Why Record Corn Crop will Cost Taxpayers up to $8.4 billion in Subsidies

[KurtNYC]

Good weather, more planting, more in storage and one of the biggest crops ever are pushing corn prices below the cost of growing and harvesting them. More food, sounds good but some corn futures are seen at <$3.00 per bushel (70 pounds) and you just can't produce it that cheaply...

http://www.bloomberg.com/news/2014-09-17/corn-resumes-decline-as-u-s-harvest-seen-advancing-to-record.html

So, because of the way our food system is run, low prices for corn trigger huge Federal subsidies:

The new farm bill ( PL 113-79 ) could trigger far bigger payments to farmers for this year than was previously thought, primarily because of the steep drop in the price of corn. An analysis by economists at The Ohio State University and the University of Illinois of the Department of Agriculture’s latest commodity price forecast shows payments could range as high as $8.4 billion. That’s more than twice the amount that the Congressional Budget Office projected in April would be paid.
...
Corn growers would get estimated payments of about $79 an acre under either scenario, about three times as much as they were getting annually under the old direct-payment system. The subsidies would be made through the new Agricultural Risk Coverage program, which provides payments when county revenue for a crop falls below a rolling five-year average. Because of the way ARC works, the payment for corn would max out at about $3.50 a bushel, so the total payments won’t increase even if the price falls further, Ohio State economist Carl Zulauf tells CQ Roll Call.

Under an alternative program, Price Loss Coverage, which triggers subsidies when prices fall below a target level, payments at the $3.50-a-bushel price would average $26 an acre.

http://cqrcengage.com/mibankers/app/document/4079733

Corn is at $3.18 per bushel now.

So the market doesn't want more corn but farmers plant corn (versus say kale or carrots) because they are guaranteed to stay in business if they do. The kale farmer is a gambler, the corn farmer knows they will get paid. Meanwhile...


http://www.nationalgeographic.com/foodfeatures/hunger/

We are forcing as much corn as we can on people -- soda (corn syrup) is the number one source of calories. Pasta, tortillas, chips, cereal, alcohol, even the chicken and beef on that chart is corn derived. Ethanol has our cars consuming corn (partly) too.

Our food system is messed up. An abundance of grain plus the lack of nutrient-dense foods has led to health issues for an increasing number of Americans. Further subsidies for corn seems a bit odd at this point.

[librechik]

1. fuck GMO corn. That's practically all of it.

I think the figure is 80%

[KurtNYC]

2. much of it is so the subsidies are going to buy more Round-Up

and Enlist Duo.

[The Velveteen Ocelot]

3. There are good reasons for not planting things like kale or carrots or other vegetables

instead of corn: First, you have to be able to get a perishable vegetable crop to market quickly - you can't store most vegetables for a long period of time. Corn can be dried and stored for months in bins until it can be shipped and sold; as long as it doesn't get wet it won't rot. Kale would rot in a matter of days. Since most farms that grow corn (as well as wheat or soybeans) have no access to facilities for refrigerated storage, there's no place to put that sort of crop until it can be shipped and sold. Most such farms aren't near large cities where a perishable crop could be sold, and the cost of refrigerated transportation would be high. California, for example, has an infrastructure and labor resources for this kind of farming; Nebraska, Kansas and Iowa don't.

And California has a good climate for vegetable growing (unlike the Great Plains states). Most vegetable crops need a long growing season and a lot of water, which might not be available (some corn is irrigated but not all of it is). Planting and harvesting vegetables is very labor-intensive, while corn can be harvested by one guy with a combine. You grow what works in your climate and location. I'm not a fan of HFCS - it doesn't belong in every damn thing. But most corn is used for livestock feed (36%) and ethanol production (40%).

There are a lot of concerns with the U.S. agricultural system, not the least of which is that corn growing has become monolithic. It would be much better to diversity crops and produce something that doesn't make people fat, but you have to have crops that will grow in a particular climate. Mostly that would be soy beans and wheat, but not kale or carrots.

[KurtNYC]

4. Yes, there are good reasons why commodity crops are corn, soy and wheat

but root vegetables (carrots and potatoes) are planted and harvested by machines and they were favorites historically because they are easy to store. At one time many houses had "root cellars."

There are many perishable crops that don't have to go to a consumer immediately. For example green beans. A huge percentage of green beans are grown in Kentucky and more than 85% of those are processed as frozen or canned green beans.

People who eat nutrient dense foods are less hungry than those who eat bulk foods. Subsidizing corn helps to perpetuate a system that keeps farmers poor and Americans unhealthy.

Agriculture is a big contributor to carbon output and growing corn to be refined into auto fuels is a multi-layered carbon fest. The commodity food system demands efficiency from farmers and then punishes them (with prices below their costs) for high output. Growing too much corn is wasteful and costly. Ultimately the subsidies keep commodity crop farmers in business but they do just well enough to make it to next year. The guys selling the patented seeds and glyphosate are the indirect winners of the corn subsidy system.

[The Velveteen Ocelot]

5. No sane farmer is going to try to grow green beans in Nebraska.

The climate is wrong, and unless somebody invests in a processing plant that isn't so far away that transportation costs would be prohibitive, nobody is going to risk losing their shirt by attempting large-scale vegetable farming there. I agree that the agricultural system needs fixing in a way that favors food crops, but any fix will have to consider soils, water, climate, transportation and storage. Just taking away corn subsidies will not make growing green beans feasible in places like Kansas or Nebraska.

[KurtNYC]

6. List of insane farmers

http://www.agrilicious.org/local/fresh-green-beans/nebraska
http://www.agrilicious.org/local/fresh-green-beans/kansas

You can grow green beans anywhere you can grow soybeans and green beans are faster (52 days) but instead people are growing a crop that sells for $3.00 per 70 pounds and in a good year nets them $350 per acre.

[The Velveteen Ocelot]

7. These are small operations, mostly located near cities.

Very few farmers are going to convert a whole section out in the middle of nowhere, far from any city or shipping hub (which describes most of the Great Plains) to growing organic vegetables no matter how much they might like to. I'm a part owner of a farm so I'm pretty familiar with the industry. We'd love to be able to grow something besides corn and soybeans and the like, and over the years we've explored other possibilities pretty thoroughly, but considering the location and other factors, we just can't do it without going broke. It's like any other business: if farmers could consistently make a living growing green vegetables in the middle of the plains without nearby shipping or processing facilities more of them would be doing it.

[librechik]

10. locavores are the future

thank god for local truck farms!

[KamaAina]

8. Pasta is made from corn now?

That must be -inducing!

[Logical]

9. Farm subsidies piss me off. So many farmers are GOP idiots also. They are hypocrites. nt