Monday, June 7, 2010

ADM's harvest: nothing new

Sadly, the reaction we're seeing now resulting from the "souring" U.S. sales of High Fructose Corn Syrup is a repeat performance.  As a CATO publication from 1995 shows, the corporate/lobbyist advertising campaigns rife with corny patriotism, the large-scale grain export and development of overseas markets, and government silence due to their complicity in the form of subsidies and tariffs, is truly nothing new.  The full report is certainly worth reading; below are some particularly relevant excerpts (along with some recent photos and comments from me.) Please note: all quotes below are from the 1995 CATO report by James Bovard.

Archer Daniels Midland: A Case Study In Corporate Welfare

by James Bovard, Cato Policy Analysis No. 241, September 26, 1995
The Archer Daniels Midland Corporation (ADM) has been the most prominent recipient of corporate welfare in recent U.S. history. ADM and its chairman Dwayne Andreas have lavishly fertilized both political parties with millions of dollars in handouts and in return have reaped billion-dollar windfalls from taxpayers and consumers. Thanks to federal protection of the domestic sugar industry, ethanol subsidies, subsidized grain exports, and various other programs, ADM has cost the American economy billions of dollars since 1980 and has indirectly cost Americans tens of billions of dollars in higher prices and higher taxes over that same period. At least 43 percent of ADM's annual profits are from products heavily subsidized or protected by the American government. Moreover, every $1 of profits earned by ADM's corn sweetener operation costs consumers $10, and every $1 of profits earned by its ethanol operation costs taxpayers $30 
Yes, that's right, in 1995 dollars, for every $1 of profits earned by ADM's "corn sweetener operation," U.S consumers paid $10.
Although much has been written lately on ADM and its harvest of taxpayer dollars, the full scope of its parasitic relationship with the U.S. taxpayer has rarely been closely examined. This study provides that detailed examination as well as an insight into the political dynamics that encourage corporate leaders to profit, not by pleasing consumers, but by pleasing politicians. The study also examines the three main arenas for ADM's corporate rent seeking: the ethanol program, the sugar program, and subsidized grain exports.
The ethanol program: still ongoing
The sugar program: in other words, HFCS
Subsidized grain exports: in 1995 they were talking about the former Soviet Union; now i guess it would be Mexico-whether they like it or not, and China.

AP photo/Seth Perlman, date: July 2, 2009. ADM rail cars that will transport refined corn products, Decatur, Ill.
Andreas recently told a reporter for Mother Jones, "There isn't one grain of anything in the world that is sold in a free market. Not one! The only place you see a free market is in the speeches of politicians. People who are not in the Midwest do not understand that this is a socialist country."
This past May ADM ran in major newspapers a full-page, full-color ad showing a corn cob decorated with the American flag with a picture of President John F. Kennedy along with Kennedy's most famous slogan, "Ask not what your country can do for you--ask what you can do for your country." The advertisement is the ultimate Orwellian agit-prop exercise, the true message being, "Ask not what your country can do for you, ask what you can do for ADM." Such misleading "public service" ad campaigns are the staple of ADM's public relations operation, providing the thin cover necessary to plunder the public till.

This Corn Farmers ad features Kurt and Heather Hora and their daughters.

America's Costs vs. ADM's Profits
Prudential Securities analyst John McMillin estimated that ADM's $746 million in profits in fiscal year 1995 (ending June 30) was derived as follows:
  • corn sweeteners, 39 percent (or $290,940,000),
  • total oilseed, 25 percent,
  • flour milling, 12 percent,
  • biochemicals, 5 percent,
  • ethanol, 4 percent (or $29,840,000), and
  • other, 15 percent.(136)
At least 43 percent of ADM's annual profits are from products heavily subsidized or protected by the U.S. government--"at least," because the substantial gain derived by ADM from various domestic crop support programs and export subsidies is virtually impossible to quantify.
ADM's lobbying and campaign contributions may have saved the federal sugar program from being abolished by Congress. Because the current sugar trade barriers and price supports cost consumers roughly $3 billion a year, consumers paid $10 in higher prices for each dollar of profit that ADM reaped from corn sweeteners.

China imports corn as expectations grow of a lower domestic harvest.

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