Ethanol Subsidies Hurting Cattle, Hog & Chicken Producers, Hitting Citizens With A Double Whammy
An interesting paragraph from a press release sent to me North Dakota Policy Council Executive Director (and Say Anything contributor back when he didn’t have such a fancy-pants title) Brett Narloch:
Because of the increased demand for corn, the livestock industry is suffering from higher feed costs [caused by the increased use of corn for ethanol]. “The North Dakota Agriculture Department states that the livestock industry is the second most important industry in North Dakota, yet the government is actively supporting its competition,” Narloch said. “Cattle, hog, and chicken producers have and will continue to see their profit margins shrink because of the increased cost of feed, which is a direct result of the government artificially inflating demand for ethanol.”
This is one aspect of the whole ethanol issue that a lot of people miss. It’s also indicative of the problems we face when we allow the government to interfere with open-market commerce.
Were the ethanol industry not currently propped up by subsidies funded by our tax dollars the fuel wouldn’t be competitive against other fuels on the open market. Performance wise ethanol doesn’t match up with ordinary gasoline. It makes fuel mileage to go down sharply and causes a noticeable decline in engine power. And cost wise ethanol wouldn’t even be in the same ballpark as regular gasoline were it not for the aforementioned subsidies.
Nobody is going to pay more for a fuel that worsens gas mileage and makes your engine less powerful.
Yet despite this, many politicians in our government have decided that we should be using ethanol. So they subsidize it, which creates an artificially inflated demand for the fuel. By “artificially inflated” I mean a demand that wouldn’t exist were ethanol’s prices not pushed lower by our tax dollars.
Now while that subsidy may be good for corn growers and investors in ethanol plants, it certainly isn’t good for people who buy corn to feed themselves or their animals. As Brett notes, ethanol plants buying up all the corn is particularly hard on ranchers who depend on corn as a feed for their livestock. And when it’s hard on those ranchers, it’s hard on the rest of us who eat the meat produced by those ranchers.
Which means that because of these ethanol subsidies we citizens are getting hit with a double whammy. Not only do we have to pay tax dollars to subsidize ethanol, we also have to pay the increased food costs associated with higher livestock production costs. It’s not really fair, is it? But that’s what happens when the government starts fooling around with the free marketplace.
I would suggest that if America’s politicians are truly interested in seeing this country use ethanol as a way to get away from fossil-based fuels that come from the middle east they’d drop the $0.54/gallon tariff on imported ethanol from places like Brazil. That would not only flood our markets with cheap ethanol (fuel that’s cheap without costing us any tax dollars) it would also shift our flow of energy dollars away from the middle east and toward a friendly ally and trade partner like Brazil.
Unfortunately, it seems like our politicians (many of them right here in North Dakota) are more interested in enriching ethanol plant investors then allowing ethanol to thrive (or die) on the open market.
You can read the entire press release here. You can read the full report on ethanol released by the ND Policy Council here.
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