Necessary Roughness

A Washington Post article dated August 20 focuses on Brazil’s accomplishment of petroleum equilibrium, importing only as much oil as it exports.

The section “Subsidies and Mandates” is quite interesting. The military government gave way to democracy and the people axed ethanol subsidies when oil prices dropped. Brazil’s Center for Sugarcane Technology went to work on process research and dropped ethanol production costs by two-thirds.

Surrounded by fields of sugar cane that stretch in all directions, the center today boasts nearly 300 scientists, led by a research and development manager, Jaime Finguerut. Although he said the sugar growers recoiled when their subsidies were taken away, the move ultimately forced the industry to become more efficient. The subsidies offered U.S. farmers might be their own worst enemy, he suggested.

Ending subsidies for sugar, corn, and other farmers may sound evil, but it will force them into alternative markets that can end up profiting them more in the long run.