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Feeding The Dragon

China, once self sufficient in corn, startled world grain markets and bought millions of bushels of American corn this year to satisfy accelerating domestic demand, driven mostly by the evolving eating habits of the Chinese middle class. They want more pork, and pigs want more corn. The Chinese also want more corn-sweetened drinks, like Coca-Cola. In a report in today’s WSJ:

Many attribute the larger-than-expected demand to a growing middle class that is changing its tastes more quickly than anticipated. As the Chinese population becomes wealthier, for example, it is eating more pork. And the Chinese government is pushing its farmers to adopt Western methods of raising their pigs, including feeding them more corn. Citizens are also slurping up juices and other products that include corn-based sweeteners: Coca-Cola Co. said that its volume in China spiked 21% in the second quarter.

Ma Liangfeng, a 69-year-old retired engineer living in Shanghai, says the array of packaged products lining store shelves was “unthinkable” just 30 years ago. Back then, families had to reserve staple meats like pork for special occasions.

The Chinese also buy about a third of American-grown soybeans and they are hungry for more.

It’s boom time for American farmers. So why are we still subsidizing them to the tune of almost $20 billion a year? It’s time to rethink American “farm income stabilization”. Driven by foreign demand and improved infrastructure, like the nation’s newest grain loading terminal on the coast of Washington state opening this fall, American farmers should be able to succeed without massive infusions of cash.

US agricultural subsidies and import restrictions on products like sugar are among our worst policies.  Ag subsidies hit taxpayers in the wallet three ways.  First we pay the IRS for the original subsidy.  Next we pay at the grocery store as government policies keep prices artificially high.  And third we pay another visit to the IRS: high food prices mean more people use more food stamps. It’s bad all round and now that the Chinese will buy practically anything we can grow, it’s time for radical changes in federal farm policy.

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