The New York Times reports on a problem facing this country's subsidy program. Corn production has far outstripped consumption for another year, reaching nearly 11 billion bushels in 2005.
When Prices Are Low And When Crops Are Large
The U.S. government pays subsidies to farmers both for growing too much corn and when crop prices are too low. Corn producers alone will receive about $4.5 billion when all is said and done.
Supply Outstrips Demand
One result is that the huge volumes of corn being encouraged by the subsidies are racing past actual demand. In fact, one Iowa corn producer interviewed had a 60-foot tall mountain of corn (almost 3 million bushels) piled outdoors next to full grain elevators, not knowing what to do with it.
Most Expensive Harvest
The surplus has depressed corn prices. When combined with a similar surplus last year, plus soaring shipping prices as a result of gasoline price hikes, a severe drought, and the damage from two hurricanes hitting the upper Gulf Coast, many corn growers have been placed in difficult positions, and subsidies will therefore increase. This could be the most expensive harvest ever subsidized by the federal government. Some predict that overall farm subsidies may surpass the record $23 billion spent in 2000.