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Ethanol's rise prompts worries of a corn crunch | csmonitor.com

Looks like the new Ethanol craze could have some pretty nasty effects on the price of all of our food over the next few years. Most ethanol is made from Corn. 20% of this years Corn Crop will be converted into ethanol. This figure is expected to double over the next few years. As a result the price of Corn is increasing pretty significantly. Unfortunately Corn is also pretty vital to raising healthy Beef, Chicken or Pork. So as Corn prices go up, so do meat prices. Also as corn prices go up, more farmland is going to be shifted from producing less profitable crops to make more corn. this shift will increase the cost of other crops.

I am not really opposed to ethanol per se. I think all of the recent mandates and subsidies however are one of the biggest scams in a long time. It doesn't burn much cleaner than Gasoline. It provides less power per gallon. You have to burn about 75 energy units of gasoline in order to produce 100 energy units of corn ethanol. Even if all of the farmland in production where converted to growing corn for Ethanol, we couldn't come close to powering our fleets. The Ethanol reformulations that have been mandated are a contributor to the higher gasoline prices that we have been seeing.

I think we have been hoodwinked..

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2 Comments

jess Author Profile Page said:

I don't see anything wrong with higher corn prices... :) Of course that may have something to do with my livelihood.

In all seriousness I see a few of your arguments are actually spin. Your figure of 20% of corn production used for ethanol is meaningless without a comparison of past years. Corn is quite important to growing our major sources of meat. However, it is currently a very cheap way to feed animals. It will take a very significant increase in corn prices to make a meaningful increase in the cost of meat production. Generally speaking less than half of the cost of feeding cows, for example, comes from corn products. However, only a portion of that cost is actually from grain corn. Most of it is in the form of silage corn. While I do expect silage corn prices to increase I doubt that it will increase at the same rate as grain corn.
As for shifting more land into corn production; you need to keep in mind that the American farmer produces far, far more than the American people can consume. In actuality decreasing the production level of many crops will result in a higher price paid to the farmer, however, it should also result in an equal reduction in government subsidies for those some crops. In other words a price increase in consumables is not a straight increase in price, rather it is merely a shift in spending.
In fact, the U.S. has some of the very cheapest food prices of any country in the world. Moreover, those prices have been held artificially low by the federal government for decades.
Shifts in farming practices can also account for a great deal of needed the increases in production. For instance; My average yield is currently about 17-18% more per acre than the average corn farmer in my area. In some instances my yield has been as high as 43% above average. Even though the American farmer is the best in the world and we have been vastly over producing for decades there is still tremendous room for improvement.
You said that ethanol doesn't burn much cleaner than fossil fuels. This is true, however, it is not the whole truth. The fact is that the carbon that is released from the burning of oil is carbon that has been locked in the earth, and out of the atmosphere, for millions of years. In other words the carbon released from burning oil results in a net increase in the level of carbon in the atmosphere. The carbon released from burning ethanol, on the other hand, was just removed from the atmosphere when the corn was grown and an equal amount will be removed from the atmosphere when more corn is grown to replace that corn you are currently burning. In other words burning ethanol releases carbon into the atmosphere, however, the result is zero net increase in the amount of carbon in the air.
Finally, you decried our inability to completely replace the use of fossil fuels. That is just plain silly. Just because ethanol cannot completely replace fossil fuels by itself is no reason to reject its use. Whatever amount of ethanol we use will result in some reduction in the use of fossil fuels which translates into a reduction of our dependence on foreign oil production. This is a good thing. Even if it only results in a 5 or 10% decrease in our use of foreign oil it is still a decrease. The important factor here is to reduce that dependence and it most likely will not be accomplished with the use of only one alternative resource. We have to be willing to develop many alternatives and not rely on just one to break our oil addiction. If we reject every alternative on the grounds that it will not single-handedly replace oil then the only people we are helping are OPEC. I am against helping OPEC but I am for helping the American people and if the American farmer gets a little boost along the way I say so be it. This country has been standing on our shoulders for over two centuries now and it would be mighty nice to finally get a little relief.

jreighley Author Profile Page said:

I don't disagree with you on a lot of your points. I just think that the Government is pushing this technology before it is economically feasable.

If you have to burn 75 energy units of Coal or Gas to create 100 energy units of Ethanol. Are we really gaining enough to justify a 50-75 cent a gallon subsidy?

In the end analysis, it seems to me, that we will wind up releasing 75 units of carbon from that was mined from the earth, Plus 100 units of carbon that was destined for the sewage treatment plant or the compost pile. So instead of burning 100 units, we are buring 175 units.

This idea reminds me of the "I had to buy it, it was on sale" phrase that we often hear from members of a particular gender. We are spending 75 bucks that we didn't have to burn in order to save 25.

Ethanol will likely be a great technology in a few years. By forcing us to buy a product before it can be efficiently produced, I suspect that the state is going to make quite a mess out of our economy.

Time will tell..

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This page contains a single entry by Josh Reighley published on July 25, 2006 11:59 PM.

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