How good intentions ended with expensive and dirty corn

Posted By Steve LeVine Thursday, July 14, 2011 - 11:44 AM Share

In the United States, corn is now officially a fuel crop -- the federal government forecasts that this year, ethanol-makers will for the first time use more corn than poultry and livestock farmers. What's the outcome of this government-subsidized gluttony by fuelmakers?

One is that folks like myself who think corn is the most delicious vegetable out there are paying 90 percent more per ear than we were last year. That includes the Chinese, who are importing much more U.S. corn (picture above). Another is that the U.S. taxpayer is effectively subsidizing exports to Brazil, Europe and elsewhere, which will buy around 1 billion gallons of the fuel. This has also been a windfall for big agricompanies like Archer Daniels Midland, which over the years has been among the most politically influential companies in Washington lobbying.

Interestingly, smart minds think almost none of this will change when, as expected, U.S. congressmen vote to kill both $6 billion in subsidies to fuel-makers and tariffs on ethanol imports. The dual end to the 45-cent a gallon subsidy and the 54-cent a gallon tariff seems likely to be a part of any budget-cutting deal in Washington.

Since ethanol is a mandated component of gasoline, ADM and the rest of the industry have captive demand, and the poultry industry thinks these fuel-makers will continue to drive up the price, which is triple what it was when Congress first approved the mandates in 2005. Plus, with oil prices seeming set to average $100 a barrel, ethanol is competitive on its own, Clifford Krauss writes in the New York Times. Currently oil companies are mandated to use 12 billion gallons of ethanol a year, a figure that will rise to 15 billion gallons in 2015, and then more than double to 36 billion gallons in 2022.

A final outcome has been a triggering of the law of unintended consequences: When initiated, the objective was to reduce U.S. imports of foreign oil. It also was to kick-start a renewable fuel industry. Now, though, U.S. gasoline demand is falling because of high prices. As for renewable fuels, corn ethanol was never route to cleaner air.We are waiting for a widely available renewable fuel that meets the original intentions.

Peter Parks AFP/Getty Images

EXPLORE:THUMBS, DEFICIT, ETHANOL, ETHANOL SUBSIDIES, RENEWABLE FUEL MANDATE

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FP_READER

5:41 PM ET

July 15, 2011

Scam

The ethanol mandate is, and always has been, a hidden subsidy to the agricultural sector - ADM in particular.

Its tiring to see corporations constantly using the government to create artificial markets that then drain the wealth of the US taxpayer.

Its even more tiring to see how cheaply congressmen sell themselves out to vote for these giveaways.

LAVONIA CHOUDHARY

9:00 AM ET

August 12, 2011

How good intentions ended with expensive and dirty corn

You head to the grocery store full of good intentions for a wholesome weeks-worth of food. Of course, buying organic is what you’d prefer to do...but why does it have to be SO expensive! So you compromise here and there and do your best. Organic milk, organic eggs, organic carrots, organic corn, organic asparagus. Non-organic strawberries, celery, potatoes.faye reagan's house, most of those organic/non-organic decisions are based on gut-emotions--”ooh, I’ve already gone over my budget this week” or “I am NOT paying 4.99 for a bunch of organic lemons! Who do they think I am!”

STEWART DOBY

9:03 AM ET

August 12, 2011

How good intentions ended with expensive and dirty corn

I know you head to the grocery store full of good intentions for a wholesome weeks-worth of food. Of course, buying organic is what you’d prefer to do...but why does it have to be so expensive! So you compromise here and there and do your best. Organic milk, organic eggs, organic carrots, organic corn, organic asparagus. Non-organic strawberries, celery, potatoes.

In faye reagan's house, most of those organic/non-organic decisions are based on gut-emotions--”ooh, I’ve already gone over my budget this week” or “I am NOT paying 4.99 for a bunch of organic lemons! Who do they think I am!”