Agricultural subsidies -- Welfare Kings
In this Op Ed, Jonah Goldberg levels some strong criticism toward current US agricultural policy. I post it here because of the strong influence that ag policy has on renewable energy policy. In particular, in Minnesota where the push to ethanol, produced from home grown crops, is so strong.
I don't think that the interconnection is fully understood but it certainly exists. It is also very complex and convoluted. One effect is what is sometimes called ag-driving-energy. This can be seen by the fact that the two leading sources of renewable liquid fuels are corn and soybeans...also two of the largest agricultural crops and also two of the heavily subsidized crops. Current US ag policy has been often criticized for its effect of reducing the varieties of crops grown by farmers. This affects energy in that it can result in a smaller established markets for those commodities of more interest for use in energy production; cellulosic biomass crops being the most significant.
Another impact is on the other side of the current successful liquid fuels production markets is that the farmers are seeing less of the benefit of increased demand for corn because of agricultural subsidies. For corn farmers, the largest form of subsidy is that of the loan guarentee. The way it works is that, for loans granted under this program, if crop prices are not above preset levels the government will kick in a portion of the difference to ensure that the farmers are able to avoid defaulting on their loans. Even if ethanol pushes corn prices above that preset level that portion of the increase necessary to cross the threshold needs to be ascribed as a benefit to tax payers not to the farmer.
I have not seen any good studies, yet, on the impact of agricultural policy on energy policy and vice versa. One good book that touches on many of the factors is 'Agriculture as a Producer and Consumer of Energy' with articles by Vern Eidman and Doug Tiffany at the University of Minnesota. I would love to hear if others have other takes on the issue or know of other good sources.
posted by Darrell Gerber @ 11:24 AM
2 Comments:
I continuously question whether all this claptrap about "energy independence" is anything more than trying to get votes in heartland.
I mean, do we want to pay more for energy merely so we can be independent? And aren't all these farm subsidies basically pushing us in that direction?
This is not to say all farm subsidies are bad but I really don't think we should have an energy policy based on thinly veiled advances to agribusiness...
I have a feeling that the connection between ethanol and helping farmers is going to weaken in political circles after more evidence comes out to the lack of impact.
Even with that, though, I think it is unrealistic to expect that ag policy and energy policy will, or should, be decoupled. Rural areas are those that stand to either benefit most or be harmed most by the directions we go with energy. The folks pushing wind energy have targeted farms as good places to locate wind turbines and have worked on ways to help them benefit from that.
Two other areas that I didn't mention before regarding farm policy and energy policy that have worked somewhat counter to what I stated are the CRP program and some ethanol policies in MN. The Conservation Reserve Program (CRP) pays rent differentials to farmers for environmentally sensitive land that they intentionally keep out of production. This land has also been receiving attention from those interested in bioenergy crops. It will probably take some changes in the laws (there are severe restictions on harvesting such lands) but it looks like they would be a good source for energy products without taking cropland from food production or impacting the environmental impacts.
Another area are two policies in MN that have helped farmers involved in ethanol production. One is a loan program to help farmers buy into ethanol co-ops. These have been good systems for both the farmers (they share in the profits) and the ethanol plants (they get cheaper feedstocks). Another is a producers credit that subsidizes ethanol produced at small plants. Both have acted together to create a large number of small, locally owned ethanol plants in the state. These have a much higher benefit to local, rural economies. Unfortunately, the producers credit is largely phased out. This is good in that it isn't needed anymore but bad in that there is less of an incentive for local ownership of smaller plants. We'll probably be seeing more of ADM in the state.
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