12 A Subsidy for Corn?

The federal government has the power to change consumption and production through the use of taxes and subsidies.  Subsidies are payments by the government that provide an incentive to produce  a particular output.  For example, the federal government subsidizes the production of corn in the United States through various income support and insurance programs for farmers.  The federal government provides direct intervention to support corn prices and subsidizes the majority of crop insurance in the country.  There is no doubt the American Farmer is one of the most efficient producers on the planet. According to the U.S. Department of Agriculture, farmers produced 30 bushels per acre in 1940 and in 2021 produced 176 bushels per acre in 2021.  Subsidies have been successful in making corn plentiful that additional uses beyond food consumption needed to be found.  Less than 1% of the corn produced is in the form (i.e. sweet corn) humans directly eat.   About one third of crop corn is used to feed cattle, hogs, and poultry.  About one third of the crop corn is used to make the fuel ethanol.  The rest of the crop is used for industrial uses, beverages, exports and human food (Capehart).

The majority of the corn crop in the country is used to produce animal feed, ethanol fuel, and high fructose syrup.  This government subsidy policy not only increases, perhaps to a level beyond needed, the production of the good but also influences the consumption choices of society.  Obesity rates have increased dramatically in the U.S with two out of three individuals now either overweight or obese.  The consumption of high fructose corn syrup sweetener found in multitudes of processed foods has been shown to contribute to obesity and higher overall health care cost (Do 2020).  So much so, that some municipalities such as Boulder, Colorado are taxing these goods at the point of sale.  Is taxing a good that was produced with a subsidy good government policy?

Questions:

1. Do some research and describe three ways the U.S. government subsidizes the production of corn.
2. Do some research and describe three ways corn subsidies negatively impact society and the environment.
3. Do some research and describe three ways corn subsides have positively impacted society.
4. The airlines are planning to blend ethanol for their jet fuel in the future to reduce their carbon footprint. In your opinion will this policy be a net positive or net negative for society?  Defend your answer.

References:

Schechinger, Anne. (March 23). “In the Mississippi River region, billions of dollars spent on crop insurance payouts could have been used instead to retire over 300,000 acres of frequently flooded fields.: https://www.ewg.org/research/mississippi-river-region-billions-dollars-spent-crop-insurance-payouts-could-have-been

Bearak, Max and Mira Rojanasakul (Nov 30 2023) “Airlines Race Toward a Future of Powering Their Jets with Corn.”  New York Times. https://www.nytimes.com/interactive/2023/11/30/climate/airlines-jet-fuel-ethanol-corn.html