Posted on 05/14/2008 3:59:06 AM PDT by Renfield
In 2007, US corn production rose to 349 million metric tons. Of this, about 62 million tons were used to produce ethanol, of which 21 million tons of dried distillers grains were returned to the grain market. This left a whopping 308 million tons available for consumption and export — an increase of 110 million tons, or about 82 percent, over the 1995 figures.
What the writer is leaving out is the grain that was snatched up at the then low prices and is even now stored away for future bio-fuel use. Most of the new ethanol plants are just now coming online, making these figures meaningless.
The numbers are from the USDA, are THEY “in the pocket of “big corn”.
Not exactly, they’re owned by ADM.
It’s actulally a tax credit to the gasoline excise tax that only goes to the blender not the producer, which is now 51 cents per gallon of ethanol used. The only incentive for alcohol production is the small producers credit of 10 cents for production under 15 million gallons per year with a capacity of no more than 30 million gallons per year.
You could argue that this would subsidize ethanol production by allowing blenders to pay more for ethanol, raising the breakeven price of production and allowing producers to make a profit at a higher corn and natural gas price. But this isn’t reflected in current prices, as gas and ethanol are selling about the same on a BTU basis.
As far as the burning our food argument, if ethanol production is burning our food than so is soft drink production.
Excuse me, but bullshit. Look at the numbers---the total amount of corn went UP hugely, even after the amount of corn used in ethanol production is subtracted out from total production. By the law of supply and demand, the price of CORN derived products should have gone DOWN based on the increased supply.
It may be true that there would be some increase in the price of wheat, rice, rye and sorghum products to the extent that acreage used for their production was "switched" to corn---but NOT for corn products, so the driver for the price increase in CORN products is NOT ethanol production AT ALL, but some other factor. My guess is increased fuel costs, speculation, and opportunistic price gouging.
Oh, where to start? Where to start?
1. Alcohol is a LOUSY motor fuel. Low energy content to begin with, very high latent heat of vaporization, hygroscopic as hell, etc.
2. Production is an energy hog as well. I see all kinds of numbers about how much energy it takes to produce a gallon, and no-one can claim it’s cost-effective.
3. Corn production uses a lot of chemical fertilizers, which are significant contributors to river pollution.
4. High feed corn demand means higher meat, dairy and poultry prices, no doubt about it. We see it already - who has paid $4.00 for a gallon of milk lately?
5. Acetone is very aggressive toward the plastic seals and hoses in your fuel system. I would not add it to anything of mine, except my 1962 BSA which was made before plastic.
6. There are FAR more useful bio-fuel technologies coming along - let’s not waste our subsidies on grain alcohol, which is a dead end.
"Not exactly, they’re owned by ADM."
You morons obviously spend too much time "conspiracy theorizing". ADM and other corn producers (aka "big corn")use the statistics gathered by the USDA in their planning processes just like everyone else does. If the statistics are wrong, then their plans will be wrong too. The USDA has got to deliver good numbers to ALL their customers, both producers and consumers (consumers in this case being the folks who process ag products into final food products).
Last I checked, ADM wasn’t a corn producer. They are shysters that buy their grain from producers and sell to users. Not only do they have the motive to influence grain markets, they are large enough to do so. Given their political contributions, no Federal decision concerning grain can be considered clean.
How many times in the last several weeks have I suggested the impact of the BRIC economies (Brazil, Russia, India, China) and their impact on competition for all resources only to be slandered by urban dwellers with expertise in agriculture? And once again, I don’t have a problem with discarding subsidies as long as Ag is not cherry-picked while others are ignored. Tax breaks for all businesses, subsidies, welfare, housing, subsidies for retirees, medicaid, medicare, etc. Git rid of them all to make for a level playing field.
Most urban dwellers just hate these USDA figures on Ag production and buy the oil business and old media vilification of farmers.
“So all these people lept into the middle class last year and it just happened to coincide with an insane rush to bio-fuels?”
I suggest you look at where the items you buy from the world’s largest retailer, and most other retailers, are made and think about it.
“”As far as the burning our food argument, if ethanol production is burning our food than so is soft drink production.””
Same goes for fat food (junk food) and ethanol in addictive drinks with more car accidents related to the 50,000 plus alcohol-related auto deaths every year.
How do you think ADM influences the corn market?
You morons obviously spend too much time “conspiracy theorizing”. ADM and other corn producers (aka “big corn”)use the statistics gathered by the USDA in their planning processes just like everyone else does. If the statistics are wrong, then their plans will be wrong too. The USDA has got to deliver good numbers to ALL their customers, both producers and consumers (consumers in this case being the folks who process ag products into final food products).””
And neither is ADM the only producer of ethanol. In fact, most of the facilities in the midwest are owned by COOPs, farmers, and other investors who like the idea of solar captured energy in the tank plus the high protein feed left as a by-product. Wart, your problem is you know too much about agriculture and the urban dwellers are buying the old media and big oil attacks on ethanol.
How do you think ADM influences the corn market?
In this case, sitting on huge stockpiles while waiting on prices to rise. This would be acceptable behaviour if they weren’t also pushing the government to give away taxpayer money to drive up consumption.
Actually, an increase in the value of corn decreases ADM's net profit by the amount that it costs ADM to meet its margin call.
But for the author to claim that the diversion of corn to fuel rather than food does not affect the price of rice is bullshit.
There are many and more important factors in the current price spike of food, but the diversion of food to fuel is certainly and unequivocally an upward pressure on all food prices. It is impossible for it not to be.
You are correct!
Subsidies screw up everything they are applied to, the Opportunity Cost equation becomes skewed and that means that resources are wasted. Just like the Welfare system makes for bad investment of scarce resources and resulting in a negative ROI.
The USDA consists of more than the ERS.
Fregards,
Moron
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.