Wednesday, April 16, 2008

I'm not sure indignation is the best response...

Corn growers are feeling picked on, I think. Jim Dickrell's editorial in Dairy Today triggered a garbled-message response from Randy Woodruff of the Wisconsin Corn Growers. First, Jim's point:

The only good news is that the shine might be off many new ethanol plants as production starts to meet domestic ethanol requirements. With 140 billion gallons of mobile fuel used annually in the United States, the 10% ethanol standard suggests demand will mature at 14 billion gallons. Boehlje projects we could reach that level sometime next year.

The Federal ethanol credit of 51¢/gallon translates into an additional $1.60/bu that ethanol plants can bid for corn. That $1.60/bu subsidy literally pumps $8 billion into corn growers’ checking accounts—or twice what the new Farm Bill would send out in direct corn payments to growers.

And with those kinds of returns, farmers are planting more corn. That’s driving up the demand for seed corn, nitrogen fertilizer and even combines. [More]
Jim's relatively mild recitation of the facts fired up the talking-point machine for Randy.
Higher grain prices mean taxpayers aren’t supporting farmers via commodity program payments. U.S. tax payers shouldn’t be subsidizing food companies with billions of dollars in farm programs that sustain below-cost-of-production feed and help keep U.S. farmers on government welfare. This year alone, Federal support for farmers dropped by well over $8 billion thanks to higher corn prices.

Truth is Americans enjoy the safest, most abundant and affordable food supply in the world and even with higher feed costs, today’s efficient dairy farmers can succeed.
Wise up and admit your mistake, Mr. Dickrell. You, Dairy Magazine and the entire Farm Journal Corporation owe us an apology. Ethanol is good for us! [More]
Apologies are all the rage today. This blog won't be where the apology is published, BTW. The sad thing for me is the lack imagination for new justification. Corn growers ares till using the "poor-old-farmers" motif as their public image even as most of us see our profit level triple or quadruple. (We're buying the $8000 ground, ya know).

The idea that ethanol (mandated and subsidized) saves taxpayers money by lowering other subsidies paid is like a bully saying because I'm busy punching you in the face, I don't have time to kick you in the shins. Farmers neither need nor deserve any of these subsidies. If ethanol was a good idea economically it wouldn't need a law to make the numbers work, and as I've said recently this is the great fear behind the increasingly worried voices of the ethanol industry: any glitch in the government largess and the whole thing could collapse. This is the pressing need for this industry - to get off subsidies as soon as possible and let the market allocate scarce corn supplies.

And I love the "most abundant" refrain. How do we measure abundance? Is there an Abundance Index? How do we know we are number 1? Who's in second place, for example? Is food more or less abundant than 2007? This is a pretend statistic. And ditto for safety. Show me any comparative food safety statistics between nations. (I've looked)

Ethanol has at any rate made corn "less abundant". It's not moving to $7 because we've got surpluses sitting around. And perhaps the corn grower memo hasn't gotten to WI yet, because growers are frantically trying to put de-link corn prices and food prices - not assert a cause and effect.

Perhaps Randy doesn't use profit center accounting. My guess is if he did, he would discover he's not adding value to his corn, he's losing money turning it into milk. This is the point Jim was making, I believe, for other dairy farmers who used to be valued corn customers.

When we have decimated our domestic livestock and dairy industries, put thousands of small meat, milk and egg producers out of business, we corn growers may finally realize our ethanol intoxication enriched us at the cost of our best friends.

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