US Ag Sec.: USDA may assist ethanol plants that suffered losses by speculating
This is a prime example of a government program being created to tackle the unintended consequences of bad public policy…
The U.S. Department of Agriculture may use its rural development money to assist ethanol plants that have suffered losses in the volatile corn futures markets, Agriculture Secretary Ed Schafer said Friday in Des Moines.
"Some plants are under pressure because they've been speculating on corn," Schafer told reporters after speaking at the World Food Prize symposium breakfast.
The secretary said the department wouldn't buy or sell grain or cover trading losses. Rather, he said, money could come from the USDA's Rural Development office, which can provide up to $25 million to keep rural businesses operating.
This next part is revealing…
The ethanol industry was rocked last month with the news that publicly traded VeraSun Energy of Sioux Falls, S.D., which has ethanol production plants at Fort Dodge, Albert City, Hartley and Dyersville, would take a quarterly loss of up to $103 million because of losses in the corn futures market.
This is rather interesting. Speculators are blamed and demonized for increases in oil prices so we’re supposed to find alternative energies. In fact, we’re supposed to publically fund boondoggles like ethanol. Ethanol plants are projects that very few individuals will invest in. Because of that fact, taxpayers are forced to invest in ethanol schemes.
So what do we do to ethanol plants that speculated and lost hundred of millions of dollars? We bail them out of course!
It’s good politics to throw away money by giving it to ethanol plants. Because of that fact, don’t expect public policy to change anytime soon.