Submitted by: Submitted by Eagle1202
Views: 124
Words: 1098
Pages: 5
Category: Other Topics
Date Submitted: 10/01/2013 02:34 AM
Corn is the largest cultivated crop grown in the United States. The United States happens to be the largest producer of corn in the world by producing 40 percent of the world’s corn (“Heritage”). The USDA has forecasted 14.350 billion bushels of corn to be grown on over 400,000 U.S farms for this current year (“Reuters”). Corn grown in the U.S is primarily used as feed for overseas and domestic livestock, fish production, and poultry (“Epa”). Currently, the U.S is making a commitment to implementing price support policies pertaining to corn. One of these price support policies is a demand expansion program, such as an alcohol fuel program. Corn is being used in the production of ethanol due to containing large amount of carbohydrates, especially starch, which is present in corn. Due to this demand expansion program focusing on creating ethanol fuels, the U.S is utilizing roughly 40 percent of its corn production to be used for ethanol production (“Heritage”). As the ethanol production in the U.S has increased, its total share of corn use has increased significantly as well. The government has also implemented another price support policy, known as a government surplus purchase program. Both of these programs support the price of corn and cause various market effects.
Demand expansion programs aren’t implemented with the intent of purchasing a surplus off the market and storing it to get the price up, but to encourage consumers to buy more of the commodity so there won’t be a surplus of the product to store. The purpose of this demand expansion program, such as an alcohol fuel program, is to increase both the demand and price of corn. Corn is being diverted from its primary use as food and animal feed to use as a feedstock for ethanol production. The intent of this program is simply to expand the demand and support the price of corn. In 2005, the U.S produced approximately 11 billion bushels of corn. During that year, the U.S consumed 1.4 billion bushels of corn...