Last week I drove from Houston to Brenham to Beaumont back to Houston to Austin to San Antonio and back to Houston. Nothing unusual or noteworthy about the travel itself other than every irrigated crop I saw along Texas highways and byways was corn. Everywhere... corn. A friend from Mississippi told me that a huge chunk of cotton land has been converted to corn.
No mystery why... farmers are appropriately responding to market conditions, and the Feds have artificially created a big market for corn through ethanol subsidies. What interests me is what will happen to the value of all the agricultural commodities that are being elbowed out by "King Corn"? Will we see a scarcity in cotton? Rice? Sorghum? You tell me... I ain't a farmer. My dad grew up on one during the depression and that beat any desire for country life out of his soul and he didn't leave me any farmer genes. Poultry scares me, as do hoes and blisters. He did pass that knowledge on to me as a kid.
My farmer friends do tell me that corn is a tough crop... it takes a lot out of the soil. Hard to continually plant it. If that is the case, why is this a great energy source? I have also heard from seemingle reputable sources that ethanol is a BTU neutral or negative fuels source. Again, if this is true, why is this a great fuel source? I believe that America is far better off having a bunch of fungible energy sources, and I support alternative energy, like, say Natural Gas fluids, coal slurry, higher octane gasoline. Just kidding. I love huge avian vita-mixers as well. Hot tin roofs. Gallium Arsenide panels swathing your house, and big huge bubble baths of liquid hydrogen for the home and car based fuel cells. Its all good.
I personally don't invest in things that are economic due to government interference, because he that gives can as easily take away. Huge amounts of VC money is being invested into alternative energies in Silicon Valley right now. My own bro is an altenergy dude in the "Valley". The VC's are polticking heavily for subsidies because it makes their return hurdle rate lower. See, VC's get 20%+ after payout of their investors money. So they invest $100 mil, they get 20% of whatever they return over $100 mil. Oil guys really get this model. We call it a 20% back in after payout. What we didn't get was the risk free 2% "management fees". That's where we get jealous of VC's. Smarter than us. Anyway, since VC's are all really rich, it only makes sense that they lobby their politico buds to make their businesses more economic by creating more corporate welfare. That's what rich folks have done since the beginning. Except these smart son of a guns have really marketed this corporate welfare beautifully. Save the environment. Save the planet. Save Bambi. It is the perfect cover for corporate welfare. Give farmers big chunks of corporate welfare as long as they pay lip service to the the new mantra of climate change. Buy everyone off so that Big Mama government can take her rightful place at the center of controlling all our lives.
Oh well. My pinko friends rail against corporate welfare all the time. Funny they don't rail against this kind. I don't like to invest in businesses that depend on tax breaks or corporate welfare to exist. That is like investing in politicians. The only thing they are good for is influencing other politicians, and they have turned that into a very valuable skillset by continually increasing the the power of the gov. You certainly wouldn't hire one to do your books. Babysit your kids. You know, the really important stuff we need competent people to do.
I ain't worried about the farmers. Since planting and bringing in a crop is a short term endeavor, I don't think farmers are at any real risk in planting corn. Just wondering about the price of my cotton Dickies next year is all.