Nick Reddyhoff
Subsidies for corn ethanol are hurting people and the planet.
Subsidies for biofuels in the United States have reached levels unimagined when support for an "infant industry" began in the late 1970s. Today, the infant has grown into a strapping behemoth with a powerful sense of entitlement and an insatiable appetite for ethanol's primary feedstock: corn. In 2009, the U.S. Department of Agriculture reported a record corn harvest of 13.2 billion bushels, 9 percent larger than the harvest of 2008. Ethanol production consumed more than a quarter of that crop--enough to feed 330 million people for a year, according to the Earth Policy Institute, an environmental organization in Washington, DC.
Apart from subsidies paid to blenders of ethanol (passed along as higher prices to farmers), the industry is supported mainly by laws mandating ethanol blending, escalating from 12.95 billion gallons in 2010 to 36 billion gallons in 2022. President Obama has proposed extending this mandate to 60 billion gallons by 2030. If there is one thing the United States has an uncontested comparative advantage in producing and exporting, it's corn. But when that corn is turned into ethanol, it requires 54 cents a gallon in tariff protection to compete with Brazilian sugar-based ethanol--demonstrating a clear disadvantage.
Doug Koplow, founder of the energy consulting firm Earth Track in Cambridge, MA, has calculated that the combination of tax credits, mandates, and tariffs will cost taxpayers $400 billion from 2008 through 2022, assuming that the mandated targets can be met. Eventually, 16 billion gallons are to come from cellulosic biofuels--yet not a drop of such fuels is now being commercially produced. If President Obama's target becomes fact, the cumulative taxpayer cost of subsidizing biofuels will exceed $1 trillion by 2030.
It would be one thing if--as advertised--these subsidies had no adverse impact on food prices, encouraged the substitution of homegrown energy for foreign petroleum, and reduced the energy sector's carbon footprint. But evidence suggests the opposite. Perhaps the most salient recent criticisms of biofuel policy relate to their impact on the environment. A worldwide agricultural model estimating emissions stemming from changed land use found that corn-based ethanol will nearly double greenhouse emissions over 30 years and increase greenhouse gases for 167 years.
The Environmental Protection Agency has been forced to reduce the amount of cellulosic biofuels mandated for 2010 by 94 percent--from 100 million gallons to a mere 6.5 million, all of it produced at heavily subsidized pilot plants. When cellulosic or other alternative biofuels (see "Solar Fuel," TR10) will begin replacing today's corn- and soybean-based fuels is anybody's guess, but it won't be tomorrow, and it may be never. Who really thinks the corn growers' associations, and major ethanol producers, will hand their subsidies over to grass?
C. Ford Runge is the Distinguished McKnight University Professor of Applied Economics and Law at the University of Minnesota. This article is based on a study conducted with Robbin S. Johnson for the Woodrow Wilson Center for Scholars, in Washington, DC.
A new study fuels the debate over the impact of growing crops for fuel.
Biofuels: raising commodity prices or not?
Brooke Coleman writes that "People go hungry not because there isn't enough land to grow food, or because there is a world shortage of food." Well, not technically, because a "shortage" balances out through reduced demand. People living on less than $2 per day and spending more than 60% of their income on food, go hungry, normally, because they simply cannot afford the food. Now, one can blame all manner of bad guys for helping to put such people in that situation in the first place, but the fact of the matter is that when grain and oilseed prices more than double in the course of a couple of years, the innocent suffer.
What would be interesting to hear from Mr. Coleman is which story from the biofuels industry is the correct one: (1) that biofuels have single-handedly raised agricultural commodity prices above the trigger price for marketing loan payments and other price-linked subsidies, thus "saving" the U.S. Government on crop subsidies they would otherwise have to have paid out? or (2) that biofuels have had absolutely no effect on the prices of food crops, and that all the price rises we have seen can be blamed on other factors.
The industry cannot have it both ways.
Mr. Coleman writes that "The reality on the ground is that the upswell in biofuels ... has continued over the last year while food and grain prices dropped." Yes, prices have dropped, but not to their levels of four years ago. And expectations are that as economies recover, the markets will be squeezed once again.
Every analysis, from FAPRI, IFPRI, the OECD, the FAO, etc., of the effects of planned increased use of crops for biofuels forecasts a measurable (often on the order of 30%) increase in the future price of cereals and oilseeds compared with a scenario with no subsidies or mandates for biofuels.
Re: Biofuels: raising commodity prices or not?
Happy to discuss. But why are you not signing your comment?
Your primary point is the biofuels industry is trying to take credit for farm income and subsidy reductions stemming from it while also saying they have not increased food prices. Impossible right? Wrong.
You mix up grain prices and food prices. Fuels like corn ethanol did increase the price of corn (the last six months have shown that oil was a bigger driver of corn prices than ethanol, but ethanol did increase corn prices) and this price increase comes with the increased income to farmers and less subsidies to corn. So they are right to take some of the credit for the good things that come from higher corn prices.
So presumably the bad thing is higher food prices. Except, grain prices are not even close to the primary driver of food prices. In fact, grain price is a tiny fraction of the price of food -- most of the price of food in this country is attributable to energy and marketing costs. This is why Food and Water Watch, which has no dog in this race, said back then:
"Pundits and food and meat processors have lamented this year's rise in corn prices with little attention to the long-term declining trends in the real price of corn. The implication that rising corn prices warrant grocery price hikes ignores the historical grocery price insensitivity to corn prices."
So, yes, ethanol can be partly responsible for grain price increases while not being a significant driver of food price increases.
One of the things we document on foodpricetruth.org is that big food companies spiked grocery aisle prices and raked in record profits while funding the anti-biofuels campaign. Record profits during a time when energy and grain prices skyrocketed? Amazing.
Your characterization that all reputable studies say biofuels are to blame is not even close to accurate. It wasn't true then (as shown: http://www.foodpricetruth.org/quotes.htm and http://www.foodpricetruth.org/facts.htm), and it's not true now (just take a look, the correlation between food prices and ethanol is broken).
Of course grain prices have not rebounded to pre-2008 prices. Neither has the entire world -- take a look at the new price of oil.
We cannot have an honest conversation about subsidies if the entire premise of the argument is bogus. Subsidy reform will not happen if the underlying arguments are not credible. We need subsidy reform, so let's have an honest conversation about why.
Guest (Russ Finley)
Re: Biofuels: raising commodity prices or not?
".. ethanol did increase corn prices .."
I'm glad you finally admitted that.
".. grain prices are not even close to the primary driver of food prices .."
Your only concern appears to be for the American farmer, who represents about 0.004 percent of the global population, and corn ethanol refiners, who represent a miniscule fraction of that number (who would not even exist were it not for the welfare they receive). The world is flat now, or did you not read that book?
Everyone knows that in the richest country on earth the cost of food is a small percentage of our incomes. It's less well known that in some parts of the world most of a poor family's income goes to food which consists largely of grains like corn meal. The poor outnumber overweight Americans ten to one.
All the same, a year ago the CBO calculated that ethanol was costing Americans about $9 billion extra per year in food costs. What right do the corn ethanol lobbyists have to do that, with our own tax money no less?
Here is the quote I got from Food and Water Watch:
".. Rural communities won't benefit from the Farm Bill becoming a fuel bill. In the long run, family farmers and the environment will be losers, while agribusiness, whose political contributions are fueling the ethanol frenzy, will become the winners .."
Source: http://cleantech.com/news/1490/lobby-groups-blast-corn-ethanol
".. So, yes, ethanol can be "partly responsible" for grain price increases while not being a "significant driver" of food price increases.
.."
Let me rephrase your above quote:
".. So, yes, ethanol is a "significant driver" of grain price increases while also being "partly responsible" for food price increases. .."
".. One of the things we document on foodpricetruth.org .."
Great... just what the world needs, another conspiracy theory website. Collusion is highly illegal and comes with a prison sentence. Your suggestion that America's grocers and livestock producers were colluding "defies all comprehension."
".. Your characterization that all reputable studies that say biofuels are to blame are not even close to accurate. .."
Arrr, that be another strawman, matey. All reputable studies have implicated biofuels as being a major contributing factor. None of them said they were the only factor.
Pardon me for not following those links back to your conspiracy website.
".. Of course grain prices have not rebounded to pre-2008 prices. Neither has the entire world -- take a look at the new price of oil .."
Not sure what you are trying to say there, but let me take this opportunity to explain how commodity prices work. If you plant enough corn you will eventually bring its price down by exceeding demand for it, which is the crux of the problem. That arable land has to come from somewhere. There is no free lunch. Ethanol is putting more land under the plow. According to a recent study in the journal Nature, expansion of industrial agriculture has already exceeded planetary boundaries:
http://biodiversivist.blogspot.com/2009/10/transgressing-identified-and-quantified.html
We cannot have an honest conversation about subsidies if the entire premise of the argument is bogus. Subsidy reform will not happen if the underlying arguments are not credible. We need subsidy reform, so let's have an honest conversation about why.
Re: Biofuels: raising commodity prices or not?
You mix up grain prices and food prices.
No, Mr. Coleman, you are making the usual argument that changes in corn prices hardly dent changes in household expenditure on food. That may be true in America, where grain is consumed as meat or as a highly processed and packaged food like Corn Flakes, and where almost half of household expenditure on food is in the form of meals eaten outside the home.
But it is not true for poor people elsewhere in the world who eat foods that are partially processed, and packaged in sacks, for which grain prices are the primary driver of food prices.
Granted, there is value to developing-country farmers in not being undermined by subsidized grain prices. But the phenomenon of aggressive biofuels targets has fed increased volatility in the world grain market. When grain prices spiked, there was no time for developing-country farmers to respond quick enough to moderate those spikes.
Particularly vulnerable are the urban poor in large African or Latin American cities, who gain nothing from higher food prices.
Fuels like corn ethanol did increase the price of corn ... . So they are right to take some of the credit for the good things that come from higher corn prices.
Can you be more precise? What share? Because the ethanol industry takes credit for ALL the reduction in crop subsidies (and then usually compared with 2005, an abarant year thanks to Hurricane Katrina) when it is trying to persuade the public and policy makers how ethanol subsidies are actually a good bargain.
Why does the world subsidize fossil fuels to the tune of $300 billion ... a year?
Most of the $300 billion (actually, the real number may be closer to $500 billion) that the world spends annually subsidizing fossil fuels is the opportunity cost to oil-exporting countries like Iraq, Iran, Nigeria and Venezuela of their practice of selling oil products domestically at well below the world price of those products, and by countries like Russia selling their natural gas domestically at well below the price that they sell exported gas. These are consumer subsidies, not producer subsidies. That makes them particularly bad from the standpoint of encouraging wasteful consumption.
But why should these subsidies have any bearing on biofuel subsidies to producers in developed countries, where petroleum products (except those sold to farmers, foresters and fishermen) are highly taxed? They shouldn't.
Indeed, if the oil-exporting countries were to finally wake up and recognize the folly of subsidizing the consumption of petroleum products, and start aligning their domestic prices with world prices (as Iran and Nigeria are starting to do), the consequence will be that more oil will be available for export, which will make it even harder for ethanol to compete on the transport-fuel market.
So it is totally bizarre to argue that there should be no talk of reforming ethanol subsidies as long as these fossil-fuel subsidies remain in place. Two wrongs don't make a right.
We cannot have an honest conversation about subsidies if the entire premise of the argument is bogus. Subsidy reform will not happen if the underlying arguments are not credible.
On that point, at least, we can agree.
Re: Biofuels: raising commodity prices or not?
Subsidy Eye,
Happy to respond (Russ, nothing new from you).
Ok, so you agree that the price of corn does not dent U.S. grocery aisle prices. We also seem to agree on other basics: grain prices went up, poorer populations are hit hardest by higher grain prices, etc.
The question is: what was the role of biofuels. Or, put another way, you argue that biofuels drove world grain prices.
So I have a couple questions for you:
1) Can you explain how biofuels, which consumes about 4% of world cereal grains, drove the price of the other 96% of cereal grains? This is why the EU energy office was confused when it said in 2008, "European Union executive's target of 10 percent biofuels' use by 2020 requires an increase in commodities for biofuels consumption of 4 million tonnes per year. The current global consumption of cereals is 2,200 million tonnes per year…We do not understand how an increase of 4 million tonnes per year could drive the price of the market of 2,200 million tonnes."
2) Why did world wheat prices skyrocket well before maize prices, and to a point well out of proportion to maize prices? Put another way, if you are going to argue that biofuel caused ripple effects in ag commodity prices, I would like you to explain why the ripple was going the wrong way.
You seem to be missing my point on oil price (maybe because I did not explain it clearly). I am not concerned about oil's effect on ethanol (and don't share your belief that pulling subsidies from oil would hurt ethanol). I am talking about oil's impact on agricultural commodities. Energy and fertilizer (which contains lots of petro and is largely price driven by oil) accounts for well over half of crop agriculture operating expenses. So, as a direct driver of agricultural prices, it is huge. Then there is the indirect effect of investors getting out of oil and into agricultural commodities when the price of oil spikes, further driving up ag commodity prices.
I am not trying to deflect to a worse evil. My question to you was: why are you turning a blind eye to that? Put another way, oil dependence actually is a major driver of higher ag prices (and therefore has serious consequences on poor people in terms of grain prices, just look at 2008).
You (whoever you are), and many of the "save the poor from biofuels" groups (including the Earth Policy Institute mentioned above, when they stand shoulder to shoulder with API and sign letters with them to defeat biofuels) seem to conveniently ignore this. So does the World Bank, as they publish report after report about how bad biofuels are while they siphon subsidies to the oil industry.
Maybe, because you have withheld your name, you can give me an unfiltered explanation for the questions above and the strange blind eye to oil?
Guest (Russ Finley)
Re: Biofuels: raising commodity prices or not?
".. Happy to respond (Russ, nothing new from you). .."
Ditto. Until you come up with something novel to rebut you are unlikely to see anything new from me ; )
".. Ok, so you agree that the price of corn does not dent U.S. grocery aisle prices. .."
Let me rephrase that above sentence:
".. Ok, so you agree that the price of corn does increase U.S. grocery aisle prices. .."
".. 1) Can you explain how biofuels, which consumes about 4% of world cereal grains, drove the price of the other 96% of cereal grains? .."
Isn't that the same strawman you presented earlier? No study I ever saw claimed that biofuels were the sole cost of price increases. They pour gas on that fire; they exacerbate the problem. From a World Bank study:
".. From 2004 to 2007, global maize production increased 51 million tons, biofuel use in the U.S. increased 50 million tons and global consumption for all other uses increased 33 million tons, which caused global stocks to decline by 30 million tons. .."
Source: http://siteresources.worldbank.org/NEWS/Resources/risingfoodprices_backgroundnote_apr08.pdf
And from the Times last year:
".. Britain’s self-sufficiency in wheat will end next year, because a giant new biofuel refinery needs so much of the staple crop that home-grown supplies will be exhausted feeding both the factory and the nation. .."
Source: http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article6860936.ece
Note that world population is increasing by about 80 million people per year. That's equal to the population of the United States about every four years. The world needs to continually produce on average more food than it did in any given previous year to prevent mass starvation. According to a recent study published in Science:
".. to meet the recent Declaration of the World Summit on Food Security (3) target of 70% more food by 2050, an average annual increase in production of 44 million metric tons per year is required (Fig. 1), representing a 38% increase over historical increases in production, to be sustained for 40 years. This scale of sustained increase in global food production is unprecedented .."
I recall watching an episode of Mad Money where the host advised his audience to speculate in food commodities. Thanks to biofuels hogging up grain reserves, he could see that there was money to be made. He conceded that it might be somewhat immoral to bet on human lives like this but you could also alleviate your guilt by donating a portion of your earnings to your favorite charity.
The decline in grain reserves did indeed spark a speculation frenzy, which started several dominoes falling. Some countries stopped exporting food to protect their own citizens, which in turn drove prices higher, thus the spike seen in 2008.
From a 2008 article in the Guardian on a World Bank report:
".. food prices examined in the study rose by 140% between 2002 and this February. The report estimates that higher energy and fertiliser prices accounted for an increase of only 15%, while biofuels have been responsible for a 75% jump over that period.
It argues that production of biofuels has distorted food markets in three main ways. First, it has diverted grain away from food for fuel, with over a third of US corn now used to produce ethanol and about half of vegetable oils in the EU going towards the production of biodiesel. Second, farmers have been encouraged to set land aside for biofuel production. Third, it has sparked financial speculation in grains, driving prices up higher.
Other reviews of the food crisis looked at it over a much longer period, or have not linked these three factors, and so arrived at smaller estimates of the impact from biofuels.."
Source: http://www.guardian.co.uk/environment/2008/jul/03/biofuels.renewableenergy?fb_page_id=6176732491&
The article is partially correct. It is true that energy policy is grossly misdirected. But the facts about ethanol as an alternative to fossil fuel are sorely misunderstood. This is partly due to the misinformation campaign sponsored by big oil. Please do a little research to learn how Brazil has transformed its economy off the foreign fossil fuel addiction and onto homegrown ethanol - and they are progressing toward an environmentally friendly ethanol industry. For more information and for everything you need to learn (and unlearn) about ethanol and food, go to http://www.alcoholcanbeagas.com/ . Trust me...Dave Blume knows a thing or two about agriculture AND energy. Learn from him. Get his book and read it. I did, and I now understand that we have more than enough land in the world to support a reasonable standard of living for all humans. But the IMF and the World Bank (and the international banksters and the oil industry) are not ready to let go of their grip on our balls.
Guest (Russ Finley)
Reading Blume's book to get educated about corn ethanol is like going to the Creation Museum to get educated about evolution.
Guest (Russ Finley)
Brooke, you appear to be focused primarliy on the food issues surrounding corn ethanol. There are several other issues with corn ethanol you seem much less concerned about. Food commodity price spikes have happened in the past for various reasons and will happen again in the future. Prices eventually drop again as farmers scramble to match supply to demand in order to capture the brief period of enhanced profitability. I have never seen a study documenting how many poor people are physically damaged or killed by these spikes in price. The flattening of the world economy is a recent phenomena.
Your contention that biofuels helped to reduce food price increases is going to be hard to defend. You got me! That's a strawman. You never said that, implying that biofuels neither reduced nor exacerbated higher food prices. They were just right.
Given enough time commodity and food prices are likely to stabilize again and your new website will lose its reason to exist.
But that's the crux of the problem isn't it? You have to expand supply to meet demand to drop prices which means putting more land under the plow and humanity has already exceeded several planetary boundaries:
http://biodiversivist.blogspot.com/2009/10/transgressing-identified-and-quantified.html
".. 2) Why did world wheat prices skyrocket well before maize prices, and to a point well out of proportion to maize prices?
Put another way, if you are going to argue that biofuel caused ripple effects in ag commodity prices, I would like you to explain why the ripple was going the wrong way. .."
The above comment is called a false premise. The phrase "well out of proportion" can mean just about anything you want. Wheat and maize prices both roughly doubled. The phrase "well before" also does not have a precise definition. Note the timing of peak prices for corn and wheat in the following graphs:
http://home.comcast.net/~russ676/Graphics/img30.gif
http://marketdepth.typepad.com/.a/6a01157030c108970b011571e7c413970b-800wi
Note also the timing of maize prices and biofuel legislation:
2004 = $2.06/bushel
2005= $2.00/bushel (Energy Policy Act of 2005)
2006= $3.04/bushel
2007= $4.20/bushel (Security Act of 2007)
2008= $4.06/bushel
2009= $3.70/bushel
Gargantuan, untimely coincidence? How long would it take to drive a car around thirty thousand square miles of corn diverted to ethanol?
Following is a link to a paper written in July 2008, discussing four competing explanations for the 2008 grain price spikes:
http://www.kysq.org/docs/McCalla.doc
Note that two out of the four competing explanations directly mention biofuels as a contributing factor. Note that biofuels are mentioned seven times in the paper and not once is it implied that biofuels helped to "reduce" food prices.
A more timely example would be the recent record high prices of sugar. Again, cane ethanol is not singled out as the sole cause but is clearly one of the factors. Brazil recently reduced the amount of ethanol in its gas because consumers were switching back to gasoline because it was cheaper.
Guest (Russ Finley)
".. don't share your belief that pulling subsidies from oil would hurt ethanol .."
Are you saying that you don't support the $ 2.5 million ad campaign just launched by the corn ethanol lobby to convince congress to continue the roughly half dollar per gallon subsidy given to oil companies to blend ethanol into gasoline?
See "Corn Ethanol Propaganda Blitz Backfires:"
http://biodiversivist.blogspot.com/2010/04/corn-ethanol-propaganda-blitz-backfires.html
"..Energy and fertilizer (which contains lots of petro and is largely price driven by oil) accounts for well over half of crop agriculture operating expenses..."
Over 75% of the energy in a gallon of ethanol comes from fossil fuels. Why do you keep turning a blind eye to that? And if the subsidies to these fossil fuels are as high as you claim, those same subsidies must be keeping the cost of those inputs down. Farmers are free to run their equipment with corn ethanol. There's a reason they don't. It's called cost.
".. Put another way, oil dependence actually is a major driver of higher ag prices (and therefore has serious consequences on poor people in terms of grain prices, just look at 2008). So, as a direct driver of agricultural prices, it is huge. .."
That's illogical. "Energy" dependence is something humanity is stuck with. "Energy prices" are a major driver of higher ag prices. It does not matter if that energy comes from oil, gas, coal, or biofuel. Liquid biofuels will never be cheaper than liquid fossil fuels on average. They will always tend toward price parity. Consumers will never win with biofuels.
And your persistent attempts to denigrate the World Bank are also wearing thin. Given the choice between two evils you have sided with for-profit corporate interests that remain solvent only thanks to massive government largess no less.
You consistently try to paint your debate partners as defenders of oil. They're not defenders of oil. They are critics of corn ethanol. There are better ways to use less oil than simply replace one liquid fuel with a worse one.
" try to explain how you can divert thirty thousand square miles of corn acreage into gas tanks without impacting global food production"
Cows have four stomachs.
Cows are natural grass eaters and do not digest starches very well. They need four stomachs to break down the fiber that their metabolisms are accustomed to.
The conventional wisdom is that ~90% of corn is fed to cattle and other animals for animal feed (that's its primary contribution to the food supply).
The corn ethanol production process effectively extracts the corn starch and converts it to ethanol. The remaining fiber (distiller's grains) is dried and sold back to food processors. Distiller's grains will start being traded on the open markets and is priced according to market demand.
http://www.reuters.com/article/idUSN1622826520100216?type=marketsNews
http://www.cmegroup.com/trading/commodities/distillers-dried-grain-futures.html
It appears that China is interested in importing these distillers grains, having imported significant amounts as cattle feed in recent years (2009: 650,000 tons)
http://www.bloomberg.com/apps/news?pid=20601012&sid=aB6yPHHO1ldQ
As such, the corn ethanol production process does not appear, in my opinion, to extract from the food supply in a significant way.
Your point about land displacement is not quite as clear. Corn plantings have increased by as much as 20% within the last 7 years (2003: 78.6MM acres; 2007: 93.5MM acres). Wheat production has varied widely even over the last 20 years (1975: 368k MT, 1990: 12024 MT, 1992, 3908 MT, 2003: 4121 MT, 2005: 2720 MT, 2009: 4509 MT). This data seems inconsistent enough for me to not stand behind any macro-related trends. Given that the U.S. has developed a low-wheat (gluten-free) diet over the last several years, there may be other trends at play too. I wouldn't guess, however, that there is a dire food shortage from the numbers, however.
http://www.ers.usda.gov/Data/Feedgrains/CustomQuery/Default.aspx#ResultsPanel
I'm also not advocating that corn ethanol is a perfect industry. But it isn't the scourge that the press has made it out to be. It is probably better to focus our efforts on improving its impact on the overall food and fuel system rather than demonize and destroy.
Max
Guest (Russ Finley)
Hi Max,
It takes 56 pounds of corn kernels to produce 2.8 gallons of ethanol, 11.4 pounds of distiller's grain, 3 pounds of Glutan meal, and 1.6 pounds of corn oil.
One study found that you could get upwards of 20% improvement in feed efficiency if you used the maximum mix of 40% distillers grains in feed. According to that source, exceeding 40% is not recommended because it contains too much fat.
Source: http://www.angusbeefbulletin.com/ArticlePDF/FeedingStrategies.pdf
This means that roughly 70% of a bushel of corn that goes into an ethanol refinery is still lost to the human food chain.
Keep in mind that for about three decades the energy balance for corn ethanol was negative. It wasn't until someone came up with the idea of giving an energy credit to the distillers grains that they could show it energy positive. If you dry those grains so they can be transported, you negatively impact the life-cycle energy balance.
".. I wouldn't guess, however, that there is a dire food shortage from the numbers, however. .."
Nobody has claimed there is a dire food shortage. It has been pointed out that the average annual price of corn has almost doubled since the renewable fuels legislation was implemented despite record acreage planted. According to the CBO estimate, this cost Americans upwards of $ 9 billion in higher food costs, which is actually a small percentage of our total food costs. The concern is the impact on the billion malnourished of the world who's very lives depend on affordable partially processed sacks of exported grain.
2004 = $2.06/bushel
2005= $2.00/bushel (Energy Policy Act of 2005)
2006= $3.04/bushel
2007= $4.20/bushel (Security Act of 2007)
2008= $4.06/bushel
2009= $3.70/bushel
Source: http://home.comcast.net/~russ676/Graphics/img30.gif
It has also been noted that prices should eventually drop again as more acreage is planted to increase supply relative to demand, which is the crux of the ecological arguments against increasing industrial agriculture:
http://biodiversivist.blogspot.com/2009/10/transgressing-identified-and-quantified.html
If all we look at are the impacts of this legislation on farmers, distillers, and politicians seeking farm state votes, it's wonderful. If you look at costs to taxpayers, livestock producers, impacts on the poor, and ecological damage, it's not so wonderful.
Russ,
You have got to learn how to regulate your posts. You overwhelm these things with "cut and paste" style posts and drown the back and forth. A couple final things: (1) i dont see the response to my questions, subsidy eye; (2) we're trying to get beyond the veneer, so data is more useful than flooding the string with clueless news stories, on either side; and, (3) if you want answers on these issues, just follow the money.
Guest (Russ Finley)
Riiight.
".. i dont see the response to my questions .."
It's utterly irrelevant to the debate and unnecessary for you to either read or react to the responses provided. They are still there for the audience to see. This is the Internet. It also does not matter who, or what the response is from. All we have are the strengths of our arguments. Your debate partner could be somebody's pet dog:
http://www.unc.edu/courses/jomc050/idog.jpg
Debate is for the audience.
".. You have got to learn how to regulate your posts. You overwhelm these things with "cut and paste" style posts and drown the back and forth. .."
Says my opponent over his shoulder as he heads for the hills...; )
".. we're trying to get beyond the veneer, so data is more useful than flooding the string with clueless news stories .."
Says my opponent who has provided a total of two links to sources, both to his own food conspiracy website.
You have been provided with several links to a combination of sources, blogs, peer-reviewed research articles, graphs of official agricultural data, along with some news articles discussing research papers.
".. if you want answers on these issues, just follow the money. .."
Says the executive director of The New Fuels Alliance, looking down at a smoking hole in his foot ; )
http://www.newfuelsalliance.org/new_fuels_alliance_the_alliance.html
Russ,
You seem to debate under the assumption that volumes of words and links wins. I could reference thousands of articles, including the new DEFRA biofuels report (which everyone should read) showing biofuels had little to do with increased grain prices. I could ridicule your mixing up of correlation and causation for the 1000th time -- steel prices skyrocketed with ethanol use too, you think there is something going on there? -- by showing that corn prices no longer correlate to ethanol use but have followed (as always) oil prices. I could paste 1000 links I have already pasted elsewhere in there and call myself the winner. But now I am just tagging blogs instead of engaging on them. The wheat/corn price game you play is classic. You dont explain why the ripple effect is going backwards, you just paste away. And thanks for childishly outing me as NFA director (I signed my first post as such). In my opinion, when you show up on these websites, the productive debate ends. Your arguments are certainly overwhelming, but for the wrong reasons.
Well I just have to say that purely based on the energy returned on energy invested this is idea of corn ethanol is a horrible one. The approximate EROEI ratio for traditional sources of oil (land based normal viscousity) is approximately 20:1 while the approximate EROEI for corn ethanol is approximately 1:1 meaning you take diesel, (from oil for tractors, transporting corn, etc.), fertilizer (from oil and natural gas), government subsidies and you gain nothing except money from the government (taxpayer money) to big agribusiness. Seems like a lose/lose/lose for the taxpayers/consumers/poor and a great big win for big agribusiness.
That EROEI comparison ignores the renewability of biofuels (or any renewable for that matter). Obviously poking a hole in the ground and getting lots of energy is a great EROEI. But then the resource is exhausted, whereas with bioenergy the same resource can be used over and over. There would be no point to biofuels if not renewable, so what's the point of comparing them to fossil fuel as if they are not renewable?
If what you're really interested in is the cause of global hunger (unlike Runge who just wants to score political points against ethanol) read this piece from Robert Paarlberg in Foreign Policy: Attention Whole Foods Shoppers. Here's a relevant paragraph:
It turns out that food prices on the world market tell us very little about global hunger. International markets for food, like most other international markets, are used most heavily by the well-to-do, who are far from hungry. The majority of truly undernourished people -- 62 percent, according to the U.N. Food and Agriculture Organization -- live in either Africa or South Asia, and most are small farmers or rural landless laborers living in the countryside of Africa and South Asia. They are significantly shielded from global price fluctuations both by the trade policies of their own governments and by poor roads and infrastructure. In Africa, more than 70 percent of rural households are cut off from the closest urban markets because, for instance, they live more than a 30-minute walk from the nearest all-weather road.
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rbrookecoleman
6 Comments
Good Grief
The problem with this article isn't that it's recycled, it's that it's just plain misleading.
People go hungry not because there isn't enough land to grow food, or because there is a world shortage of food, or because grains now used for biofuels used to be exported to "poor people" (the absurdity of the idea that exporting U.S. cheap corn helps poor people is beyond comprehension). One of the primary reasons go hungry is because local agriculture is plundered by agricultural goliaths and their minions like the World Bank, massive imports of grains that kill local economies.
The reality on the ground is that the upswell in biofuels in the U.S. has occurred without significantly changing overseas planting (see USDA data), and has continued over the last year while food and grain prices dropped. Food and grain prices follow oil prices -- so why does Runge not explain that correlation and the need to address it? Why does the world subsidize fossil fuels to the tune of $300 billion (often times facilitated by the World Bank) a year?
The myth that Runge perpetuates -- that we have to choose between feeding the poor and growing bioenergy -- doesn't serve the poor. It serves the oil industry, the version of the world perpetrated by the World Bank, and their apologists. Sure, let's reform subsidies -- but let's start at the source of the problem.
Brooke Coleman
New Fuels Alliance
www.FoodPriceTruth.org
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Guest (Russ Finley)
Re: Good Grief
"..People go hungry not because there isn't enough land to grow food, or because there is a world shortage of food, or because grains now used for biofuels used to be exported to "poor people.."
I just reread the article to see if the author actually made those arguments. He didn't. From Wikipedia:
".. Strawman argument--Presenting a misrepresentation of the opponent's position and then refuting it, thus giving the appearance that the opponent's actual position has been refuted .."
Poor people can't afford the food. Price is the universal standard of measure for supply and demand. Here, this chart should give you a feel why the number of chronically hungry have passed a billion souls for the first time in history:
http://home.comcast.net/~russ676/desiremore/povertychart1.gif
".. the absurdity of the idea that exporting U.S. cheap corn helps poor people is beyond comprehension .."
When you are living on a few dollars a day it is easy to comprehend how your children could become malnourished when the price of staples like corn double.
".. One of the primary reasons go hungry is because local agriculture is plundered by agricultural goliaths and their minions like the World Bank, massive imports of grains that kill local economies. .."
Interesting how American farmers who were happy to export the subsidized grain that kept other countries from competing are now saying that doubling the price of that grain is a good thing because it will force them to grow their own ...not concerned in the least that they and their families will starve to death trying (and many already are).
".. The reality on the ground is that the upswell in biofuels in the U.S. has occurred without significantly changing overseas planting .."
Define the word significantly and then provide a link to your source. And once you've done those things try to explain how you can divert thirty thousand square miles of corn acreage into gas tanks without impacting global food production given known rates of productivity increases.
".. Food and grain prices follow oil prices -- so why does Runge not explain that correlation and the need to address it? .."
Everyone knows that food and grain prices are impacted by a large number of variables, including the price of fossil fuels. And everyone knows that the price of fossil fuels is not always the main driver of food costs. Witness the recent spike in oil prices corresponding to the drop in corn prices. The main driver of food costs is supply verses demand and the speculation associated with it, which also increases cropland costs and all other costs.
When you see record high acreage planted and record high prices, you know something is gobbling up supply because massive corn harvests typically translate into depressed corn prices. That something is ethanol.
".. Why does the world subsidize fossil fuels to the tune of $300 billion (often times facilitated by the World Bank) a year? .."
Let's assume for just a minute that your number is valid. Divide that number by the BTUs of energy produced by fossil fuels per year and you will find that corn ethanol subsidies still dwarf those received by fossil fuels on a per unit energy gained basis. Not to mention that about 75% of the energy in a gallon of ethanol comes from those fossil fuels.
".. The myth that Runge perpetuates -- that we have to choose between feeding the poor and growing bioenergy -- doesn't serve the poor. .."
It's not a myth. It does serve the poor, and the article is about corn ethanol, not the vague generic term "bioenergy" which could be just about anything.
".. It serves the oil industry .."
Corn ethanol serves the oil industry. The oil industry could care less which liquid fuel it profits from and the last thing it wants is for the internal combustion engine (which throws away about 80% of the energy in a tank of gas) to be displaced by modes of transport less dependent on liquid fuels.
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