Fascists Of The Corn

David Freddoso is still angry about our insane and, in my opinion, criminal ethanol and sugar policies:

The problem is that our sugar industry has even better lobbyists than big ethanol. They enjoy price supports, which we pay for both through the Treasury and in the supermarket. The price of our sugar is usually twice that of the world market. The sugar growers love it — even if they cannot sell all of their sugar, they have a guaranteed government buyer at an inflated price. The corn growers love it too, because high U.S. sugar prices push our food industries to use high-fructose corn syrup (ever seen that on a product label?) as an alternative sweetener — yet another artificial support for the world price of corn.

Not to mention wreaking havoc on the Everglades. Price-supported sugar cane is using up a lot of the water that both south Floridian humans and animals need, and they do this with the same political clout that they use to get the subsidies and tariffs, for an industry that is not all that big in terms of the economy.

Even if we want ethanol, we can’t solve the problem by importing sugar, because there are tariffs in place. We can’t import the ethanol itself because there’s a high tariff against that, too. Wherever you turn, there’s no way out — Americans don’t enjoy economic freedom, we live in a managed economy.

It makes me especially proud of my country when I see Sen. Chuck Grassley (R-Iowa) call foreign delegates’ concerns over a potential doubling of world hunger “a joke…”

Let’s call these people out for what they are–Republicans and Democrats alike–fascists. Not that there’s anything wrong with that.

[Update a few minutes later]


[Update early evening]

Oh, wonderful:

Key House and Senate farm bill negotiators reached agreement today on the main elements of the farm bill…[T]he five-year bill would raise the target prices and loan rates for northern crops beginning in 2010, raise the sugar loan rate three-quarters of a cent and include a sugar-to-ethanol program.

Oh, that’s just great. We have a program that makes us overpay for sugar, and now we’re going to start a new program to subsidize the ethanol we create from it — because without the subsidy, the inflated sugar price we’ve created will make the ethanol unprofitable.

Just when you think it can’t get any worse, they always find a way.

3 thoughts on “Fascists Of The Corn”

  1. At current gasoline prices, the mere fact that grain can be converted to ethanol at a not-too-high price means there’s a floor on the price of grains. As gasoline becomes even more expensive, this floor will rise. This is largely independent of details of US government policy. At worst, you can say that by helping mature the grain->ethanol conversion chain, the US policy has reduced the cost, and hence raised the floor on grain prices (for a given fuel price).

    Only when global ethanol production is so high that it depresses the global price of gasoline will this unfortunate effect be mitigated.

  2. A realistic transition would include a buy out of the US sugar producers. Let’s look for something that won’t be blocked in the Senate. My estimate of the implicit subsidy from the import ban is about 50% of the US wholesale price or about $0.10/pound times 25 megatons or about $5 billion/year. It probably costs them something more than the world price to produce so splitting the difference would be about $2.5 billion/year. Discounting that at 8%, a realistic buyout might be in the range of $30 billion. Look for a win-win with the sugar industry unless you want to out-spend them on lobbying. Figure out a way to make both big sugar and big corn happy or else the corn people will block the sugar buy out. It’s very hard to mount a successful lobbying campaign by a diffuse interest group against a concentrated one.

    Paul: Good for corn growers and ethanol distillers at the expense of taxpayers. It has negligible effect at the fuel pump.

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