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southern MN | You are looking at 2 different issues, and trying to make them the same.
They are different.
Govt grain programs build stable grain production year in & year out long-term that builds stability which creates lower grain prices over decades - less roller coaster.
Seriously messing with grain supplies with export bans or sudden policy changes on ethanol is a short term knee jerk reaction creating wild swings in the market, instantly slashing prices but creating long term uncertainty that creates long-term roller coaster prices that are bad for everyone, and create higher average prices over the long haul.
As long as we have a large export of corn, we will be valuing corn in world currency valuations, with ups and downs based on our 'minor' situations. (Yes, I'm calling a 2-year global drought sitiuation 'minor' because we still, even, with govt grain supports, manage to produce a surplus, export grain supply. Wiithout the farm programs, we would know a world of hurt from these weather problems in this country....)
Corn is high priced right now because the USA dollar is low-valued. That is the base value of corn. Our bad ecconomy makes it so.
The roller coaster effect is high because, despite the govt programs that ensure stable, long term cheap corn production, the world has experienced 2 years of weather issues. Making some high peaks of corn as people speculate on shortages or excesses. This would be worse without the govt programs.
Ethanol is a side issue, it is built into the supply & demand of corn, it came about slowly and progressivly, and did not affect world markets nor world supplies. Ethanol affected local basis is about the sum of it.
Yes, we coulde impose an export ban, or we could stop the ethanol mandate and _seriously_ affect corn prices today. This would lower grain prices, raise fuel prices, and hurt a lot of people in the short term.
Long term, as always, it would end up costing the USA more, and destablize everything.
World ecconomy would _still_ set the basic price of corn, so our bad ecconomy would _still_ dictate a big USA $$$ value on corn over the long haul.
And the destablized grain ecconomy in the USA would demand much, much larger subsidies, and the drastic ripple in the rural values and unstablised rural ecconomy would create a huge loss in corn growing and bigger roller coaster grain prices in a few years.
Clearly, to anyone who understands ecconomics, a drastic sudden change to corn useage would de-stablize prices and be very bad long term.
As well, clearly as long as we continue to produce enough corn to export a bigh percentage, the basic bottom line of corn value has all to do with world monitary valuations and _not_ internal useage - whether it is feeding livestock, making corn bread, or using for ethanol. We grow excess corn, so it will be priced based on what China, Japan, Egypt, etc etc are willing to pay - they are the stop-gap buyers of our product, otherwise it will sit here and rot. Wioth or without ethanol, makes no difference.
--->Paul | |
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Food price not related to ethanol
