What would happen if the government stopped giving ethanol subsidies?



  1. 0 Votes

    Corn production would fall dramatically. Incentives for corn production in 2009 were near $7 billion (a number some see as much too high given the comparably small amount fuel that resulted from the investment). In the last four years a little less than half of corn bushels harvested have been used for ethanol and corn by-product (usda.gov). With 12,710 million bushels harvested/used this year, about 5,000 million bushels of that was contributed to ethanol and by-product.

    The government also created financial initiatives for ethanol processing plants and car manufacturers that accommodate ethanol fuel. This means that more than likely if ethanol is recognized as an economically unsound source of fuel (which may be the case) then all facets of ethanol subsidy would be cut (corn production, processing, car manufacturing) and there would be no private incentive to pick up the slack. Close to half of corn suppliers’ demand would be lost. Unfortunately it is the independent farmers that would go under because corporate farming can afford to adjust and perhaps find a new market segment. 

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