Sunday, October 25, 2009

On the Subject of Subsidies

By the 1990s, King Corn reigned supreme as the most predominant sweetener in U.S. processed foods.  We've already talked about the benefits of HFCS for producers of processed foods.  But why is HFCS cheaper than sugar?

In surveying the on-line literature, i find that many sources ultimately come back to either Michael Pollan's works or the Tufts' study: Alicia Harvie and Timothy A. Wise, "Sweetening the Pot:  Implicit Subsidies to Corn Sweeteners and the U.S. Obesity Epidemic," Global Development and Environment Institute Tufts University, GDAE Policy Brief No. 09 - 01 February 2009

The Tufts' study does a good job demonstrating how HFCS became cheaper as a result of the fact that corn prices are kept low by U.S. farm policies. "We find that U.S. farm policy effectively lowered corn prices and HFCS production costs, offering HFCS producers an implicit subsidy of $243 million a year, a savings of $2.2 billion over the nine-year period, and over $4 billion since 1986. For soda bottlers, the main consumers of HFCS and among those most heavily implicated in public health concerns, the savings amounted to nearly $100 million per year, $873 million over the nine-year period, and nearly $1.7 billion since the wholesale adoption of HFCS by the soda industry in the mid-eighties."  The costs are in part kept low as a result of overproduction; and of course inflated sugar prices (resulting from the efforts of the South Florida Sugar giants--among others?-- ) plays a role.

Yes, that is Nikita Khrushchev, who was apparently most impressed by U.S. corn....
(Photo source)

"About 2.7 million bushels of corn is piled 60 feet high on the ground beside full elevators at an agricultural cooperative in Ralston, Iowa."
Photo Source: Alexai Barrionuevo,  "Mountains of Corn and a Sea of Farm Subsidies" The New York Times, November 9, 2005

Some additional sources of information:


  1. A very interesting and informative series of posts. This only highlights similar experiences that other industries have experienced with corporate greed, political-power ploys, and that oh-so patriotic feeling of "looking out for Joe consumer". (Big Oil, anyone?)

    My question to the author would be this: What would you do to enact change? Especially keeping in mind that Ma & Pa Corn Farmer make a living by growing and selling corn and industries like the Soda companies need to keep costs down.

  2. The sad thing is that if anything were to change (with respect to the prevalence of corn byproducts) the only person that would be hurt would be Ma and Pa Corn Farmer.