produce 50% more grain than it presently does, since there has been so much productive land taken out of use.

    I do not know where the statistic “net importer of food” comes from. I do not believe that to be true, especially regarding cereals.

  5. scott says:

    And since the US is now a net importer of food, that means we are taking food from the tables of poor nations to feed ourselves. This injustice has cascading implications.

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