Corn prices are up. Demand is up. That much the “CBS Evening News” reported. But the April 27 report left out the primary reason.
The real story is in what CBS didn’t report. Bowers noted the high demand for corn-based ethanol, which will gobble up 25 percent of this year’s corn harvest. She didn’t explain that it’s an artificial demand, though, created by government policy.
American corn farmers have reaped the benefits of this “gold rush” for years.
According to the Environmental Working Group’s “Farm Subsidy Database,” the U.S. government has handed out more than $51 billion to corn growers since 1995. Grain giant CHS Inc., for example, has netted $14.5 million in corn subsidies since 1995.
So while Bowers mentioned that corn has reached $4 per bushel, up from $1.90 per bushel in 2005, according to U.S. Census figures, and that retail food costs have also risen as a result, the larger economic impacts were not addressed.
The ethanol “market” is a case of government policy determining winners and losers in the U.S. economy.
The winners are corn growers and ethanol producers. They’ve already benefited from huge subsidies and vocal congressional representation that keeps the cash flowing while keeping tariffs high (54 cents per gallon) on imported ethanol.
The losers have been and will continue to be American taxpayers. Tax incentives and handouts to ethanol producers will redirect up to $8.7 billion a year by 2012, according to Taxpayers for Common Sense.
Even the liberal online magazine Slate declared “The ethanol subsidy is worse than you can imagine.”
In a 2005 Slate story, author Robert Bryce laid out a compelling case against ethanol. Citing scientific studies, Bryce wrote that ethanol production actually uses more energy than the resulting product provides. Put bluntly, Bryce stated that “more ethanol production will increase America’s total energy consumption, not decrease it.”
In addition to corn and retail food prices, CBS might have examined how the anti-free market corn and ethanol subsidies will affect the price of gas at the pumps and a host of other consumer products.