Stupid Corn Tricks

Among the dumbest agricultural policies ever enacted was the a subsidy for use of corn, both a consumer food product and a livestock feed grain – and a huge net export for the United States –to produce ethanol to be used to stretch our fossil fuel availability. In short, the government paid farmers to grow valuable corn to be turned into a gasoline additive, effectively driving up the price of meat and dairy products as that feed grain was diverted into other purposes. We wouldn’t even allow Brazil to export that ethanol – made from much cheaper sugarcane – into the U.S. absent a massive tariff.

“As 2011 expired, so did a U.S. government program that for over three decades appeared politically untouchable: the federal tax credit and domestic tariff for ethanol. From its first appearance in 1978 to this past December 31st, the policy provided over $20 billion in subsidies to American ethanol producers, costing the U.S. taxpayer almost $6 billion in 2011 alone. Enacted in the spirit of ‘energy independence,’ ethanol subsidies became a redoubt for the agricultural lobby and a lighting rod for criticism from environmentalists and sustainability advocates…

“Over the last decade in particular, the growth of corn ethanol as an additive to gasoline exploded …, thanks to such laws as the Energy Policy Act of 2005, which mandated an annual production of 7.5 billion gallons in renewable fuel by 2007, and the Energy Independence and Security Act of 2007, which upped that target figure to 36 billion gallons by 2022. Also introduced in the last ten years was the Volumetric Ethanol Excise Tax Credit (VEETC) or ‘blender’s credit,’ which awarded gasoline refiners a 45-cent tax break for each gallon of gasoline they blended with ethanol.

“However, the growth in federal support for ethanol and the consequent surge in corn ethanol production have attracted no small amount of criticism, and for good reason. Corn ethanol production is, for the most part, energy intensive and inefficient. Sasha Lyutse of the National Resources Defense Council (NRDC) has demonstrated that when the direct and indirect effects are taken into account, the life-cycle greenhouse gas emissions of corn ethanol can easily exceed those of conventional gasoline. A 2008 study from the Proceedings of the National Academy of Sciences (PNAS) concluded that the combined climate-change and health costs, for every billion gallons of fuel produced, ranged from $472-952 million for corn ethanol as opposed to $469 million for gasoline. Also harmful are the indirect land use effects of expanded ethanol production, which can include nitrogen runoff from crop fertilizers, soil degradation, and a loss of biodiversity. Furthermore, the federal subsidy and tariff regime has barred more energy-efficient forms of ethanol from competing with corn, such as Brazil’s sugar-derived variety.” SenseAndSustainability.net, January 26, 2012. Tax credit addiction can kill you… or at least a few million others.

If you are not throwing up already, here’s a biggie. The hottest summer on record, the massive droughts have plagued not only the United States, but Europe, Africa and Asia as well, have resulted in projected (by the United Nations) food shortages that could add hundreds of millions of additional hungry mouths to those already suffering from starvation. The U.S. Department of Agriculture has also projected the lowest U.S. corn yields in 17 years. With feed grain diverted into expensive energy production, and with the drought decimating other feed grains as well, the impact on American ranchers and livestock growers has been devastating. Short term, beef prices are probably going to drop as ranchers cull curds for lack of feed… but future beef costs will eventually skyrocket from the shortages.

“Severe weather has also hurt agriculture production in other major export countries, including Brazil, Russia, Australia and India. That means higher prices for commodities including sugar, soybeans, corn and wheat, as well as the food products produced from them. The United States grows about 40 percent of the world’s corn and soybeans as well as 20 percent of the wheat.

“The worldwide surge in food commodity prices is stoking fears of global inflation and food shortages in some developing countries. A surge in food prices in 2008 resulted in widespread social unrest in several countries including Egypt, Tunisia and Algeria… On [August 9^th], the United Nations Food and Agriculture Organization said global food prices had jumped 6 percent in July, with the price of corn up 23 percent. It said that countries that rely on imports of corn and soybeans – including China and Mexico – would be the areas worst hit by the price increases.” New York Times, August 10^th.

More of the world is starving, grain prices are soaring, and the even United Nations sees the U.S. corn-ethanol mandate as absurd in this perilous time. “In a letter published in the Financial Times on [August 10^th], José Graziano da Silva, the director general of the United Nations’ Food and Agriculture Organization, wrote: ‘An immediate, temporary suspension of that mandate would give some respite to the market and allow more of the crop to be channeled towards food and feed uses.’ … The ethanol industry said calls to waive the fuel standards were premature. ‘So far we have nothing more than speculation about what the danger to the corn crop is going to be,’ said Matt Harwig, a spokesman for the Renewable Fuels Association, an ethanol industry trade group. ‘We need to take a wait and see approach.’” NY Times. How many people need to die before “we have nothing more than speculation” vaporizes?

I’m Peter Dekom, and there is absolutely no excuse for this wasteful policy to continue.