The ethanol scam

In article ,
Stella Starr wrote:

It may be worth noting that corn growers are getting NO federal crop
subsidies, since the price is currently high. Not as high as it's been
in adjusted dollars in the past, but high enough that the capitalist
system responded in admirable fashion, inspiring growers to announce
plans to plant a record number of acres in corn.

Yes, but just for information, what would have been the "admirable
capitalist response" of all parties involved -- here in the U.S., I
mean -- if the price had instead gone way down?

[This is a question . . ]

What Stella refers to is called the "Loan Deficiency Payment" or LDP.
Google is your friend and it can become complicated. Basically, when local
corn prices fall below a certain level this daily adjustable subsidy kicks
in to hold the price up to that predetermined level. This level varies from
county to county, currently for us it's around $1.75 per bushel for our
county.

If a farmer applies for a federal loan, using his corn for collateral, and
the current market is below the posted minimum county price, the farmer can
apply for the LDP. When the current market is above the posted minimum
county price, as it is at this time, there is no LDP available.

In simple terms, consider it a government price support, although it is at
very low levels compared to the cost of production which is between $2.25
and $2.75 per bushel in our area.

There are two other payments that corn growers can receive. The first is
the direct/guaranteed payment and this is capped at a max of $40,000 per
entity. This maximum requires a history of planting roughly a minimum of
1500 acres per year. Vegetable crops, if planted, count against these acres
and can reduce this payment. It's the governments method of guaranteeing
corn production in lue of other crops that may be more profitable.

The second payment is the counter-cyclical payment and this is a long
confusing government formula based on current markets, the posted county
price multiplied by 88% of your base acres times the historic county average
yield minus $2.60.... if I can remember it correctly... obviously with corn
at $3.20 and higher, this is currently a negative number and will not be
paid.

These payments also require the farmer to comply with local DNR and
Conservation Department planning and recommendation, so they are also used
to protect wetlands and marginal areas that could be farmed, especially if
prices rise high enough, but if the farmer does so he is then barred from
any government programs.

So, the answer to your question would be that the farmer would receive the
guaranteed payment, the counter cyclical payment, and the LDP in varying
amounts to subsidize his corn price up to but not beyond the minimum posted
county price, of roughly 70% of the cost of production.

No need for Ambien, huh

Jim



"AES" wrote in message
...
In article ,
Stella Starr wrote:

It may be worth noting that corn growers are getting NO federal crop
subsidies, since the price is currently high. Not as high as it's been
in adjusted dollars in the past, but high enough that the capitalist
system responded in admirable fashion, inspiring growers to announce
plans to plant a record number of acres in corn.

Yes, but just for information, what would have been the "admirable
capitalist response" of all parties involved -- here in the U.S., I
mean -- if the price had instead gone way down?

[This is a question . . ]