Griffith 1Mark GriffithYehSustainabilityFebruary 23, 2011 Removal of corn subsidies effect on prices in grocery store Since the mid 1970’s farming has been revolutionized. It is no longer aboutdiversity in crops and helping out your neighbors to provide food fresh produce togrocery stores, it is now about surplus; it is about buying your neighbors land to growmore of the same crop, a crop that is not even worth its own cost. This crop is mainlycorn; it has caused the big farms to get bigger and the small farms to go out of business.Corn farmers heavily rely upon government subsidies because without it farmers wouldnot make any money growing it; in fact, they would lose money by growing it3. Whatwould happen to the corn industry if government subsidies ceased to exist? How wouldthis change affect the other areas of agriculture? Before discussing today’s farming problems it is important to know the history ofcorn farming and its subsidies. Prior to the 1970’s Midwest farmers found themselvesgrowing diverse crops in an area of land small enough themselves and a few helperscould manage by hand. Supply of the crops was not very high forcing consumers tospend nearly 40% of their earning towards food. The government during the New Dealera decided it was time to bring supply into line with demand. The government set aprice floor guaranteeing farmers a decent price for corn and set the tone of farming ontoindustrial-style monocropping. From this, a single type of corn, yellow #2, became the
Griffith 2dominant corn crop due to its invulnerability5. Corn was now sold primarily to industriesand businesses rather than the general public to which it had before5. The businessesneeded this corn to make their commodities quicker and cheaper. For example in thebeef industry it took four to five years for a cow to become the correct size for slaughtereating solely off of grass. After the new farm deal in the 1970’s, slaughterhouses beganfeeding corn to their cattle instead of grass, and it drastically reduced the amount of timeit took the cow to reach the correct size; about one and a half to two years, half theamount of time that it used to take. Technology began to improve to where one mancould farm not only his land but also had the ability to farm his neighbors as well. Thiscreated a competition where only the farms with the most output could survive and thosethat did not sold their land, inevitably to the bigger and more successful farm that had ranit out of business creating a vicious cycle. The price of corn collapsed soon after the 1996 Freedom to Farm Act whichresulted in huge taxpayer bailouts and in 2000, subsidies from the government increasedstaggeringly making up 49% of the average farmer’s income5. There are many differentsubsidies farmers are paid: direct payments by just telling the government you are goingto growing a certain amount of corn, crop insurance subsidies to ensure there are newcrops coming up every year, price support payments the most iconic subsidy, this isactive because the price at which a farmer can sell his corn is less than the money he putinto it. This also goes in hand with the market loss assistance subsidy and the counter-
Griffith 3cyclical programs5. These subsidies added up cost a total of 73.8 billion dollars of thetaxpayers just from 1995-20095. So what would happen if the government decided to stop subsidizing corn? Thereis no specific research done on all of the effect it would have but there are many thingswe know for certain that would happen. The extremely common sweetener, High-fructose corn syrup (HFCS), which is used by many companies today to sweeten theirproduct for cheap because of the subsidies that make the corn cheap in the first place. Ifcompanies did not have this commodity to use for their products the cost of making theirproducts would increase substantially because of the tariffs placed on sugar. For oneexample if the Coca-Cola bottling company had only a 1/10 of a cent increase in the costof sweetener they use, per serving, it would cost the company roughly 122 million dollarsper year which would translate over to the price at which they sold their beverages6. Atthe same time according to a report by Center for Agricultural and Rural Development(CARD) claims, if the removal of corn subsidies caused a theoretical increase in cornprice by 5%, the price of pork would increase by 53%. As stated in the report, “Pork chops that cost $3.00 per pound with farm subsidies would increase in price by less than two cents per pound. If corn prices were to rise by 10 percent with the removal of subsidies, then pork chops would cost only three cents per pound more than they currently do. Because corn represents a smaller share of the final value of beef and dairy products, retail prices for these products would go up by a smaller amount (in percentage terms) than the price of pork.”1
Griffith 4If this claim by CARD would become the truth then it seems as if not all prices ofgroceries would increase substantially. The products that used HFCS would still increasebecause of the tariffs placed on sugar but it seems the theoretical end result in thesupermarkets and grocery stores would only go up by a few cents for most meat products. With the removal of government subsidies on corn it would also make thepopulation more healthy. Corn fed beef has been proven to have higher saturated fatcontent than the traditional grass fed beef2. Since 1974 the use of HFCS hasexponentially increased and the obesity epidemic in America has been on the same trackas the increase of HFCS, nearly matching it as a perfect fit4. At the PrincetonNeuroscience Institute a study found conclusive evidence that lab rats become moreobese eating HFCS than regular sugar, with the amount of calories of both the HFCS andregular sugar totaling the same. Hillary Parker one of the researchers on the project said, “The rats in the Princeton study became obese by drinking high-fructose corn syrup, but not by drinking sucrose. The critical differences in appetite, metabolism and gene expression that underlie this phenomenon are yet to be discovered, but may relate to the fact that excess fructose is being metabolized to produce fat, while glucose is largely being processed for energy or stored as a carbohydrate, called glycogen, in the liver and muscles.”8The rats in this study show the addictive nature of HFCS and the dangerous effects it hason our bodies.
Griffith 5 In conclusion the changes made in the 1970’s in the agriculture industry goingfrom the private farms to industrial monocropping where yellow corn #2 became thedominant species has completely reshaped our economy as a whole. With spending of 73billion dollars in 14 years on subsidies for corn and selling corn to companies andindustries rather than grocery stores and consumers it is now nearly impossible to touch aproduct at the grocery store without some form of corn in it. The removal of cornsubsidies found through research seems to be a significant one in some areas while itwould cause barely a dent in others. For example the 1/10 of a cent increase in sweetenerper serving for Coca-Cola would cost them roughly 122 million dollars whereas with theremoval of subsidies pork, dairy and beef products would only go up by a matter of centsaccording to research by CARD. Along with the price differences would come the healthbenefits, which have not been conclusively identified as the main reason of the obesityepidemic in the U.S. it has many similarities placing it as the main source of our obesity.
Griffith 6 Works Cited1 Babcock, B. A. (2006, March 13). Cheap Food and Farm Subsidies: Policy Impacts of a Mythical Connection. Center for Agricultural and Rural Development, 12(2), 55-63. Retrieved from http://www.card.iastate.edu/iowa_ag_review/spring_06/article1.aspx2 Calca, J. (2009, Winter). Withdrawal of Corn Subsidies. National Academy of the Public, Retrieved from http://opengov.ideascale.com/a/dtd/8198-40493 Ellis, C. (2007, Fall). Facts behind King Corn. Sustainable Table, Retrieved from http:// www.sustainabletable.org/features/articles/kingcorn/4 Hartman, P. (2010, November 23). Stop Federal Corn Subsidies to Decrease Childhood Obesity. Childhood Obesity, 67-71. Retrieved from http://childhoodobesitynews.com/2010/11/23/stop-federal-corn-subsidies-to- decrease-childhood-obesity/5 Herzberg, J. (2009, Spring). King Corn Fact Sheet. National Family Farm Coalition, 47-51. Retrieved from http://www.nffc.net/Learn/Fact%20Sheets/King%20Corn %20Fact%20Sheet.pdf6 Hopkins, K. (2006, January 4). Tariffs and Subsidies - The Literal Cost of High Fructose Corn Syrup. Accidental Hedonist, 32-35. Retrieved from http://www.accidentalhedonist.com/index.php/2006/01/24/tariffs_and_subsidies_t he_literal_cost_o7 Landrigan, P. J. (2006, Summer). Why Are We Subsidizing Childhood Obesity? Mount Sanai School of Medicine, 15(4), 37-38. Retrieved from http://docs.google.com/viewer? a=v&q=cache:Iq3XgoBRq5wJ:www.mountsinai.org/static_files8 Parker, H. (2010, March 22). A sweet problem: Princeton researchers find that high- fructose corn syrup prompts considerably more weight gain. Princeton Journal, 24(6), Retrieved from http://www.princeton.edu/main/news/archive/S26/91/22K07/9 US Price of Beef. (2010, January 2). Retrieved from http://www.mongabay.com/commodities/price-charts/beef-price.html