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President Obama's administration fears losing key swing states if it drops corn farmer-friendly quotas

It's a painful memory etched into many chapters of American history -- selling the farm.  But amid a record-setting drought many farmers fear that may be precisely what will happen.  But unlike past farm failures, this one may come not solely from nature, but from the government's decision to artificially inflate corn prices by mandating corn ethanol production.

I. Corn Ethanol - Pork 101

It's hard to understand why corn ethanol fuel in the U.S. has stuck around for as long as it has.

Unlike a handful of nations (i.e. Brazil), the U.S. lacks the resources to supply all its fuel needs with sugary food-crop ethanol.  Thus, unlike those nations U.S. automakers have been largely unable to sell pure-ethanol vehicles to consumers.  That's a game killer for corn ethanol, as it means that consumers pay more at the pump using ethanol than they would using gas as mixed-fuel engines lack the fuel efficiency advantages of pure ethanol engines.

Corn ethanol handouts
The federal government has funneled billions in handouts to the corn lobby. [Image Source: AP]

Then there's the economics -- corn is a food crop, so using it as a fuel source drives up prices on everything from snack foods (corn syrup) to beef (cows eat corn feed).  Finally, there's the environmental issue.  One of the big goals of the alternative fuels movement is to reduce emissions of carbon and noxious (nitrogen or sulfur containing) gases.  But studies have shown corn ethanol actually leads to higher emissions than gas.

Corn ethanol's strange status in the U.S. perhaps began when corn producers seized on the experimental fuel as a means of bumping the billions they already received in government subsidies even higher.  During the Bush and Obama administrations, the corn lobby opened its checkbooks to many members of Congress, and in exchange reaped a multiplier in the form of billions of grants and subsidies for corn ethanol -- all on taxpayers' dime.

Perhaps most significantly, the federal corn supporters authorized the EPA to mandate all fuel sold to contain a certain percentage of ethanol -- in essence forcing all Americans to pay for corn ethanol, even if it was bad for their cars and not something they wanted.

II. Quota Remains Last Major Handout to King Corn

As part of the government's embrace of corn ethanol, the Energy Independence and Security Act of 2007 (EISA) -- passed by Congress and signed into law by President George W. Bush -- mandated a series of ever-increasing production targets to be regulated by the U.S. Environmental Protection Agency (EPA) (a slightly ironic duty consider there was strong evidence corn ethanol harmed the environment).  The idea among corn producers who backed the bill leaning on the candidates they "funded" was ostensibly that this would force future Congresses to commit to ever-increasing subsidies.

But after the recession, public backlash against wanton government spending led to Congress cutting corn ethanol's subsidies.  But Congress did not bother to overturn the EPA's emissions targets.

Cattle farmers
Cattle farmers fear they could go under if corn prices stay artificially high. [Image Source: Texas Vox]

While cutting the subsidy, but leaving the quota might seem like adding insult to injury, corn producers were actually happy (mostly) that the quota remained.  The quota created higher artificial demand, driving up prices.  That artificially elevated demand has helped the corn industry weather the recent droughts, as corn prices have risen 60 percent.  

But while that may have saved big corn's profits in a year which otherwise would have been disastrous, the damage has essentially been passed along to livestock producers.  

Mike Deering, a spokesman for the National Cattlemen's Beef Association, says his organization has pleaded with the EPA to temporarily cut targets to alleviate already drought elevated corn prices made even higher by artificial ethanol demand.  He comments to ABC News, "Our ears are open and the line of communications is open, [but] we do not have any definitive news at this point and time."

III. Trading Higher Food Prices for Votes

Perhaps this is a case of reaping what you sow, but amid pleas from livestock farmers there's not a drop of relief in sight.  The issue lies with how the EISA is structured.

While the EPA has the power to temporarily reduce production quotas, it must receive that request from states or ethanol refiners.  An ethanol trade group -- the Renewable Fuels Association -- said it "wouldn't be surprised" to see such a request, but none has come yet.  The issue is that corn demand actually helps corn farmers, refiners, and corn-producing states.

Currently about a third of corn is used to make ethanol, another third goes to livestock feed, and the remaining third is sent for human consumption either as a vegetable or in various food additives (corn syrup, corn starch, etc.).

The cattle industry warns, "The drought-induced reductions in the corn supply means that the mandated utilization of corn for renewable fuels will so reduce the supply of corn and increase its price that livestock and poultry producers will be forced to reduce the size of their herds and flocks, causing some to go out of business and jobs to be lost."

One problem is that supporting corn ethanol has held the key to Presidents Bush and Obama wining crucial swing-state battlegrounds.  

In 2008 President Obama won three of the four largest corn producing state -- Iowa, Minnesota, and Illinois.  He also won other swing states with large corn growing regions, including Michigan, Ohio, and Wisconsin.  Support of ethanol earned President Obama and other regional politicians key support -- both financial and in votes.  Unsurprisingly politicians in these regions and the President are key supporters of corn ethanol.

Electoral college 2008
Corn ethanol supporters were key to President Obama winning battleground states in 2008.
[Image Source: Wikimedia Commons]

Meanwhile the states who are hurt the most by the quotas -- livestock states like Texas -- are regions where President Obama holds little hope of winning electoral votes.

Of course, there is a risk that supporting government inflation of corn prices could backfire.  Outside of corn producing states who directly benefit from higher corn prices, voters in other swing states might look to punish President Obama and the backers of big corn if failing livestock and higher food corn prices could drive up costs of meat and many dry foods.

For now, though, the quota stands.

Source: ABC



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Hey Cattle Farmers!
By quiksilvr on 8/4/2012 11:37:18 AM , Rating: 0
Screw you! Stop feeding your cows this unhealthy product that's causing most of the health problems with red meat in the first place! Feed them grass. It will stop the meat from getting tainted with e-coli and will in turn remove the need to douse all meat in ammonia and chroline prior to being given to the public. Furthermore, it is healthier for the cows too. More Omega-3s (good fat) and far less Omega-6 (bad fat). Healthier cows = Healthier humans. Go figure.




RE: Hey Cattle Farmers!
By Rugar on 8/4/2012 2:22:27 PM , Rating: 2
Eh... just out of curiosity... which terrestrial grasses produce any significant amount of Omega-3s? Certainly there are some crops (flax, chia, or rapeseed) that contain decent levels of alpha-linolenic, but none of these are grasses. They are all seed crops.

I can agree with the notion that free-range cattle produce a completely different product than feedlot cattle and subjectively I can agree with you that the product is better. But unless you know something I don't about grasses, your argument is blatantly false.


RE: Hey Cattle Farmers!
By Jeffk464 on 8/5/2012 12:49:01 AM , Rating: 2
I have seen studies that say the same thing, that grass fed cattle have a much healthier fat profile. Buffalo also have a much healthier fat profile, I don't know why they are not more of an option.


RE: Hey Cattle Farmers!
By Jeffk464 on 8/5/2012 12:40:06 AM , Rating: 2
Stop eating the red meat that is unhealthy because of corn feed. I have cut back probably 90%, even make spaghetti with ground turkey or chicken now. People need to start learning to vote with their wallets, its really the only vote that counts in this country.


RE: Hey Cattle Farmers!
By Jeffk464 on 8/5/2012 12:45:14 AM , Rating: 2
Oh forgot, also switched from hamburger fast food, to places like subway, quiznos, baja fresh, etc. I also majorly cut back on drinking any corn syrup sweetened beverages, easiest thing in the world is swap ice tea for soda.

Added benefit of dropping 13 lbs in about 4 months.


RE: Hey Cattle Farmers!
By Gungel on 8/5/2012 8:47:35 AM , Rating: 2
Chicken and turkey contains to much antibiotics, hormones and what not. And none fermented soy (tofu) is even worse, it inhibits the absorption of minerals. So be careful with your red meat replacement choices. I reduced my red meat intake to 4 servings a month and grass fed only like buffalo, venison, etc.


RE: Hey Cattle Farmers!
By jeffkro on 8/5/2012 9:14:14 AM , Rating: 2
I know, basically no matter what you do it feels like the food industry is attempting to poison you.


RE: Hey Cattle Farmers!
By Reclaimer77 on 8/5/2012 11:24:33 AM , Rating: 2
We get more and more sedentary and inactive and yet life expectancy goes up and up.

I doubt we're being poisoned lol. Maybe the food industry isn't perfect, but it's better than going back to times of mass famine, food-borne illness and contamination being common place, etc etc.

We have a bunch of people now who've watched Food Inc., the most one-sided documentary since the last Michael Moore flick, and think they have it all figured out. The food industry is doing the only thing they can to meet the demand placed on them. Going "all organic" simply isn't sustainable on THIS planet. We would need one with a lot more farmland, and way less people.


RE: Hey Cattle Farmers!
By Jeffk464 on 8/5/2012 7:38:04 PM , Rating: 2
"yet life expectancy goes up and up"

I have seen predictions that the current generation will be the first generation to reverse that trend due to obesity. But I think the reason life span has been going up has more to do with modern medicine then it has to do with the general health of the population. Medicine has just been able to squeeze more years out of people than what they would have in the past. How many elderly people do you know going in for stints, blood pressure meds, etc.


RE: Hey Cattle Farmers!
By Jeffk464 on 8/5/2012 7:46:57 PM , Rating: 2
By the way I agree with you that we probably need to use current methods to get the needed quantities. I just don't think all the hormones, chemicals, and pesticides don't come at a health cost. To think they are not involved in a percentage of the populations cancer's and other diseases seems unrealistic.


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