The market is good for corn farmers right now. Corn prices are reaching highs because of the increased demand for food and as of late, the increased demand for corn-based ethanol.
The price of corn is at an 11-year high. Its $4.38-a-bushel price tag is fueling food inflation, according to the December 17 "CBS Evening News."
However, that's contrary to what CNN Chief Medical Correspondent Dr. Sanjay Gupta told viewers on the December 18 "American Morning." It is the low price of corn, he said, that has prompted the need for San Francisco Mayor Gavin Newsom to impose a "sugary drink tax," specifically drinks sweetened with high-fructose corn syrup.
"[I]f you look at the history of this substance, ["American Morning" co-anchor] Kiran [Chetry] - I think this is very important - we subsidize a lot of corn production in this country," Gupta said. "We've been subsidizing it for a long time to support the corn farmers, which is a good thing. If there is a problem in all of this, it is that maybe we make too much corn and some of that corn gets turned into this high-fructose corn syrup."
Prior to Gupta's segment, CNN Business Correspondent Ali Velshi reported that many commodity prices like wheat are skyrocketing in part because of the demand for corn-based ethanol.
"As a result of that you've got corn prices up, soybean prices up, sorghum, wheat, milk, anything that has to do with livestock and farms is more expensive," said Velshi.
Gupta said corn prices, artificially lowered by taxpayer government subsidies, should be artificially raised with a tax on drinks sweetened with corn syrup.
"There's a lot of extra corn that gets turned into this substance and it's now being used as a sweetener in lots of different products," Gupta said. "That's what makes it cheap. What Mayor Newsom and others have proposed is that you actually bring it back to what would be a normal price point for these substances. It's going to be more expensive. People are going to be less likely to buy. It's going to sort of offset, if you will, the subsidies."
Unfortunately, what Gupta didn't suggest was to eliminate the tax-funded subsidy interfering with the market price of corn in the first place, and pass that tax savings along to the consumer.