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Grandview, TX | I see it as an indirect subsidy this way. The government mandates that all gasoline has a minimum of 10% ethanol in all gasoline sold in the U.S. By government intervention, this has created an alternative artificial market for corn that competes with other end users buying corn for feed. I know the byproduct of ethanol can be fed, but it isn’t a one to one ratio when comparing a bushel of corn to what’s left of a bushel of corn after processing for ethanol. It’s created a vicious cycle that has expanded corn production farther than it historically has been grown. I used to be a salesman for a company called UAP when I got out of college and was given a tour of the large fertilizer plant in Cairo,IL in roughly 2007. While touring the area, I noticed quite a bit of more hilly pasture in the process of being broken out, and the plant manager making the same comment with the addition of, “I don’t see how they are going to pencil it out with such marginal land being broken out”. This artificial demand has now made corn acres expand into the fringe acres from the Dakotas to Texas. Now that we aren’t exporting the amount of corn we once were, we are have come full circle and prices have dropped with a bunch more corn acres than before the ethanol mandate. All the lobbyists and farm groups are now clamoring for more subsidies since we are not exporting as much.
The downfall of cotton has been the increased use of man made fibers, made from oil, due to how cheap it is. I see this as no different than when corn was $2 a bushel before the ethanol mandate. What if the government mandated that any fabric or garment imported into the U.S. contained a minimum of 10% American cotton fibers blended in ? Would the midwest farmers scoff and call this government meddling ?
Right now, cotton at .60 per pound is the equivalent to $2 corn, give or take. I’m lucky enough that I’m in a fringe area that can grow corn, because cotton does not pencil out. Wheat doesn’t either the last couple years. This leaves corn the prettiest ugly girl in the room for my area. Dryland farmers a couple hours west of me don’t have the luxury of any alternatives but cotton, due to the drier environment.
I’m not knocking any Midwest farmers. Y’all are trying to make a living just like all other farmers. From mandates to the general direction of farm bill ag policy the past few administrations, it seem as though it favors the Midwest corn and bean farmer model. | |
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