Monday, April 21, 2008

Crash could follow farm boom; Ethanol Subsidies to be Cut?

First, from the Boston Herald:

DES MOINES, Iowa - At a time of record agricultural profits, concerns are mounting that American farmers could be edging toward a financial crisis not seen since the 1980s farm-economy collapse.

Soaring land values, increasing debt and a reliance on government subsidies for ethanol production have prompted economists to warn that what some describe as a golden age of agriculture could come to a sudden end. At risk are the livelihoods of thousands of farmers, the health of hundreds of banks and the vitality of an agricultural industry that has lately been one of the nation’s few economic bright spots.

“We’re in a very risky time, and yet we don’t seem concerned about that risk nearly as much as we should be,” said Barry L. Flinchbaugh, an agricultural economist at Kansas State University....MORE

Next, from Reuters:

Ethanol incentives, farm payments may be cut

Ethanol tax incentives and crop subsidies including "direct" payments to farmers could be reduced as part of the new U.S. farm law, a House chairman and two Senate staff workers said on Thursday....

They're talking a nickel (10%) cut in the Blender Credit. A reminder:

Finally for investors in rent-seeking organizations there is the real risk that the politicians will change the rules. Heed the words of Sen. Simon Cameron (R&D!-Pa.):
"The honest politician is one who when he is bought, will stay bought."