Recently, a corn ethanol plant in Nebraska that switched to using cheaper sugar to produce biofuel was sued by local corn farmers.
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The dispute allows a glimpse into the clashing worlds of subsidized agriculture, and highlights what happens when people make market-oriented decisions within the tangled framework of the state-directed economy.
Corn and sugar are two of the most important agricultural commodities in the world, and have been produced by humans for thousands of years. The US corn belt is where approximately 40 percent of the world’s corn crop is grown, while sugar is produced in other countries (the US is a sugar importer). Global corn ending stocks, which are the amount of supply on hand to meet demand, fluctuate over time. As a result, this and other factors cause the price of corn to rise and fall to reflect these market conditions.