“China’s need for corn—which forms the basis of sweeteners, starch and alcohol as well as feed for livestock—was on stark display in July when the nation ordered 21 million bushels of U.S. corn in one hit, more than the U.S. government thought the country would buy in a year,” the Wall Street Journal reported Wednesday.
The headline was “Chinese Hunger for Corn Stretches Farm Belt.”
It comes at a time when the price of corn is $7.29 a bushel, up from $3.81 a year ago.
And it comes when Ethanol requirements backed by some of the same folks who yell loudest for small government and “no earmarks” have kept corn prices high for years.
So, why is it that between 1995 and 2010, the federal government shelled out nearly $80 billion in corn subsidies alone, mostly to mega-farms?
From time to time, natural disasters—such as this year’s flooding and drought--wipe out or severely diminish crop yields. The government has a legitimate role in ensuring smooth markets. But the federal government not only helps cover those losses, it also subsidies crop insurance. Washington “provides 50% catastrophic coverage to farmers at no cost to the farmer,” according to the user friendly Farm Subsidy Database. Talk about double protection!
As we embark on a national discussion of “entitlements,” a good place to begin is the farm subsidy program. It began as fully-justified protection for small farms but it appears it has morphed into protection—very lucrative protection and income—for big businesses.