Children of the Corn

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

When Iowa flooded, your future dinner got soaked. Console yourself with a snack of schadenfreude.

Experts say the soggy state could produce less than two-thirds the usual corn harvest. Wet weather kept some 4 million cornfield acres, out of 86 million total, unplanted. Now, floods have killed many already-sprouted stalks.

What bitter timing for farmers. Corn prices are already record-high because demand is, too. Part of the demand is stoked by the distilling of corn into ethanol, something subsidized, tax-credited, and encouraged by the federal government for years.

Alas, however, just when the farmers who got politicians to juice up corn prices at the expense of consumers and taxpayers can now make a killing, those farmers have a third less corn to sell.

Try to restrain your sympathy. This seems like a cosmic comeuppance to an industry that for years has been milking taxpayers through crop subsidies and ethanol mandates. It has plead for decades that farmers need help. Help? Good heavens, they wouldn’t even permit subsidies to fade this spring when farm incomes were booming and the farm bill was up for reauthorization. Instead, Congress handed them your wallet — again.

To be fair, farmers may not be guilty of all charges now levied. Popular wisdom, and some academics who study agricultural policy, now accuse them of starving the world by diverting corn to ethanol production. Ethanol, however, is made from corn’s starch, growers note. It leaves behind the oil and proteins that can be used to fatten up pigs or cattle, the kind of use that’s soaring as China turns carnivore. Besides, farmers say, production is up, last year increasing by about twice as many bushels overall as the rise in the quantity of corn devoted to ethanol.

Suppose, though, that ethanol is harmless to Third World food supply: It still costs us plenty. The federal government has mandated that we use 9 billion gallons of it this year and 15 billion gallons by 2022. This forces people to use an inferior fuel, one costlier to make, to ship, to run a car a mile on.

Besides the up-ratcheting mandate, taxpayers must fund several tax credits, the big one being about 51 cents a gallon to companies that mix the stuff into gasoline. This cost about $2.5 billion in 2006.

Ethanol’s defenders point out that the federal government offsets this blender’s credit by reducing crop price supports, but this raises the bigger question: Why are we paying those to begin with?

The ethanol subsidies are political kin to all the subsidies, tariffs, and market fiddling that make up the government’s decades-old money pipeline to farmers. This was spigoted off briefly in a Gingrich-era burst of fiscal sense and has been reopened by degrees since.

The result is the $289 billion farm bill that President Bush vetoed for the second time on Wednesday. Congress overrode the veto within hours, and so you’ll pay at least $5 billion a year in automatic payments to farmers growing staples such as wheat, cotton, corn, and soybeans, even if prices stay at record levels. You’ll pay an extra $410 million to dairy farmers, who have been enjoying record prices. You’ll pay new subsidies to vegetable growers, horse breeders, and salmon farmers. But for a bipartisan minority of budget hawks, Congress resoundingly endorsed this.

Why? To go on insulating the agricultural sector from economic reason, as the federal government has done since the Depression — to act as a fiscal levee that lets farmers flourish on the floodplain, economically speaking.

The matter of literal floodplains is arising now that towns are drying out. Some Iowans are noting that some places are in imprudent locations. “Cities routinely build in the flood plain,” a professor and city council member in Cedar Falls, Kamyar Enshayan, said to a reporter. “That’s not an act of God; that’s an act of City Council.”

Last summer, I wrote in the Sun about Gays Mills, Wis., a village in a steep-walled valley that was badly flooded and whose residents were nonetheless loathe to move, since aid was forthcoming. It was flooded again this year, and now people seem much more inclined to regroup on higher ground.

At last they’ve seen the light. But again consider corn. Now at $8 a bushel, it was averaging about $2 in 2005. That’s what it was in 1977 and, with minor variations, most years since then. Nominal dollars, too, not adjusted for inflation.

Why would you stay in an industry where your price is flat for 30 years? Why is our sugar, a tropical crop, grown domestically, and in Minnesota? Why is Wisconsin’s dairy industry as dominated by small operations as 50 years ago?

To some extent, because farm productivity has grown, but mainly because you paid for things to stay this way. Taxpayers have sheltered farming. We have thus fueled a rising demand for subsidies, we’ve ruined would-be suppliers in Third World countries, we’ve bankrupted confectioners, and helped torpedo free-trade talks. As of Wednesday, we’ll be doing more of this still.

I don’t mean to minimize actual human suffering from actual floods. No one deserves a house drenched in sewage-tainted water.

But one suspects that in some heaven, the 19th-century free-trade reformers who struck first at England’s costly grain tariffs are chuckling to see fate take out American corn just when years of government jiggery-pokery would have made that corn worth a fortune.

Mr. McIlheran is a columnist for the Milwaukee Journal Sentinel.


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