Indeed, the boondoggle bill deserves a White House rejection for its almost $300 billion of farm programs that will be paid for by taxpayers and consumers. Farm bills, however, no matter how wasteful, have a way of surviving, and this legislation may be no exception, since it’s a case study of bipartisanship gone bad.

Besides the sugar provisions we’ve written about here and here, the biofuels programs’ grants and loan guarantees, plus moneys for R&D and “energy efficiency” projects, together with the extension of the tariff on imported ethanol, will continue to exacerbate the food vs. fuel program.

Corn futures at the Chicago Board of Trade surged as much as 4 percent on Tuesday, with an all-time high of $6.60-3/4 a bushel set by the July 2009 contract.

According to the U.S. Department of Agriculture’s weekly agriculture summary, the pace of planting is significantly slower this year:

Corn: Twenty-seven percent of the Nation’s corn crop was planted by week’s end, 18 and 32 points behind last year and the 5-year average, respectively. In the central Corn Belt, Ohio Valley, Tennessee Valley, and central Great Plains, producers gained momentum and were able to plant 20 percent or more of their crop between rain showers, but remained well behind normal in most areas. Elsewhere, farmers planted at a slower pace, awaiting warm, dry conditions to resume fieldwork. Progress was the farthest behind normal from Missouri and Illinois northward.

If lower crop production occurs, higher prices could add to rising food costs.

And, of course, the increased use of corn for biofuels has exacerbated the rise.  As the USDA noted in a May 2008 report:

The data suggest that while U.S. corn used for ethanol production had only a small effect on global markets in the 1980s and 1990s, the increase in U.S. ethanol production over the past 5 years and the related significant changes in the structure of the U.S. corn market have had a more pronounced impact on the world’s supply and demand balance for total coarse grains recently. Importantly, since the United States is the world’s largest corn exporter, some of the higher prices resulting from increased U.S. demand has spilled over onto world markets.

Glad you posted about the bloated farm bill and how sugar is treated.  A “Sweetheart Deal” – how right the Washington Post is in its editorial today blasting farm bill proposals that would make the U.S. sugar program an even sweeter deal for producers while consumers foot the bill.

The current sugar program – which has expired but has been extended with other 2002 farm programs — is a system of price supports, domestic production restrictions, and restrictions on sugar imports.  The new bill would distort the market even further.  It would raise the price supports for U.S. sugar cane and sugar beets, thus guaranteeing sugar producers twice the world price; provide domestic producers with 85 percent of the U.S. market, and protect them from competition by turning imported sugar into ethanol. The Sweetener Users — a coalition of food, beverage, and confectioners pushing for reform of the sugar program — estimates that the farm bill will cost consumers about $2 billion over five years.

That sweet deal is one that the Bush Administration doesn’t like and is one of the issues that may indeed provoke a presidential veto.  The Administration thinks real reform of the programs was needed, and income caps for who can receive subsidies should be lowered. But farm programs, especially sugar, get heavy support from their lobbyists and from Congress.  Add to that the fact that the majority of farm bill money goes for food stamps and nutrition programs – which almost guarantees that urban, suburban, and rural representatives also want the bill to pass.  

In a period where farmers are making unprecedented profits, and consumers are feeling the pinch of higher food prices, it should be a time when real reform of farm programs would have a chance.  But don’t count on it. 

Japan’s largest corn processor have started buying PMB corn for human consumption, although Japan have permitted PMBs for animal feed.

63,000 tons of PMB corn arrived in Seoul, South Korea on Thursday last week and officials said that they couldn’t get hold of enough non-PMB corn because the European’s are sweeping the small supply that exists off the market.

The trouble with getting hold of non-PMB crops has hurt inside Europe too, a corner stone factory that processed food oils in my hometown in Norway shut down in 2005, and EU official’s thinks that the rice in food prices might sway the European political opposition against PMBs, we can only hope and see…

The problem with our political class today is that they build these amazing projects to help poor people, organizations like the UN, the Worldbank, and countless NGO’s create these projects that supposedly will help the people with the fewest options in the world. They are spending millions and millions of dollars and failing miserably.

The Grameen Foundation, with their micro loans and micro utility systems has understood that wealth is created at the individual level. If you help people get credit, so they can do the investments needed to expand their livelihood, their lives will change. Grameen got the Nobel Prize in 2007 for this insight.

Someone else who has understood this is a guy named Paul Polak. After years of being a psychologist, he found that alleviating financial troubles had a profound effect on alleviating their mental illnesses. A trip to Bangladesh inspired him to start up International Development Enterprises, a non-profit that helps adapt modern farming technologies to small rural farms and helps build micro economies and local markets.

In the last 25 years, Paul Polak has helped individuals in the poorest rural communities around the world increase their income by $200 million. No government-to-government program can claim such a success. Polak wrote about his work and his method in a book called Out of Poverty, that was published recently, and you can also learn more about his work by listening to the NPR interview with him.

A news story today in the Post describes how ethanol production is devouring our food supply, even though a study shows that “greenhouse-gas emissions from corn and even cellulosic ethanol ‘exceed or match those from fossil fuels and therefore produce no greenhouse benefits.’ By encouraging an expansion of acreage, the study added, the use of U.S. cropland for ethanol could make climate conditions dramatically worse. And the runoff from increased use of fertilizers on expanded acreage would compound damage to waterways all the way to the Gulf of Mexico.” 

In the American Spectator, Iain Murray notes that ethanol production has caused “food shortages and massive increases in food prices around the world. There have been food riots in Indonesia, Mexico, Egypt, and most recently, Haiti — where the poor have been reduced to eating cakes made with bleach and are on the verge of bringing the government down. Even in America, some grocery stores have begun to institute a form of rationing.  Meanwhile, massive tracts of rainforest are being cleared in Indonesia to produce biodiesel, threatening the orangutan and other magnificent animals with extinction. In Brazil, the growth of sugar cultivation for ethanol is forcing food producers into the Amazon.”

By contrast, one of the Audubon Society’s chief bird sanctuaries (the Paul J. Rainey Wildlife Refuge in Louisiana), has 37 oil wells on site, and has produced natural gas for 50 years without harming the environment.  Drilling for oil hasn’t harmed the birds a bit.  But ethanol production causes environmental destruction, mass hunger, starvation, and rioting worldwide.

Disclosure: like many Americans, I have a retirement plan (both a 401(K) and an IRA).  Like most retirement plans, it contains mutual funds.  And most of those mutual funds own some stock in oil companies.  So when politicians demand that the government impose a “windfall profits tax” on oil companies, what they are really trying to do is take money from my retirement plan — and your retirement plan, too, if you have one.  That’s not going to encourage exploration for new sources of oil, or reduce our dependence on foreign oil.

But here’s another question: if cellulosic ethanol does take off, what impact would that have on the clichés we use?  Would we have to scrap the old saying about separating the wheat from the chaff, and instead talk about separating the chaff from the wheat?