U.S Corn Subsidies
Corn is one of the main foods that are seen in American tables. In United States alone, corn farmers receive an amount of 10 billion from taxpayers for corn production subsidy. This helps American farmers to produce corn that is needed for the daily American food servings. With regard to the subsidies given by the government to the American corn producers, underlie some ideas that should be discussed. First is the impact of the subsidy to the supply of corn. Second is the impact of the subsidy to Mexican farmers. Last is the abolishment of the subsidy, given by the government to American corn farmers (Becker C4).
The subsidy of the American government to corn producers and farmers has a great impact in the supply of corn in the United States. That great impact leads United States to be one of the largest exporters of corn in the world. In addition to that, the subsidy given by the government also helps farmers improve their way of producing corn by investing some of their money in technology, which can maximize the production of corn. This means that supply is overflowing in the U.S. Also connected to the increase in supply is the decrease in price, as stated in the law of supply and demand (Becker C4).
Due to the increase in supply of corn in the United States, producers of corn are now exporting corn in other parts of the world including Mexico. In the past, Mexico is one of the pioneers of corn production. However today, Mexico is now only importing one third of its corn demands from United States but, how does this happen? In the previous statement, one can see that the United States is not dumping corn in Mexico. In fact, one might see that it is helping Mexico in some ways. Since Mexico cannot give subsidy to the Mexican corn farmers, the supply of corn in their country is becoming insufficient for their needs. Furthermore, lack of funds for farmers to produce corns with the use of new technology also harms Mexico corn production (Becker C4).
Corn subsidies in United States may have existed since the start of the North American trade agreement. Since that day, one may not see the increasing demand of corn around the world including Mexico. With an increase in the demand of corn for some countries in the world, they need to find an alternative source of corn or an alternative to corn itself. United States subsidy to corn farmers is the way of government to help their people. If government will provide subsidy to corn farmers or whatever a farmer plants, then it will help the country in many ways. The government gives subsidy so that unemployment will be minimal. The subsidy gives help not only to the United States itself but to other countries in need of corn, now including Mexico. Since supply is overflowing, corn market in United States are exported at a very low price compared to other corn exporters so that the supply and demand will be balanced. Mexico is now in need of corn and they are getting help from United States by getting it at a lower price. This means that corn subsidy in United States is up to this point. The agricultural subsidy should not be abolished (Becker C4).
However, there are some problems that will arise when exporting of corn from United States continues. Corn importing countries like Mexico will be tied to the United States due to its low cost corn exporting. This will result to agricultural dilemmas in Mexico and other corn importing countries. Corn importing countries will not have enough space for agricultural advancements and technology for their corn production to increase. Furthermore, corn importing countries will suffer the consequences of unemployment. This is because corn importing countries will rely more in corn import than their own production thus limiting corn producers and farmers resulting to unemployment (Becker C4).
The corn subsidy may not be the only reason that can be attributed to the decrease in corn prices. There are many factors that can also be attributed the decrease in corn prices. One cause could be the increase in mandatory use of ethanol in United States. In the recent years, there is a sudden mandatory increase of use of ethanol in United States. This mandatory use allows other countries to export ethanol in the United States. Corn is one of the major sources of ethanol. If corn will be used to produce ethanol, then the United States supply of corn will be affected. This is one of the causes of low corn price. The United States used corn as a substitute for the ethanol that will be imported from other countries. However, the corn supply in the U.S. will burden more consumers since the ethanol use is mandatory. To resolve the problems, U.S. government started agricultural subsidies to suffice the supply of corn for all uses (Babcock).
Overall, one should not think of corn subsidy as a burden to others. It is only a way of government to respond to its own problems. However, United States should not provide too much subsidy to its countrymen. Too much of the subsidy will be too much of a burden to taxpayers and other parties such as Mexico. Too little subsidy will also be a problem. Agricultural subsidy is good but it should be limited and normalized.
Babcock, Bruce. “How Low Will Corn Prices Go.” Iowa Ag Review vol. 14 no.4 (Fall 2008). 6 May 2009 < http://www.card.iastate.edu/iowa_ag_review/fall_08/article1.aspx>
Becker, Elizabeth. “U.S. Corn Subsidies Said to Damage Mexico.” New York Times. 27 August 2003: C4.