Why do we have corn subsidies?

Many people in this thread thought that corn subsidies contribute to the obesity epidemic. Indeed, one hears talk of these corn subsidies often in any health-related discussions. So I turned to Google to find out something about these corn subsidies… and faced a disappointing lack of information.

No one seems to be writing articles or putting up web pages with information about these subsidies. There’s no Wikipedia article about them. Lots of news articles mention them in passing, but I wasn’t able to find any which explain where they came from or their reason for existence.

So does anybody here know? Why does the federal government of the USA pay farmers and agribusiness to grow corn? What interest do the feds believe they have in keeping the price of corn artificially low?

Ultimately, the reason is that corn is big business, and has a particularly large and powerful lobby.

Ostensibly, it’s to ensure that American farmers stay in business, because if they went out of business, the food supply would be in jeopardy, and we could starve.

There are quite a few states where agriculture has traditionally been a powerful force in politics, because it was/is a big part of the state economy and affected a lot of voters. So the voters elect someone sympathetic to the business (ie, someone who supports the subsidies). Everyone in Congress brings earmarks back home for their constituents - that’s how bills get passed. The earmarks for a few states are corn subsidies. It’s basically just politics - Democracy means that if enough people want someting, regardless of why they want it, they’re probably going to get it.

Each state has 2 senators, that’s why.

The cornbelt states are 1) numerous, 2) low popuation (the majority of them, IL is a big exception). Consequently, they have very powerful senators (i.e. each senator represents comparatively few people).

These cornbelt states have nothing else going for them other than agriculture, by and large. And corn is the predominant crop.

Therefore, corn subsidies are the way you buy those senators off. And those corn subsidies are how those senators get re elected.

Some states it’s corn. Other states it’s military bases. It’s all the same thing.
and OP, here’s a good starting off link: http://en.wikipedia.org/wiki/Agricultural_subsidy#United_States

The big push for corn subsidies came in 1973, under Earl Butz, Secy. of Agriculture under Nixon. The 1973 farm bill was a response to ballooning food prices, intended to bring costs under control. From the standpoint of that era in history, it worked - large scale agribusiness efficiently producing enormous amounts of corn made it cheap. High fructose corn syrup gained as a cheap alternative to sugar. From that vantage point, it had a defensible utility - doing something about the prices people were seeing in the supermarkets had become a hot political issue. Unfortunately, government programs are always likely to live on past an era where they made sense.

And remember that agriculture subsidies are linked to alternative-fuel ethanol, as well, since (in the US, anyway) it’s made from corn.

And in Brazil, it’s made from sugarcane, which is arguably worse, given the cultivation methods. Nonetheless, I still hold out hopes for cellulosic ethanol, and I’m aware that putting the brakes on corn based ethanol is likely to kill commercialization of cellulosic ethanol production, and retard the acceptance of ethanol as a fuel. I don’t want that to happen as long as I think ethanol from waste and low-impact feedstocks like switchgrass might work. Corn ethanol subsidies aside, I would really like to see most gasoline automobiles being made flex-fuel. It doesn’t impose much cost to do it, so it’s not like it’s really a lot of wasted effort if ethanol doesn’t pan out.

At least sugarcane-derived ethanol doesn’t divert food crops, since it uses the cane after the juice has been crushed out of it.

or feed crops for cattle.

and it’s more energy efficient per acre of crop.

You’re looking at the problem from the wrong direction. Many alternative fuel programs were created partly in reponse to a glut of unsellable corn. The government is paying people to grow so much corn that consumers can’t eat it all. So the government has to turn around and sponsor program to develop new ways to use the excess corn. That’s the reason you see so many products that have corn-based additives.

Point taken. But offset by the destruction of rainforest for large scale sugarcane production for food OR fuel. Might make more sense grown somewhere else.


Corn Ethanol has driven the price of both feed corn and food corn up as farmers replace the food types of corn with the ethanol types of corn (white vs. yellow)

Alternative fuel programs are created in response to the looming shortages of easily sellable crude oil, they aren’t in existence to sop up the excess amounts of corn due to inefficient market operations by way of subsidy.

I should correct myself. both white and yellow are varieties of sweet corn. this is the stuff you eat on the cob. apparently is also used in certain kinds of foods

feed corn is used for all the rest of the stuff. it accounts for 98% of maize acreage.

The Federal Ethanol Program is also a big energy waster-it causes higher imports of oil to grow and process the corn. It is another aspect of this foolish policy, which distorts the market for corn. Suppose corn was not subsidized-it would be grown according to supply and demand. With a subsidy, farmers can keep increasing the amount of corn they grow-they get paid for whatever they grow, at the pegged price. What happensn to the surplus? It gets turned into corn syrup-which is now so cheap that it has become a major food additive (it is a reason why Coca-Cola, USA, used corn syrup instead of cane sugar). Corn syrup is blamed by many for the obesity epidemic-so the subsidy of corn may well be a major factor in rising healthcare costs (diebetes is now epidemic in the USA).
A bad deal all round-except for the farmers.

Actually it’s a pretty bad deal for many farmers as well. Some obviously benefit financially if they get themselves into the subsidy system - but they do so at the cost of becoming dependent on a system over which they have little control. And the farmers who can’t or won’t farm for subsidies find themselves getting crowded out of farming by the subsidy farmers.

The real question to ask is, “How much petroleum do we use (in the form of vehicle fuel, fertilizer production, and so on) to produce this alternative to petroleum? Is it really less than one gallon of petroleum (or gasoline) per gallon of ethanol?”

I fear politics will prevent a real answer to this question.

Let’s backtack a little. The reason we have corn (I’m talking about the 98% feed corn that Rumor noted, not the sweet corn people eat off the cob) is that it’s very good for feeding livestock – beef, chicken and pork. Livestock producers want lots of it, and they want it cheap. And because corn only grows well in a few parts of the world, especially the U.S., it has a very good market for export.

Corn farmers want to grow lots of corn. Unfortunately, the cost of production is pretty close to what the market will bear in terms of price. If the cost of corn gets too high, then the cost of meat gets too high, livestock producers cut back on their herds and the export customers look to buy corn from other countries.

In other words, if the price of corn gets too low, farmers can’t make a profit and go out of business. If the price of corn gets too high, the market for corn disappears and farmers go out of business.

You can’t just start and stop a farm, or a livestock operation. So the federal government has decided it’s in everyone’s best interest to keep the price of corn fairly stable, so the farmers will want to plant a crop, and the livestock operations will stay open, regardless of whether this year’s crop was good or bad.

And that’s why we have agricultural subsidies in the first place. The idea is to have the taxpayer put in a (relatively) small amount of money up front in return for a stable and relatively cheap food bill on the back end.

As long as there’s corn, there’s a market for it. Roughly 40% of the corn grown in the U.S. goes directly to feeding U.S. livestock. Ethanol production uses another 30%, exports use up 15-16%. High fructose corn syrup only accounts for about 3% of use. But trying to discuss the relationship between farmers, export policy, ethanol subsidies and the pure food movement gets really complicated.

I recall a TV newsmagazine (60 minutes?) pointing out the connection between corn subsidies and presidential electoral politics. A candidate is less likely to do well in the Iowa caucuses if he or she is not a friend of the corn industry.

From the wikipedia article on Iowa

Here’s another discussion about that…http://e360.yale.edu/feature/the_corn_ethanol_juggernaut/2063/

Let me see if I understand. I’m going to concoct an oversimplified example so my meager intelligence can handle it.

Farmer Joe has a farm set up to grow corn. Let’s say it costs him $1 to grow 1 bushel of corn. The marked for corn is such that people are only willing to pay $1 per bushel. So he spends $100 producing 100 bushels and get only get $100 in return for it, just breaking even, making it not worth his while to grow corn.

So, the federal government pays him 25 cents per bushel, which he receives in addition to the income from selling the corn he grows. Now, if he spends $100 growing 100 bushels, he can recoup the $100 by selling the corn, PLUS he gets a check from the feds for $25, giving him a $25 profit and making it worth his while.

But what if the feds end the subsidy? Can he just raise the price he charges for corn to $1.25 per bushel, so he can still make his $25 profit? No, because corn-buyers won’t pay $1.25 per bushel, because that would make the cost of feeding their livestock more expensive, so they’d have to charge supermarkets/restaurants more for their meat, and that wouldn’t work because people just won’t pay that much for steak. Or, they can import Chinese corn for $1 per bushel so they’d just do that instead.

Is that it?

Actually corn is not a particularly good feed grain for cattle. They evolved to eat grass not corn. Cattle ranchers developed ways of feeding cattle corn because it’s cheap but it creates various problems that have to be addressed.