Tax Payers for Common Sense has published the following Fact Sheet, emphasizing the problem with Corn Ethanol subsidies. The study analyzes the history of Ethanol subsidies and the current support of these subsidies on current legislation like the 2008 Farm Bill. The study also determines the Taxpayer’s cost and the Environmental cost of this form of corporate welfare and the conclusions of this form of cronyism.
“It’s time the mature corn ethanol industry survived on its own two feet without taxpayer support. After more than 30 years of federal backing, corn ethanol subsidies scattered throughout the federal tax code and farm bill energy title should be eliminated once and for all. Economic, environmental, and public health costs would also decline if unintended consequences of ethanol production were ended, benefiting drivers, consumers, and the general public.”
The Economist ran an article about the antiquated regulatory scheme for raisins in the US, and how they are being presented to the Supreme Court.
Since the 1940s raisin farmers have been obliged to make over a portion of their crop to a government agency called the Raisin Administrative Committee. The committee, run by 47 raisin farmers and packers, along with a sole member of the raisin-eating public, decides each year how many raisins the domestic market can bear, and thus how many it should siphon off to preserve an “orderly” market. It does not pay for the raisins it appropriates, and gives many of them away, while selling others for export.
Participation in this Brezhnevite scheme is mandatory…The department portrays these arrangements as anodyne efforts to set quality standards and improve marketing. But Ilya Shapiro of the Cato Institute, a think-tank, argues that the federal government is nurturing a crop of agricultural cartels.
Rich Tucker at The Foundry blog writes about the USDA’s most recent crony consideration.
The Wall Street Journal reports that the Agriculture Department may buy some 400,000 tons of sugar to prevent processors from defaulting on $862 million in loans. These loan guarantees keep prices artificially high for consumers, who are already paying far more than they need to for sugar.
This isn’t simply bad fiscal policy; it’s costing Americans jobs. “For each one sugar growing and harvesting job saved through high U.S. sugar prices, nearly three confectionery manufacturing jobs are lost,” the Commerce Department reports.
Alexandra Wexler writes an article at the WSJ (subscription req’d) about a possible federal government bailout of the US sugar processors industry, due to falling prices. But favoritism towards one industry comes at the cost of another, and consumers as well.
The move would benefit companies that turn sugar beets and sugar cane into granulated sweetener, a business plied by American Crystal Sugar Co., Amalgamated Sugar Co. and U.S. Sugar Corp…
Higher prices would hit food companies including candy giants Mars Inc., Hershey Co. and Nestlé SA, and could ultimately boost retail food prices, at a time when many consumers are financially stretched.
“Clearly, the USDA has made up its mind that Big Sugar is going to trump the American consumer,” said Pierson Bob Clair, president and chief executive at Brown & Haley, a confectioner in Tacoma, Wash., that makes Roca butter-crunch candy.
Baylen Linnekin at Reason comments on cronyism in the dairy industry:
Historically, this industry has been one of the most visible practitioners of crony capitalism—at least since it began to use government to squeeze out competition from newfangled margarine—a less expensive alternative to butter—in the mid- to late-1800s. The industry later supported a similar push to ban cheap milk substitutes like filled milk—best (or, perhaps, worst) evidenced in the seminal 1938 Supreme Court case United States v. Carolene Products.
An opinion piece in the Lincoln Journal Star addresses the problem of federal crop insurance:
If there is any doubt about the generosity of the safety net provided for farmers with the help of the nation’s taxpayers, consider this: Despite a record nationwide payout of perhaps $15 billion because of drought and other crop losses last year, premiums for crop insurance actually will decrease next year for many farmers.
David Harsanyi writes at Human Events about the recent Super Bowl ad romanticizing farmers, and takes the opportunity to explain how the agricultural industry has become heavily dependent on government support:
Taxpayers spend about $7 billion a year on crop insurance alone, the largest farm subsidy, as if the industry apparently has the God-given right to operate in certainty. The Department of Agriculture hands out from $10 billion to $30 billion in cash to farmers every year – depending on the vagaries of the world around them.
Only 10 percent of farmers collect 75 percent of all subsidies. More than 90 percent of agriculture subsidies go to farmers of just five crops – wheat, corn, soybeans, rice and cotton. Government does not subsidize almost any of the fruits and vegetables we eat (also grown under the threat of unpredictable weather) or flat screen TVs we watch (also produced in a highly competitive marketplace) yet you can find any of them without worrying too much about serious fluctuations in price.