FarmPolicy

October 31, 2014

Biofuels- Survey of Issues

Categories: Ethanol /EU /Farm Bill

A Reuters news article from yesterday reported that, “A Republican senator said on Monday a threat by President George W. Bush to veto a farm bill is wrong, but a government official said the proposed legislation will be rejected by the president…’It will be a terrible mistake to veto this bill,’ Senator Norm Coleman (R-Minn.) said in a telephone conference call to the annual meeting of the industry group American Sugar Alliance here…’‘He (President Bush) is simply very wrong when he’s talking of vetoing this farm bill,’ Coleman, who is in Minnesota after a major bridge collapse in Minneapolis, said.”

I. Biofuels
II. Farm Bill

I. Biofuels

Food Prices

Helen H. Jensen and Bruce A. Babcock, in an article published in the current issue of the Iowa Ag Review (“Do Biofuels Mean Inexpensive Food Is a Thing of the Past?”), stated that, “Concern is growing that expanded biofuels production means the end of inexpensive food. After all, the prices of corn, soybeans, and wheat have dramatically increased and are likely to stay high. The line of thinking that expects expensive grains and oilseeds to lead to dramatically higher food costs follows the logic often used by proponents of U.S. farm programs. Many proponents justify subsidies by claiming that farm payments work to keep food plentiful and inexpensive by artificially keeping the price of commodities lower than production costs. For this justification to be valid, farm subsidies would have to expand commodity production, thereby lowering commodity market prices. Lower prices would then, in turn, lead to an expansion in the production of the food that all of us actually eat (pork chops instead of no. 2 yellow corn), which would cause food prices to be lower than they would be otherwise. Thus, according to the argument, we do not need to spend as much of our income on food. By the same logic, high commodity prices caused by subsidized biofuels should result in a reduction in the production of food and higher food prices.”

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