ag subsidies

Unlike the U.S., European governments are cutting back on agrofuel goodies

European biodiesel makers have entered a rough patch. The price for their main feedstock, rapeseed, has risen more than 50 percent since the beginning of the year. But the price of the final product, biodiesel, has plunged, because producers are churning out far more biodiesel than the market can absorb. Similar conditions hold sway among […]

Agriculture is drunk on corn-based ethanol

Thomas Dobbs is Professor Emeritus of Economics at South Dakota State University, and a W.K. Kellogg Foundation Food & Society Policy Fellow.

-----

American agriculture is becoming addicted to corn-based ethanol, and the economic and environmental effects of this addiction call for some intervention!

The explosive growth in U.S. ethanol production from corn is having worldwide ramifications. December 6 articles in The Economist ("Cheap no more" and "The end of cheap food") trace the impacts of ethanol production on prices of other crops and on food. Rising crop prices can benefit farmers not only in the U.S., but also farmers who have marketable surpluses in other countries.

Many consumers, however, are hurt by the rising food prices. This is especially true of urban and landless rural poor in developing countries. According to The Economist's food-price index, food prices have risen in real (inflation-adjusted) terms by 75 percent since 2005. International Food Policy Research Institute data cited by The Economist indicates "the expansion of ethanol and other biofuels could reduce caloric intake by another 4-8 percent in Africa and 2-5 percent in Asia by 2020."

The growth in ethanol production is hardly a market phenomenon. According to The Economist, Federal subsidies for ethanol production already come to over $7 billion a year. Moreover, many previous years of cheap corn that resulted from Federal farm program subsidies helped lay the economic foundation for ethanol plants already built or under construction.

Implications for energy and farm policies?

What are the policy implications of this "food versus fuel" conflict that past and present energy and farm policies have created? As far as the ethanol industry is concerned, its interests trump all other interests, including those of taxpayers and the poor who can least afford higher food prices.

Payment limits topple, but the livestock title looks good — for now

Update [2007-12-14 13:5:54 by Tom Philpott]:The Senate just passed the farm bill, 79-14. Presumably the livestock title is intact. Now it’s time to mount an epochal battle to defend that important title as Congress reconciles the House and Senate versions, which will take place in early 2008. The Senate is set to vote on the […]

Back under debate in the Senate, the farm bill lurches ahead

The farm bill has been languishing in the Senate for weeks, buried under the weight of hundreds of specious, unrelated amendments. But the chamber reached a deal Thursday; each party agreed to float only 20 amendments. That means the bill is back on track. Majority leader Harry Reid vowed the Senate would hammer out a […]

Malawi celebrates, but for how long?

So while the U.S. Farm Bill is out to pasture until 2008, it looks like most commodity subsidies will remain untouched. Agricultural price supports may be the law of the land here, but it's certainly not what we've been advocating abroad. A bittersweet story on page one of today's NY Times documents how Malawians are pulling back from the brink, largely because -- going against the wishes of the World Bank -- they've begun to reinstitute government crop subsidies:

A clip from the Republican YouTube debate

Ladies and gentlemen, I give you small-government conservatism:

The corn industry hopes Congress will pull its fat out of the fire

I used to love to start my writing day by taking a poke or two at the corn-based ethanol industry — you know, the biggest greenwash ever. Photo: mrobenalt These days, the debunking of corn fuel almost seems like it’s piling on. Today, two major newspapers — the LA Times and The Wall Street Journal […]

How egregious are farm subsidies?

So egregious that they make the Bush administration look reasonable. I repeat my contention that completely eliminating this boondoggle that trashes the environment, increases incentives for obesity, and distorts the entire global agricultural trade should be a high priority for environmentalists. Step #1: call it what it is -- corporate welfare.

Why gutting commodity subsidies should be the focus of Farm Bill reform efforts

Thomas Dobbs is Professor Emeritus of Economics at South Dakota State University, and a W.K. Kellogg Foundation Food & Society Policy Fellow.

-----

Tom Philpott wrote an article in which he challenged some of the key assumptions underlying Farm Bill reform efforts of the past year ("It's the Agronomy, Stupid"). He contended that gutting commodity subsidies would not solve the U.S.'s long-standing oversupply problems, and that we need the money currently in the "commodity" title to remain available for eventual support of conservation and other measures reformers hold dear.

The following day, a guest post by Britt Lundgren appeared in Gristmill, contending that Philpott missed the real point of the Farm Bill debate. The real point, said Lundgren, is "whether or not the current suite of farm subsidies are actually an effective and productive way to support agriculture in the U.S."

I find myself largely in agreement with the contents of Lundgren's post, but I want to address more directly Philpott's contention that "it's the agronomy" that matters. I disagree. "It's the economics" that matters in assessing the consequences of the U.S. farm program's heavy emphasis on commodity subsidies.