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Petition Against Cheap Corn

by: Brad Wilson

Sat Nov 06, 2010 at 06:32:37 AM PDT


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Here's where you can sign on to the main policy solution to cheap corn.  We must do this now, well in advance of the next farm bill, as I explain below.

Those who have read my blogs and comments here and elsewhere will know of my concern that there is a major barrier to winning our policy fight against cheap corn and other farm program crops, against most of the main problems identified in the new food books and films, from high fructose corn syrup, to CAFOs and the global food crisis.  That barrier is a misunderstanding of just what the real policy cause is.

Brad Wilson :: Petition Against Cheap Corn
The big policy matter that gained movement and mainstream attention in the fight over the last farm bill was farm subsidies, or as Michael Pollan often emphasizes, "subsidized corn."  If you go to the Farm Subsidy Database online at the site of the Environmental Working Group, you can see charts and statistics documenting the size and scope of farm subsidies.  Without question, it clearly APPEARS that farm subsidies are the huge policy cause.  It APPEARS that subsidy reform, (caps, greening, elimination,) is the true policy solution.

In stark contrast, the actual evidence from econometric studies and the real world, proves a very counterintuitive point:  subsidies are just another problem caused by the real policy cause.

In a nutshell, farm prices have usually been low for well over 100 years for a basic economic reason.  The main crops, (and these are mostly government "program crops,") as a group (and the group varies somewhat from region to region (ie. corn/soybeans vs. wheat/cotton/rice), lack "price reponsiveness" on both supply and demand sides.  They don't self correct.  You don't eat 4, 5, 6 meals if grain prices are low.  Likewise, low prices don't lead farmers to plant only part of their farms.  They still need to try to get money to pay taxes and interest on long term debt, for example.

Ok, that's an economic matter.  Policy came in with the nonsubsidy farm programs started in the New Deal.  A policy solution to the long term economic problem was enacted:  price floors with supply management (acreage reduction) on the low side of price, and reserve supplies, with price ceilings to trigger their release, on the top side, for occasional price spikes (1970s, 2007-8, to a certain extent, and again now).  

These policies brought farmers fair trade, living wage prices by the traditional standard of parity (100% of parity) from 1942-1952, as price floors were set at 90% of parity for each crop.  Price floors and the other provisions were then reduced 1953-1995, and then ended in 1996.  On rice, for example, compensatory subsidies for farmers were not added until 1977, (contrary to widespread false information).

We see then, that, in focusing only on subsidies during work on the last farm bill, most of the food movement advocated for policy packages that create cheap corn, policies that have been long sought and defended by agribusiness grain buyers.

It makes no sense, therefore, to directly petition Congress and the President to go it alone and work for the needed policies.  First we need to build a base of support at the grassroots level.  We have a huge movement.  We need to first petition it's leaders to change course, to actually reverse course, and advocate against agribusiness special interests and for fair priced corn and other farm program crops.

That's exactly what my new petition at change.org does.  It calls for Michael Pollan to use his bully pulpit to call on food movement leaders and together to lead this change.

You can find the petition here (http://www.change.org/petitions/view/michael_pollan_lead_the_food_movement_to_corn_price_floors).  I have also attached a video to the petition.  The video sets out four proofs to back up my claims.  You can see part 2 of the video at my YouTube channel, here (http://www.youtube.com/user/FireweedFarm#p/c/A1E706EFA90D1767/5/feTeT45iWnc), (and also part 1, here:  ).  

This is a vitally serious matter for our movement, as I've tried to make clear in the petition and in these videos.  The failure of the movement last time is shocking.  It must somehow be prevented this time. Please learn about it and take a stand, with me, at change.org. And then help to spread the word, far and wide, until we can fruitfully confront Congress about the policy causes of cheap corn.

This petition can serve as a bellwether of how well the food movement understands the Commodity Title of the Farm Bill.  It is starting very slowly, to be sure, but so far, it has been signed by persons from 12 states and 3 foreign countries.  The word is seeping out, far and wide.  May the waters soon flow forth vigorously toward a major farm policy victory.

Poll
Do you believe that cheap corn is caused by the presence of corn subsidies, or by the lack of corn price floors and supply management?

Results

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There ain't gonna be any cheap corn this year (0.00 / 0)
Not with the futures prices like they are right now.

According to my feed expenses, I don't think we've had cheap corn in several years.

Normal people scare me.... But not as much as I scare them.


Either way, we need my petition (0.00 / 0)
USDA-ERS listed full costs at $3.10/bu  for 2007, $3.50 for 2008 and $3.39 for 2009.  Prices during some of this period were, therefore, likely below full costs, though, as in your comments, this might not have been noticed.  (Costs for 2008 were higher than 2009, I think, because of the oil price spike in 2008.)

From this perspective, your prediction depends upon how high costs rise for 2010 and 2011.  For example, if full costs rise above $4.00 in 2011, but prices fall below $4.00 within the next year, there would be, by this definition, cheap corn.

The price of corn averaged $2.23, 1981-2006, (in a simple,  average of yearly averages,) while full costs were lower than that on only 2 of those years, for example (by my calculations of ERS data).  This, of course, is the justification, (in the context of our ill advised "Freedom to Farm" style policy,) for always paying subsidies to farmers (which is the rule for Direct Payments, of 28ยข/program bu. for corn).  

If costs rise to $4.00, countercyclical payments will also kick in, IF corn prices fall, not below $4, but way down to $2.63. LDP subsidies will also compensate farmers for their losses (if corn prices fall, not below $4 or $3, but below $1.95), as no cost of production adjustments were made in the 2008 farm bill.

Of course, my petition ALSO calls for reserve supplies and price ceilings, to address the top side of corn and other costs.  Those provisions would specifically protect your feed costs, which currently have no such protectin.  The bottom side helps protect you from competition from CAFOs, if you also feed forage & hay. The combo protects you from volatility, which is hard on any business.

Recently corn prices around Iowa were below $4.30, then rose to over $5.  Of course, we had an even bigger price spike during the 70s (because reserves weren't maintained).  Conventional costs skyrocketed, the policies in my petition weren't adequately adjusted, and we had a quarter century of below cost corn, as shown above.

So these are factors you might want to keep in mind, as you lead others in the food movement their interpretations of my petition, as they may not easily grasp the larger contexts.

"We're trying to warn this nation of a tidal wave ..., and it's coming your way, whether you want to know it or not...!"  female family farm activist in Iowa warning against agribusiness, Donahue Show, 1985


[ Parent ]
Good points and thank you for them (0.00 / 0)
I'll keep them in mind.

Normal people scare me.... But not as much as I scare them.

[ Parent ]
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