Taxpayer subsides cause crop overproduction, leading to more subsidy schemes, like biofuels

Diesel Fuel News, Feb 4, 2002

Proponents of "biofuels" mandates and subsidies -- including ethanol and biodiesel -- partly justify their pitch by claiming consequent reductions in huge surpluses of soybean oil or corn stocks and consequent higher prices for farmers, along with some dubious claims about reduction in foreign oil dependence.

But now comes U.S. Sen. Dick Lugar (R-Indiana), himself a part-time corn and soybean farmer, calling these chronic, growing, gigantic taxpayer subsidies for endless farm program cycles a "charade."

Writing for a column in the New York Times last month, Lugar blasted the ending U.S. Senate farm bill sponsored by Sens. Tom Daschle (D-S.D.) and Tom Harkin (D-Iowa), both from big-corn states and both big backers of "biofuels" mandates and subsidies.

This bill would give a whopping $171 billion in subsidies to corn, soybean, wheat and rice farmers, along with huge payments to milk, sugar and peanut producers.

The bill also would "halt attempts to reform America's distorted agricultural policy," Lugar said, with "huge increases" in subsidies "at a time when the United States is fighting a sluggish economy and a life-or-death war on terrorism."

"Ineffective agricultural policy has, over the years, led to a ritual of overproduction in many crops" because U.S. taxpayers hay given farmers "essentially a guaranteed income" through forgivable "loan payments" at target commodity prices.

The big political problem: "If either party stands in the way of this largess, they risk being labeled the 'anti-farm party' and targeted with sentimental imagery associated with farm failures," Lugar explained.

This Lassie-like political manipulation could be compared to the Willy Nelson "farm aid" music spectacles of recent years, starring a singer that earned millions off his records, yet simultaneously lived off huge government largess by failing to pay his own income taxes.

Related problem: The ag lobbies enjoy "focused advocacy [that] has much more political influence than the broader well-being of Americans," Lugar said. "Those who benefit from current agricultural programs are virtually the only participants in the debate."

But rather than pushing a complete free-market solution to this never-ending, growing raid on the taxpayer, Lugar instead proposes a modest "whole-farm income insurance" subsidy that would "provide assurance of 80% of an average [farm] income taken over a five-year period." This would be "more market-oriented" than the staggering Daschle-Harkin bill, Lugar argues.