Senate Farm Bill Boondoggle
November 5th, 2007 by Brendan SteinhauserThis week the Senate will be debating the pending farm bill on the Senate floor. This latest farm policy outrage will cost taxpayers more than $280 billion over five years. It’s a combination of subsidies, tariffs and price controls, all of which are bad public policies. One of the worst giveaways from Big Government to Big Ag is the extension of the tariff on imported ethanol through 2010. Instead of importing cheaper and more efficient sources of this product, the government planners in Washington don’t want American corn ethanol producers to have to compete on a level playing field. Seeing how protectionism has permeated our political culture from Lou Dobbs to John Edwards to Mike Huckabee, it does not come as a surprise that this is a popular idea.
As if the tariff were not bad enough, there is also the provision sponsored by Senator Bingaman that would force “alternative” fuels to be used. Perhaps the Senate should consider the effect this mandate would have on corn prices. The Senate should also consider the inefficiency of ethanol production. (Ethanol production burns more energy than it creates.) As a recent study found,
“Ethanol production in the United States does not benefit the nation’s energy security, its agriculture, the economy, or the environment,” according to the study by Cornell’s David Pimentel and Berkeley’s Tad Patzek.
No matter. The politicians have to pander to domestic corn growers in places like Iowa with, shall we say, certain “strategic” characteristics. Who are the real losers in the farm policy nightmare? The American consumer, who must pay more for food, and the foreign producers of the more efficient sugar-based ethanol.
Even The New Yorker magazine has figured out the Big Sugar boondoggle:
The government guarantees producers a fixed price for domestic sugar and sets strict quotas and tariffs for foreign sugar. Economically speaking, this has many obvious bad results. It keeps sugar prices in the U.S. at least twice as high as the world average. It makes it harder for companies that use lots of sugar to do business hereâ€â€in the past decade, an exodus of candy manufacturers from the U.S. has eliminated thousands of jobs. And import restrictions make Third World countries poorer than they’d otherwise be. But protecting sugar also has a surprising consequence: it’s hurting America’s efforts to become more energy-efficient.
Farm policy has been horrendous in the past, and it looks to be horrendous this time around as well. The result? Get ready to open your wallet to subsidize Big Ag, and then pay again for the higher prices caused by that subsidy at your local grocery store.
November 5th, 2007 at 2:36 pm
Our industrial ag policy subsidizes lower-value-added agriculture jobs at the expense of higher-value-added food processing/ manufacturing jobs. It doesn’t make economic sense.
November 20th, 2007 at 3:50 pm
woe to the consumer who is continually bien by a one to punch and an upper cut, subsideis are major sticking point the trade deadlock in doha. nobody likes to be taken for a fool, smaller countries are being taken advantage of bu america and the eu, continually subsidies thier farmers and tell 3world countries not to, who is screwing who over. free trade cannot apply when conditions are right, it applies all the time, if fairness is to achieved.This kind of hypocracy will win america no friends nor allies, only enemies.Lets meet in doha, i hope the farm bill will not be law by then.