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National Debt

Corn Subsidies: Good for Politicians, Bad for Everyone Else

  • June 23, 2008

    A favorite hobby of politicians running for office and campaigning in Iowa is to talk about the great value of corn and ethanol subsidies to the hard-working farmers that are the back bone of this great nation of ours.

    It always plays well: the crowd cheers, the politicians get the support of those attending.

    Unfortunately, the rest of us get fleeced.

    Ethanol, the gasoline additive that is mandatory in fuel sold in the U.S. (up to 10% per gallon), is, in the U.S., a corn-derived fuel that once fed the engine of the Ford Model-T and is seeing a resurgence in popularity due to escalating oil costs as well as the desire to reduce emissions leading to global warming.

    There are varying blends of ethanol-based fuel, with some cars running on up to 85% ethanol and only 15% gasoline.

    While ethanol is a good choice for reducing our dependence on fossil fuels and Saudi oil, it receives an unnecessary set of subsidies that are wasting taxpayer dollars and stifling other forms of alternative fuels, some of which are cheaper to produce and more efficient.

    For instance, ethanol made from sugar cane in Central and South America is significantly cheaper to produce due to lower processing and land costs. Besides the cost savings, sugar-based ethanol provides eight units of energy for every one unit used to grow it, where corn is about a one-to-one trade, making it fairly uneconomical.

    To keep farmers happy though, Congress maintains a $.54/gallon tariff on sugar cane-based ethanol, which then makes the cost of gasoline that we purchase that much more expensive. Imagine if there were no tariff Ė fuel costs per gallon would be considerably lower than the $4+ per gallon they are today.

    Even if we didnít import sugar cane-based ethanol, there are other domestic types of ethanol fuel producers that are much more efficient than corn such as switchgrass, which is a wild tallgrass and is one of the most dominant in the U.S., and requires no subsidies to corn growers.

    In case you were wondering, there were almost $5 billion in corn subsidies in 2006 alone, a bit over $56 billion between 1995 and 2006.

    If you think that itís unreasonable that we are inhibiting the free market and at the same time subsidizing an industry which doesnít need subsidies, we urge your to contact your elected officials in Washington and tell them that itís time to lower our energy costs, become more efficient, and end the corn subsidies.

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