July 26, 2012

A DROUGHT OF LEADERSHIP: U.S. NOW IMPORTING CORN. “For the first time, U.S. agricultural companies are importing corn from Brazil — the equivalent of Saudi Arabia importing oil, as the Financial Times noted. . . . The problem here is the man-made element that is exacerbating the U.S. drought. There should be plenty of corn from U.S. reserves after recent record harvests for exports — 61 million metric tons in 2008 — were it not for the 2007 law that forces U.S. corn producers to turn ever greater percentages of U.S. corn into ethanol.”

UPDATE: Reader Robin Rhea emails:

I just noticed a snippet blaming our importation of corn on Ethanol, noting that last year was a banner year and if we weren’t pumping it into our cars we would still have plenty left for other uses. It is important to understand that Ethanol is the reason we had the banner year in the first place. It has artificially elevated the price of corn, making farmers more likely to produce it. Prior to widespread utilization of corn in ethanol $3 per bushel was a good price for corn. Now farmers routinely receive $6-7 per bushel and they have made sure that every acre available is growing corn. Land prices have skyrocketed, equipment sales to farmers are on the rise, all thanks to ethanol.

Now this might just be a gigantic wealth transfer from drivers to farmers, but the bottom line is that without corn ethanol, there would have been no banner year last year.

Just more to dry up and blow away this year. And yeah, it is a gigantic wealth transfer.

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