Ethanol's rise prompts worries of a corn crunch

[larrylee]

Corn, corn, everywhere, and not a kernel to eat. Well, not really, but...

Ethanol's rise prompts worries of a corn crunch (Christian Science Monitor)

NPR aired a related story this morning, but I was unable to find it on their web site. The CSM article is from July.

Amid America's rush to replace gasoline with homegrown alternatives like corn-based ethanol, some researchers worry that the results may benefit motorists at the expense of higher food costs and fewer US crop exports. It also raises ethical and environmental questions about the best uses of crop land.

The issue appears to be that corn, used in the production of ethanol, is getting a lot of focus as a result of a push for more biofuels. The demand has caused the price of corn to rise. It will impact the cost of food in ways both direct and indirect. Iowa is both the primary producer of corn and pork in the US. Corn is a primary component in pork, beef, and chicken feed, primarily because it is cheap. Corn syrup is ubiquitous in mass produced foods. Not to mention the corn we buy in markets.

From the CSM:

One key impact is that the price of feed corn for cattle, pork, and poultry could rise 60 to 70 percent over the next two years, although meat and other grocery items may not see significant price gains for up to four years, Wisner says.

The NPR story focuses on the "food versus fuel" question, but the CSM article points out:

The drive to produce food-based biofuels is misplaced, because even if all US corn and soybeans were used, they "would meet only 11 percent of gasoline demand and 8.7 percent of diesel demand. There is a great need for renewable energy supplies that do not cause significant environmental harm and do not compete with food supply," the study says.

The CSM also mentions cellulosic ethanol, which does not rely on corn.

If there's a silver lining in this, maybe an increase in the cost of beef will reduce its consumption, along the lines of what Steingarten when wrote "We should consume beef infrequently, but when we do, we should buy only the most tender, rich, juicy, and flavorful beef we can afford." A pipe dream at best.

[Mallet]

In The Omnivore's Dilemma, Michael Pollan expresses a lot of doubt about the use corn for ethanol. I don't have the book in front of me, but some of the points raised were that the corn grown is artificially cheap (i.e: being bought for less than the price of production because of federal subsidies), grown unsustainbly and using fossil fuels (fertilizer, machinery etc..). He also likened the push for corn-based ethanol to the production of corn whiskey (i.e: as a way to get added value to use up and sell the vast excess of corn being produced).

If this can help precipitate a shift away from corn as artificially cheap feed for cattle, poultry, swine etc.. so much the better. A 60-70 rise in price would bring the price of "factory" meat in line with those of organic production (I already get grass-fed, dry-aged beef for about the same price as supermarket beef at my farmer's market). I guess this would also make processed foods more expensive (perhaps making whole foods more attractive). This is probably asking a bit much

[cdh]

Hear hear, Mallet! You said it quite well.

Maybe if corn is getting turned into ethanol, we'll rationalize our sugar import restrictions and replace all that high fructose corn syrup with good old fashioned cane sugar, simultaneously improving the flavor of lots of things, and maybe helping some 3rd world sugar growing economies.

[srhcb]

Hi! I'm from the government, and I'm here to use my taxing authority not only to tell you what fuel to burn in your car, but also what to eat."

SB (thanks government, but no thanks)

[Busboy]

In The Omnivore's Dilemma, Michael Pollan expresses a lot of doubt about the use corn for ethanol. I don't have the book in front of me, but some of the points raised were that the corn grown is artificially cheap (i.e: being bought for less than the price of production because of federal subsidies), grown unsustainbly and using fossil fuels (fertilizer, machinery etc..). He also likened the push for corn-based ethanol to the production of corn whiskey (i.e: as a way to get added value to use up and sell the vast excess of corn being produced).

If this can help precipitate a shift away from corn as artificially cheap feed for cattle, poultry, swine etc.. so much the better. A 60-70 rise in price would bring the price of "factory" meat in line with those of organic production (I already get grass-fed, dry-aged beef for about the same price as supermarket beef at my farmer's market). I guess this would also make processed foods more expensive (perhaps making whole foods more attractive). This is probably asking a bit much 

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I don't see much benefit in forcing those among us who can't affort organic meat to pay as much for their dinner as those of us who can. There is a problem here, but "taxing" poor people is not the way to solve it.

And before we get all anti-government here (not that there's anything wrong with that) let's look at the real villain: an unholy alliance between the nominally right-wing large corporations and agribusinesses whose millions underwrite massive lobbying efforts in favor of ethanol and reap billions in revenue as a result; nominally left-wing environmentalists whose care for the environment and loathing of big oil have rendered them irrational; and midwestern farmers whose disproportionate political power allows them to extort funding from every politician of either party who wants to be president.

I am all for significant invetment in biofuels, but the current, massive influx in corn ethanol expenditures is not well advised.

[Darcie B]

I don't see much benefit in forcing those among us who can't affort organic meat to pay as much for their dinner as those of us who can.  There is a problem here, but "taxing" poor people is not the way to solve it.

And before we get all anti-government here (not that there's anything wrong with that) let's  look at the real villain: an unholy alliance between the nominally right-wing large corporations and agribusinesses whose millions underwrite massive lobbying efforts in favor of ethanol and reap billions in revenue as a result; nominally left-wing environmentalists whose care for the environment and loathing of big oil have rendered them irrational; and midwestern farmers whose disproportionate political power allows them to extort funding from every politician of either party who wants to be president. 

I am all for significant invetment in biofuels, but the current, massive influx in corn ethanol expenditures is not well advised.

(is it too political if I trash everyone?)

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I agree with most of what you have said, but disagree with the "midwestern farmers whose disproportionate political power allows them to extort funding." That would be again be agribusiness like Monsanto, ADM and the like, who own many of the large corporate farms. The few, struggling, small family farmers occasionally get a trickle down effect from these corporate owned mega farms but by no means have political power. (My brothers have a 1,000 acre small grains farm and certainly do not have the power to extort anything nor do they belong to any organization who does). I don't consider a corporation that has 100,000 acres and employs workers to be "farmers".

[Busboy]

I agree that ADM and Monsanto are not farmers, and that small farmers continue to struggle. Actually, this is one of the insidious things about the program. Congress could, if they had the guts, cap payments to individual farmers, thus ensuring that that small farmers got a larger share of the benefits than they do now. With a program designed in part to artificially raise prices, however the bigger you are, the more benefit you get. (Don't forget that the big producers are getting hefty refining subsidies as well).

But the ethanol program is being pitched to the American people as a way to support small farmers; it is supported by politicians already flocking to Iowa in court of the small farmer vote; and, to the extent that growing demand for ethanol plays a role in the 25% rise in corn prices the article references (with higher prices expected as ethanol refining capacity grows significantly), it is putting money in small farmers pockets.

Now, I would rather chew my own arm off than argue with a farmer or their family about what the price of corn "should" be, but if farmers are going to reap the expected rewards of this programs, and allow themselves to become the poster children of the program, and vote for people becasue they suppport the program, they deserve a little of the credit/blame for the program as well.

[Darcie B]

I agree that ADM and Monsanto are not farmers, and that small farmers continue to struggle.  Actually, this is one of the insidious things about the program.  Congress could, if they had the guts, cap payments to individual farmers, thus ensuring that that small farmers got a larger share of the benefits than they do now.  With a program designed in part to artificially raise prices, however the bigger you are, the more benefit you get.  (Don't forget that the big producers are getting hefty refining subsidies as well).

But the ethanol program is being pitched to the American people as a way to support small farmers; it is supported by politicians already flocking to Iowa in court of the small farmer vote; and, to the extent that growing demand for ethanol plays a role in the 25% rise in corn prices the article references (with higher prices expected as ethanol refining capacity grows significantly), it is putting money in small farmers pockets. 

Now, I would rather chew my own arm off than argue with a farmer or their family about what the price of corn "should" be, but if farmers are going to reap the expected rewards of this programs, and allow themselves to become the poster children of the program, and vote for people becasue they suppport the program, they deserve a little of the credit/blame for the program as well.

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I'm not real familiar with the ethanol program as my family's farm is too far north to grow corn, but it sounds like the usual BS. As soon as I heard people around here talking about how we should just more ethanol I knew that we didn't have enough farmland to produce near the amount we would need. It's just like saying we should drill in Alaska's wilderness so we won't have to import oil. There just isn't enough. How about we stop driving Stupid Useless Vehicles that get 10 mpg? Nah, that'll never fly in the U.S.

[Mallet]

[...]

If this can help precipitate a shift away from corn as artificially cheap feed for cattle, poultry, swine etc.. so much the better. A 60-70 rise in price would bring the price of "factory" meat in line with those of organic production (I already get grass-fed, dry-aged beef for about the same price as supermarket beef at my farmer's market). I guess this would also make processed foods more expensive (perhaps making whole foods more attractive). This is probably asking a bit much 

←

I don't see much benefit in forcing those among us who can't affort organic meat to pay as much for their dinner as those of us who can. There is a problem here, but "taxing" poor people is not the way to solve it.

[...]

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I see this issue in reverse: it's not so much artificially forcing the price industrial meat up to meet organic prices, but correcting the artificially low price of industrial meat now. Remember that the corn based feed for these animals is being purchased at below production cost and although it's a complicated issue, I think this is a big part of the problem with artificially cheap food. From what I understand, these same economics feed the ethanol industry. I just found this article, which originally appeard in Investor's Daily

At least 43% of ADM's profits come from products subsidized by the taxpayers. Most of ADM's fortunes come from ethanol, produced through the distillation of corn into grain alcohol. Ethanol can either be mixed with gasoline to yield gasohol or be turned into gin.

Over the years, ethanol has benefited from a host of taxpayer supports. The Carter administration provided hundreds of millions of dollars in subsidized loans to a dozen gasohol producers and imposed a tariff on imported ethanol. The Reagan administration provided surplus corn to gasohol producers, including $29 million worth to ADM. And the Clinton administration ordered, on dubious environmental grounds, inclusion of small amounts of ethanol in gasoline.

Most expensive is Washington's 54 cent-per-gallon tax break for gasohol. This special-interest loophole accounts for the bulk of the more than $10 billion in subsidies to ADM since 1980. All told, analyst James Bovard estimates that every dollar in profits earned by ADM costs taxpayers $30.

(not that I want to get into this too much but I can't resist. I don't buy the "those of us who can't afford organic meat" argument in most cases except for very poor families. I can afford to eat organic meat on a grad student salary, I just don't eat it every day. For those families who truly could not afford it, my guess is subsidizing these people directly would be both cheaper and more effective than a subsidy on the entire food chain. All of this keeping in mind that America already spends less of its disposable income on food than any other country in the world.)

[Bux]

In The Omnivore's Dilemma, Michael Pollan expresses a lot of doubt about the use corn for ethanol. I don't have the book in front of me, but some of the points raised were that the corn grown is artificially cheap (i.e: being bought for less than the price of production because of federal subsidies), grown unsustainbly and using fossil fuels (fertilizer, machinery etc..). He also likened the push for corn-based ethanol to the production of corn whiskey (i.e: as a way to get added value to use up and sell the vast excess of corn being produced).

. . . .

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Let's not under emphasize the amount of fossil fuels consumed in just growing corn, not to mention that used in processing corn to make any and all of its byproducts including methanol. Less germane to this article perhaps is the result of pumping all this fertilizer onto the fields of Iowa and neighboring states--polluted lakes, rivers and drinking water. Recently, I read an article about a new corn based fabric in a glossy magazine with an article touting the move away from petroluem based artificial fabrics this might offer. Having just read the section on Industrial Corn in Pollan's The Omnivore's Dilemma, I shook my head wondering why they didn't consider this commodity corn fabric a petroleum based fabric.

The whole distinction between the agribusiness, which many farmers see as part of the military-industrial complex, and small farmers is becoming muddled with one distinction. Agribusiness is screwing the small farmer. Nevertheless, the small farmer can less and less afford a bio-diverse farm and is more and more forced into growing nothing but corn, or soybeans, on his acreage, and for many reasons has little choice but to grow commodity corn--that is the cheapest, least nutitious corn--simply because it's a commodity purchased by quantity, not quality. To stay afloat, he's forced to be a servant of the few large agribusinesses and polute the land and waters that were once our great prairies and farmlands. The more corn he raises, the lower the market cost. Fortunately for the farmer and big business, the government will make up the difference to the farmer in supports, thus allowing the agribusiness industry to reap the benefits of low market prices at the expense of the taxpayer.

Let just add that Pollan's book is a real eye opener, and you don't have to agree with any of his conclusions to be rewarded by reading it. In fact, his point is that we have a dilemma that's not easily solved or which leads to easy conclusions.

Edited September 14, 2006 by Bux (log)