Corn is a grain crop that is widely grown in the US (Davies, 2008). It is used to produce animal feeds, ethanol multiple of foods and other industrial production including sweeteners, starch and corn oil. It accounts for more than 90% of the total production of the US farm produce (Stossel, 2008). When corns’ prices go up, the agricultural industries earn more profit. The US government provided corn farmers with subsidies in 2008. This brought about several challenges to the market by increasing most prices of farm products.
According to the government the subsidy given to the farmers was meant to reduce the cost of production of corns, promote the production of ethanol to be used as fuel and make the most of food prices lower down (Stossel, 2008). What the government never thought of is that the increase in the use of ethanol would also lead to an increase in the use of corn to produce enough fuel for people to use. 24% of the total corns produced in the US are used to produce ethanol (Davies, 2008). This is an indicator that more corn is pumped to production of fuel leaving a very minimum amount of it to be shared among the industry and the food usage.
The general impact of the move is that more corn is required both for ethanol production and food (Stossel, 2008). Where the demand of a commodity increases the price also goes high. This fact has led to a rise in the prices of most food commodities when most of the corn is directed to production of ethanol (Davies, 2008). For instance animal products like pork, eggs, milk and beef also rises due to increase in animal feeds that are manufactured from corns.
The US government should not engage in farm business if its objective will negatively affect the citizens (Stossel, 2008). The high food prices that the state is experiencing are a result of the government subsidizing corn. When corn prices go down, the production of ethanol goes high thus increasing the volume of corn used. The industries that use corn will also increase their activities, as well as those that use it for feeding animals and food (Davies, 2008). All these factors result to an increased need for corn in all sectors thus creating a shortage of corn for industrial use, ethanol manufacturing and food. The government must keep off such ideas.