The President’s Response to Drought: Corn at the Center

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INTERACTIONS
Source: bloomberg.com

On Monday, President Obama visited farmers in Iowa affected by this summer’s severe drought. In a speech he talked about how Congress has, so far, failed to provide emergency relief to farmers or pass a new farm bill.

The president blamed House Republicans, like Vice Presidential candidate Paul Ryan, for Congresses failure to act. President Obama said of the congressman, “He’s one of those leaders of Congress standing in the way.” He went on to say, “If you happen to see Congressman Ryan, tell him how important this farm bill is to Iowa and our rural communities.”

Because of the stagnant reaction in Congress, the President has begun to take matters into his own hands, presenting his own version of a relief plan for the nation’s farmers. To provide some assistance to livestock producers, he has ordered the Department of Agriculture to purchase up to $170 million worth of meat, poultry, and fish from struggling farmers.

The food will go to federal food nutrition assistance programs, including food banks. The Obama Administration is making some necessary adjustments in order to aid farmers but maintains that this is not enough. On the White House drought response fact sheet states, “Congress still needs to act to ensure that the needed disaster assistance is available to these communities.”

One industry that is not seeing a timely response from the president is corn. Corn growers have seen some of the worse effects of the drought. They expect 13 percent less corn yield than in 2011, marking this year’s yield the lowest in nearly two decades. As one of the nation’s most in demand products for food and fuel, this puts a major strain on livestock producers who use corn as a primary feed source. They are now forced to contend over each bushel of corn with ethanol producers.

Credit: droughtmonitor.unl.edu

The biofuel industry generally purchases around 40% of nation’s corn crop, for the production of ethanol each year. This practice supported by the federal government which has, for the past five years, mandated that gasoline in the United States contain 9% ethanol. Livestock producers have asked the federal government to wave this requirement, in order to ease some of the competition over the diminishing crop.

The U.N Food and Agriculture Organization is siding with livestock producers in urging the United States to ease biofuel policies for the time being. The UN’s July food price index, indicating a 6 percent surge in food prices has prompted the organization to increase pressure on the United States.

Ethanol producers have begun to fight back to attracts to their industry, claiming that their drain on corn crops are not as great as have been claimed. According to producers, over a third of corn that is processed to make ethanol is then converted back into animal feed.

The federal government and the president are being pulled in multiple directions about how to respond to the drought. Any response is sure to receive backlash. With corn at the center of the drought crisis it will be a matter of time until we see whether livestock or biofuel will win a greater claim on the crop.

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  1. Paul Grajciar This is a common practice and has been done by administrations of both parties historically. Don't be so partisanoid. Or would you rather see agri-conglomerates take over all the small farmers in the country?
  2. Kathy Jones So this is food in ware houses not sell able which covers under the FDA Sub act and is also tax deductible, but we are buying it? FYI it applies to IA who majority is feed corn. how about investing in water storage instead since they will already receive sub funds.
  3. Todd Vickers Instead of building a war machine, this great nation of ours should have built a continental aquaduct system that diverts water from flooded areas and distributes it to areas suffering from drought.
  4. David A. Lelli I agree with Todd Vickers. An aquaduct system is a great idea. The insurance companies could be tabbed to contribute because they have a vested interest. What are the chances of this president taking the initiative on something like that? I think slim and none and slim just left!
  5. Al Simmons Supply and demand. A lesson missed by Obama.
  6. Leo Zicc what makes me think all the buying will happen on monsanto owned farms?
  7. Dan Stanard They will but and then jack the price up 3X
  8. Nicole J Hyke-Cintron @La dene it is bad. It was bad last year (saw it with my own two eyes) worse this year. The world does not get a bulk of it's grain from Mexico......
  9. Nicole J Hyke-Cintron Highly unlikely Ryan is the one holding this up. Wisconsin is in drought mode this year also. It's all the crap they are tacking on to thid bill. Let it stand alone and hit the budget hard the next time. Still don't have a budget.....smh
  10. Angela Montgomery with the almost non existant corn crop this year, it will be fought over by the ethynol producers vs. grain users. This may stabilize what would be a war with prices only going up up up to the consumer. just sayin'
20 comments
Paul Grajciar
Paul Grajciar

This is a common practice and has been done by administrations of both parties historically. Don't be so partisanoid.

Or would you rather see agri-conglomerates take over all the small farmers in the country?

Kathy Jones
Kathy Jones

So this is food in ware houses not sell able which covers under the FDA Sub act and is also tax deductible, but we are buying it? FYI it applies to IA who majority is feed corn. how about investing in water storage instead since they will already receive sub funds.

Todd Vickers
Todd Vickers

Instead of building a war machine, this great nation of ours should have built a continental aquaduct system that diverts water from flooded areas and distributes it to areas suffering from drought.

Al Simmons
Al Simmons

Supply and demand. A lesson missed by Obama.

Leo Zicc
Leo Zicc

what makes me think all the buying will happen on monsanto owned farms?

Dan Stanard
Dan Stanard

They will but and then jack the price up 3X

Nicole J Hyke-Cintron
Nicole J Hyke-Cintron

@La dene it is bad. It was bad last year (saw it with my own two eyes) worse this year. The world does not get a bulk of it's grain from Mexico......

Nicole J Hyke-Cintron
Nicole J Hyke-Cintron

Highly unlikely Ryan is the one holding this up. Wisconsin is in drought mode this year also. It's all the crap they are tacking on to thid bill. Let it stand alone and hit the budget hard the next time. Still don't have a budget.....smh

Angela Montgomery
Angela Montgomery

with the almost non existant corn crop this year, it will be fought over by the ethynol producers vs. grain users. This may stabilize what would be a war with prices only going up up up to the consumer. just sayin'

Thomas Wheatley
Thomas Wheatley

Why not do nothing and let the free market work? Oh yea, that is not how a bloated Government works.

La'Dene Bean
La'Dene Bean

as to the disrespect for the only man trying to help this sorry country out of the hole the GOP shoved it in, piss on you ~

La'Dene Bean
La'Dene Bean

Do not bail them out, the Famers get subsidies already. This drought is not that bad on corn despite the claims. I live in high desert - in the poorest lands in Mexico, corn thrives with min. water. It is a sham to get something for nothing ~

Lynn Baker
Lynn Baker

obama is spreading himself thin with all of his promises ... but he did not deliver on his promises from the last election !!!

Stefan A. Schoellmann
Stefan A. Schoellmann

One of the LARGEST PAC SUICIDES in MODERN HISTORY is TAKING PLACE RIGHT NOW ... and YOU BUY THE BLACK SNAKE - WHOA PEOPLE TO YOUR DEMONS!

Missi Sheer-West
Missi Sheer-West

With what money is he buying these goods with? How much money do we have in the til? Is he just doing a good deed or is he purchasing your vote with money that our federal goverment doesn't have? H

Redhotchilli Pepper
Redhotchilli Pepper

so that is what he does after lying about paul ryan and the farm bill .. he buys the votes

John MacAulay IV
John MacAulay IV

Ok so we have less supply, and the government is going to adress this issue by buying up part of that supply? Basic economics says this is going to cause food prices to spike. But who cares about consumers, they are only all of us. :-

Evelyn Billington
Evelyn Billington

what are they going to do with all the food? Throw a big BBQ?

David A. Lelli
David A. Lelli

I agree with Todd Vickers. An aquaduct system is a great idea. The insurance companies could be tabbed to contribute because they have a vested interest. What are the chances of this president taking the initiative on something like that? I think slim and none and slim just left!