The government encourages farmers to grow a new crop, with the promise of a more stable future. Farmers plant that crop en masse. One year later, so many farmers have planted the crop that an oversupply problem means prices are low and that many farmers who moved to that new crop will be unable to recoup their investment.

Let’s not forget about the rapid rise in corn prices this particular boom caused and the hardship that resulted in Mexico, where corn is as much a staple of the diet as wheat is here.

Governments are supposed to learn from past mistakes, not repeeat them until they finally work.

Ethanol’s Boom Stalling as Glut Depresses Price
By CLIFFORD KRAUSS
Published: September 30, 2007

NEVADA, Iowa, Sept. 24 — The ethanol boom of recent years — which spurred a frenzy of distillery construction, record corn prices, rising food prices and hopes of a new future for rural America — may be fading.

Only last year, farmers here spoke of a biofuel gold rush, and they rejoiced as prices for ethanol and the corn used to produce it set records.

But companies and farm cooperatives have built so many distilleries so quickly that the ethanol market is suddenly plagued by a glut, in part because the means to distribute it have not kept pace. The average national ethanol price on the spot market has plunged 30 percent since May, with the decline escalating sharply in the last few weeks.

Posted by skooter at 1:54 PM This entry is filed under America, Politics.
This entry is tagged: America, Economics, Environmentalism, George Bush, Politics