The Politics of Corn
No, you didn't read that title incorectly: corn makes for some serious politics. One of America's most prolific foodstuffs is at the core of everything from fuel prices to obesity to immigration. How is it that a single crop has managed to wind its way into so many seemingly diverse issues? An exploration into it reads like a chapter straight out of Freakanomics.
Large scale farm subsidies can, unsurprisingly, be traced back to the New Deal and the Agricultural Adjustment Act. The Act was designed to boost prices for farmers by paying them to limit how much they produced. It even went so far as to destroy excess foodstuffs in an effort to keep prices artificially inflated. Naturally, this made a lot of food prices higher and lead to popular resentment of the program and its effects. While the Act was overturned in the courts, a modified version of it still exists today with the intent of paying farmers to keep retail prices low.
Of course, the subsidies lead to more and more production of corn and an overabundance of corn. Iowa is current receiving about $2.2 billion (with a B) per year in subsidies, most of it for corn farmers. Once you have a large supply of something cheap, you have to find some kind of way to use it. It's no wonder then that corn oil and corn syrup are so popular as substitutes for other oils and sweeteners. Corn is also used to make a lot of packaging (in the form of plastic and paper) and has risen as a chief source of ethanol in the US.
This is where the problems start popping up. Because corn was cheap, it became a prime crop for ethanol. With the surge in popularity for biofuels, the demand for corn is outstripping the supply and driving prices much higher. This has far-reaching consequences. Corn is a primary foodstuff for more than humans; cattle, chickens and pigs are fed an enormous amount of the stuff. An increase in corn prices could very well drive milk past $4 a gallon and make meats significantly more expensive to boot. Plastics, paper, textiles, adhesives… all will rise in price with the price of corn. We've built a lot of our lives around this single crop.
But wait, there's more. The years of overproduction lead to US farmers dumping this cheap corn in foreign countries, particularly Mexico. Flooding the market with this chief foodstuff has been driving Mexican farmers out of business at an alarming rate, farmers who then (you guessed it) migrate to the US looking for the jobs that we more-or-less took from them. Who new that a farm subsidy could also be driving immigration policy so potently?
Health care is also heavily affected. Since corn is a cheap source of sweeteners, oils and starches, it's used to make a variety of inexpensive foodstuffs. Unfortunately, these same foodstuffs are incredibly unhealthy and are consumed by the poor at very high rates because of the low prices and calories-per-dollar ratios. The New York Times did an article on the topic and found that a package of over-processed Twinkies (containing no less than 39 separate processed ingredients) are cheaper than all-natural carrots while providing several times the calories to boot. This policy not only drives up health care costs universally but also inflates the amount of money consumed by Medicaid.
Corn subsidies totaled over $50B between 1995 and 2005. Even so, it's hard to figure out what kind of economic impact removing the subsidies would have. Certainly removing them all at once would be an economic disaster with uncontrolled spikes in staples of the American diet. Even phasing them out is difficult with how much sway legislators from farm states have within the halls of Congress. Pretty much every state (excepting maybe Alaska) has agriculture play a part in its economy and no member of Congress wants to go down as the man who killed the family farm.
I'm hoping against the odds that the myriad bad effects of corn subsidies will get more mainstream attention, forcing Congress to shut down one of their most extensive manipulations of American society and pocketbooks we have ever seen. If we don't correct the course from our poor decisions to fund subsidies now, we'll be paying for it for generations to come.