Tuesday, January 23, 2007

It's all about corn...

Our government has apparently decided all farmers should be corn farmers. The State of the Union speech tonight should officially make this One Nation Under Tassels. And when the US is one big cornfield, ag policy will be really easy.
  • We can finally start cooperating at the WTO. I mean, with $4 corn who is going to whine about losing LDP's or small direct payments?
Farm subsidies: The United States has offered to cut the amounts it is allowed to spend on subsidies to farmers under WTO rules by 60 percent. But the European Union and leading developing countries say that it could still spend over $22 billion a year, more than 2005 spending of some $19.5 billion. It is widely assumed that the United States has at least a further $5 billion of cuts up its sleeve made up of so-called “product-specific de minimis” support, which it rarely uses.

The United States is also under pressure to tighten disciplines in the so-called “blue box”, which is a half-way house between farm aid that is considered trade-distorting and aid that is not, like rural development spending.

The EU, which spends far more, has offered a 70 percent cut in subsidies, but could go to 75 percent if the United States went to 65. [More] [Another view]

  • We won't have to worry about cotton farmers or ranchers or livestock producers, but can just throw 'em under the bus as we all produce for wildly expanded mandated markets. Southern producers are not idiots - they are already gaming the shift from cotton to corn. And no doubt scientists will come up with new hybrids or something those guys can grow instead.
The Energy Future Coalition, a Washington-based proponent of alternative fuels, said yesterday that the group expects Bush will call for more than 60 billion gallons a year to be blended with U.S. gasoline by 2030, up from the 7.5 billion by 2012 mandated by current law. [More]

  • Agribusinesses will be ecstatic as demand for fertilizer, machinery, seed, etc. will be huge. My guess is we're going to need a bunch of trucks and roads to move all that stuff from where it is to where it is needed as well. If not, Iowa could soon be knee-deep in DDG's.
Mandates are easy, and don't show up on government budgets. They are also a side-effect of the strong-executive theory of government. If livestock operators think their study group report will have any more effect than the Iraq Report, they are fooling themselves. In fact, they might be the next big subsidy recipients.

This decision has been made, I think and there is small chance of turning back (we like to stay the course a lot).

Too bad it's another unfortunate choice.

5 comments:

brian said...

John,

We may turn on a dime if hamburger is $8/lb. Doug Jackson calls this our "burning our food for fuel policy."

Brian

Anonymous said...

Who worried about the prices that the corn farmer received the past 25 years? We are one of the small farmers who had to quit hog production because of huge hog confinements. The prices we've received for corn and beans has stayed depressed, while all the other costs have increased.

Anonymous said...

What's are DDG's?

John Phipps said...

Brian: I don't know about burning our food, but we're going to fry some livestock producers.

Anon 1: Many producers feel like it is their turn to "get theirs" as well. As you well know there was no safety net for hog producers when they needed it, but we seem pretty comfortable with rigging the market with mandates for corn producers. I'm not convinced raining buckets of money on corn farmers will add all that much fulfillment to their lives, and seeing this windfall as payback strikes me as carrying a grudge. My memory is so bad I have a hard time doing that.

Anon 2: Unfortunately, I can't link you to a good answer here in the comments, so: DDG's are dried distillers grains - the stuff left over after you extract all the starch (ethanol) from corn.

Patrick said...

Makes me want to go out and buy a hundred acres and plow it under and plan corn here in the Pacific NW. We have a Ethanol plant being built that will only be able to get 40% or less of its corn from the Pacific Northwest. The rest will be imported from the midwest...

Kind of crazy... Feels like the dotcom days I went through...

Patrick