Posted on 02/02/2007 4:34:02 PM PST by blam
Gas tanks could guzzle half of U.S. corn yields
Janet Raloff
In his Jan. 23 State of the Union Address, President Bush called for ramping up production of biofuels, such as ethanol from corn, to help cut U.S. dependency on foreign oil. A new report describes an ethanol-industry expansion already under way that is poised to boost corn-ethanol production by 160 percent within 2 years.
However, such an increase may carry a high cost, says the report's author, agricultural economist Lester Brown of the Earth Policy Institute in Washington, D.C.
The 116 existing U.S. ethanol-fuel distilleries now use 53 million tons of corn. The 90 distilleries under or planned for construction would boost that demand to 139 million metric tons of corn, half of the projected 2008 U.S. harvest.
U.S. farmers produce 40 percent of the world's corn and export 55 million tons. Brown argues that any change in the crop's availability for food and feed will propel world grain prices—including those of wheat and rice—"to levels never seen before." He explains, "These three crops compete for much of the same land."
Oregon State University came out with a study about two days ago. The cost of producing ethanol is 7.5 times the cost of petroleum fuel.
Oregon has two ethanol plants under construction. Irrigation water use will climb accordingly.
Federal judges have been taking water rights away from some Oregon farmers for "environmental" reasons.
Get the popcorn out (oops price is up)
I know about simple economics. If you can't do it without a subsidy you shouldn't do it. If it's such a great idea you don't need the government to "encourage" corn production.
Farmers would be able to farm without subsidies if the consumer weren't such a bunch of whiners about the cost of food. Whiners who whine to politicians, I might add.
I've got a news flash for you: there is a very deliberate agenda, and has been for years, in DC called the 'cheap food' agenda. Policymakers have for years been obsessed with making sure food is cheap, cheap, cheap, and they view subsidies as a viable way to keep food cheap. A big component of the USDA's budget has nothing to do with farming and is the food stamp program. The USDA is in place to assure cheap food. Any "help" the USDA gives to ad producers seems rather secondary to making sure that food is cheap.
Could the US farmer survive without subsidies? Yes.
Will the US farmer be able to achieve a market without subsidies? Not likely. The majority of farmers don't accept subsidies as it is now. Ag subsidies are concentrated in a very few states, across a rather top-heavy group of producers. Most of the smaller producers don't shake down Uncle Sammy for the big bucks. If you want to see the most eye-opening shake-downs, don't look at corn, look at rice.
These subsidies insure over-production and keep ag commodity prices artificially low, as it shown by the absurdly low price for corn at $4/bu compared to inflation-adjusted corn prices. People who like to spout about the free market and farming obviously don't know their posterior from a warm rock, because commodity producers are price takers, not price makers. If a farmer's input costs go up, but there is an excess of his commodity in the market, he doesn't get to raise his prices if he wants to sell his crop at all. He gets to take a loss.
Likewise, if the market is suddenly out of a commodity, prices can go up very, very quickly. When there is no hay to sell, I can charge anything I want for hay. It doesn't mean that people will like paying it, but when animals have to eat and there isn't anything else readily available, sure, I could price gouge. But there's the flip side: As soon as a commodity market has high prices, lots of producers rush in to fill that market. Prices then come down even more quickly as soon as the commodity shortage is filled. Commodities are like that, and if you'd like an example, look at what happened following "Freedom to Farm" passed in 1996.
A fair price for something is what people are willing to pay for it. And since you're slinging around such ad hominem nonsense as "farmer Vlad", let's just observe the noise we're already hearing from people on this thread who get their undershorts in a twist that farmers might be growing something other than food is pretty hilarious stuff, as tho were farmers are mere serfs for you people who wouldn't know dent corn from white corn if we laid it out on a table in front of you.
Here's a newsflash for y'all: farming is a business. We farmers are in no way beholden to you, the public any more than any other business sector is. You want farmers off subsidies? Fine. The vast majority of farmers would like to dispense with subsidies too.
Let's say that farmers were given a choice:
1. Keep growing food commodities at prices kept artificially low with subsidies by policymakers in DC obsessed with "feeding the poor." I might NB that "feeding the poor" has now resulted in such nonsense as talk of an "obesity epidemic" (as tho overeating were in some way a transmissible disease) and there are a great number of the "poor" who could do with skipping a few weeks' worth of meals.
2. Grow fuel, for which people seem to be willing to pay increased prices that more than cover the costs of production, and therefore enable a farmer to withdraw from any subsidy programs. The public grumbles, but their actions don't match their words. They're still buying and driving vehicles that get low gas mileage. They're still consuming fuel at a voracious rate.
And let's say farmers took door #2.
What are we going to hear from the public? I think we already have a pretty good sampling here on FR, and it is that conservatives like ag subsidies, or at least want what results from ag subsidies, because I'm noticing that an increasing number of y'all are bellyaching about increasing food prices. If you want to end ag subsidies, that's fine, but be aware that you will pay more for food. Period, end of discussion, because it is the subsidies that have kept the price of food low since WWII and especially since the "Great Society" of the 60's.
As I pointed out on another thread, it helps to know where your food dollars are going if you're going to bellyache effectively. Let's take again the case of a box of corn flakes. How much money does a corn farmer receive for the corn in corn flakes?
About 16 cents at $4/bu corn, if we're using the 36-oz (net) box of Kellogg's corn flakes.
How much are you paying for that box, hmmm? A lot more than 16 cents.
The farmer was receiving about 11 cents for the corn in that box before corn went up to $4/bu recently.
You're going to tell me, with a straight face, that the farmer is breaking your balls (to quote Eric Cartman) by getting a five cents more per box of cornflakes?
Yea, right.
There you have your choice: food with subsidies or fuel without. Don't bother trying to inject other choices into the debate. The policymakers in DC have made it clear that they want cheap food. The public has made it clear (even here on FR) that they want free food and they consider it (in some cases) "immoral" to choose between food and fuel.
The free market that conservatives like to keep harping upon has made is clear that the public will pay increased prices for fuel. The same market has made it clear that consumers whine and complain when they have to pay a bit more for food.
That's the future the farmer sees in front of him, and many farmers are already voting with their feet to head to the market where they will receive a return above the costs of production for their output.
So: when you consumers indicate via your pocketbooks that you value food as much as you value fuel, guess what? Farmers will grow food before they grow fuel.
Hydrogen won't be produced cheaply, no matter how it is produced. This is because hydrogen transport and storage will raise the cost of this wonder-fuel of the future beyond viable price levels.
The only reason why hydrogen gets any hearing at all is because the state of science and engineering education in the general public is atrocious and going downhill quickly.
It better not leave a single "walking steak" hungry, or I'm going to get very upset!
Mark
Makes you want to slap a spotted owl, doesn't it?
Mark
Next meal, eat a can of corn. The whole can.
No thanks. You see, AFAIC, corn's not food. Corn is what food eats. I prefer my corn medium rare, just a bit of salt and pepper, no steak sauce, thank you.
BTW, EVERYTHING is of "limited nutritional value." You can't live your entire life on just one sort of food. People need a combination of foods for a healthy life. And just because we can't digest whole kernels of corn, why do you say we shouldn't eat it. Corn meal and corn flower are excellent providers of nutrition. Are you telling me that when you eat a nut, you also eat the shell? Or when you have a steak, you eat the entire cow, skin, hooves, bones, guts and all (well, if you're eating hot dogs, you may very well be doing just that)
Mark
You forgot the best part. Natural gas is far more expensive to use for generating electricity than coal. So it drives prices of electricity up, and there's less supply for home heating, so the cost of natural gas for home use goes up too. So EVERYONE is now paying more for home power and heat!
Mark
Or eat one for dinner....I hear they taste just like chicken.
If I remember correctly, burning ethanol also produces soot particles.
Be prepared to replace your spark plugs (or clean the fouling) about every other day.
Mark
You know, at first I was going to post, "It makes you want to slap an environmentalist, and eat a spotted owl: I hear they taste like bald eagle", but I edited it down. :-)
Mark
You're right -- even the simplest diets require at least two groups of foods.
Humans can go quite a while on a legume/rice diet, as boring as it might get. But you can't go very far on legumes only or cultivated grains only.
Goodbye my cornflakes! I guess it won't be long till they will be served in only the best restaurants in town!
"Farmers would be able to farm without subsidies if the consumer weren't such a bunch of whiners about the cost of food."
Yes, those pesky consumers and their free choice within a capitalist system are rather annoying aren't they, Vlad.
"I've got a news flash for you: there is a very deliberate agenda, and has been for years, in DC called the 'cheap food' agenda. Policymakers have for years been obsessed with making sure food is cheap, cheap, cheap, and they view subsidies as a viable way to keep food cheap"
Ok, explain the price of a gallon of milk?
"Here's a newsflash for y'all: farming is a business. We farmers are in no way beholden to you, the public any more than any other business sector is. You want farmers off subsidies? Fine. The vast majority of farmers would like to dispense with subsidies too. "
Farming cannot survive and not depopulate large tracts of the midwest without subsidies. Farmers are most certainly beholden to the taxpayer as long as they receive said subsidies. Farming is just another government job in far too many cases. Paid for not doing, rather than doing.
No, pesky consumer groups who whine about the price of food and demand the Congress "do something" are the worst. Congress continues to intrude where they're not wanted in ag, mostly at the direction of idiot consumers. Latest intrusion that wasn't wanted and is going to further reduce farm profits is the USDA's Animal ID drive.
To milk prices:
Milk, priced at the farm, is dirt cheap.
Once again, you seem content to display your vast ignorance of prices paid to the farmer. So, let's go to the NASS and get the prices paid recently for milk to the dairyman, shall we?
http://usda.mannlib.cornell.edu/usda/current/AgriPric/AgriPric-01-31-2007.txt
Dig down. You'll find the numbers in there. Noodle around in the whole report. You might learn something.
Fluid-grade milk prices to the farmer, averaged out across the US, reported as of Dec 1st, 2006, were $14.10 per hundredweight. I know a "100 pounds of liquid" unit is a silly way to report fluid milk production, but then, hey, this is the US government we're talking about here. FWIW, a 'hundredweight' of milk is 11.63 gallons of milk.
OK, so your handle says you're an RF engineer. I'm was a EE before becoming a farmer, so I know you can do math. What does $14.10/100lbs of milk come down to for the farmer, on a per-gallon basis, eh?
I come up with $1.21/gallon.
You're being charged, what, $3+ per gallon?
Guess what the farmer's break-even price in in smaller dairies, especially in the northeast?
About $15/cwt. Not $14.10. Over $15.
Some western producers with huge economies of scale can get by on $13/cwt.
What to know who is making money from you on a gallon of milk? The retailer, that's who. Not even the middleman is making much on fluid milk. Your local retail store is pulling in a nice, tidy profit on each gallon - in California, the largest dairy production state, between 40 to 45% of the price you pay in the store goes to the retailer. The rest goes to the fluid milk processor and then the dairy farmer.
Here's a nice little circular from South Dakota on their dairy industry, which mirrors much of the dairy industry in the west: increasing herd size, fewer operations, leaner, meaner and in a ruthless drive to reduce costs and make the operation work on sheer volume:
http://agbiopubs.sdstate.edu/articles/FS925-I.pdf
Here's a 2004 article from the northeast, showing the failing economics of small dairy operations at current milk prices:
http://www.fmpc.uconn.edu/research/milk/courant050304.pdf
NB the farmer who sold off most of his herd and is now making a tidy bundle on 'creamline' milk: what is his price per gallon?
About twice what the commodity milk is in the stores - $6/gal. NB that he's now in an unregulated milk market, just what you claim to want.
"Milk, priced at the farm, is dirt cheap"
This is true. I absolutely agree.
But your point was that the government intervened to make sure food prices were cheap, because that is what consumers demanded. In the case of milk - it simply is not true. Milk is a true staple, a basic, in every household in america, yet there is no consumer backlash no charges of "gouging" on the cost of milk.
My point being that it is the government intervention that is keeping the price of milk high.....and subsidies that keep the price to farmers low by encouraging more dairy producers than are necessary.
The price of milk could be easily affected by political pressure if people cared enough to do so.
Your "idiot consumer" complaining to congress wanting "cheap food" simply doesn't exist. Those that are most vulnerable to prices get food stamps, the rest either can afford it no matter what the price, or simply choose the least expensive options at the grocery store.
I don't even agree with the premise that food is universally "cheap". If you compare a bushel of corn today versus 30 years ago, as you did, you are not telling the whole story with regards to farming.
Your disdain for "the consumer" - your ultimate customers futher undermines your argument that somehow you are ready for market forces to rule agriculture....NOBODY who grows, makes or creates a product or service would show such disdain. That you do tells me you are not anywhere close to competing in a free and open market - government subsidies and government jobs do that to people. "The customer is always right" while somewhat cliche is also a necessary attitude for being successful in a free market.
The point about ethanol - government giveth and government taketh away....the present ethanol fad will not last- so farmers that depend on the demand for corn to be on the increase in a sustainable manner are delusional.
The political winds on ethanol could easily shift, leaving demand far below ethanol-driven supplies. I am sure farmers will then be there with hands out wanting the government to pay them for NOT producing things that can be converted to ethanol, just like they always are, complaining that some how the "family farm" is a victim.
As you said "farming is a business"....and like many business interests, they lobby like hell to keep their subsidies. They should not be insulated from being driven out of business by more efficient producers like they are now.
I don't see why it should be any more expensive in the long run than storage and transport of gasoline. Yes, there will be large startup costs in the beginning, but once the infrastructure is in place, I see no major source of high costs.
From the scientists I know, the major cost issue is hydrogen production, not the transport and storage. Conventional eletrolysis involves huge loss of energy, but a solution to that problem exists, at least in theory.
The only reason why hydrogen gets any hearing at all is because the state of science and engineering education in the general public is atrocious and going downhill quickly.
Really? So you think the engineers at Ford, GM, and BMW working on this have atrocious education? That's a pretty strong statement.
Liquid hydrogen cannot be run through pipelines across country. Look up the specs on liquid H2 and how cold it has to be. You'd have to transport the fuel everywhere in cryo tanks.
All the cryo tanks need to have vents on them to allow the vent the H2 that converts to gas as the tank heats up. If we're going to have liquid H2 on the actual car fuel tanks, the cars will have to have vents.
Right now, there is work being done on using metal hydrides to store H2 fuel in cars, but that's quite a ways down the road.
As for my statement of science and engineering education in this country: the reason why I say that is that anyone who believes hydrogen is a "fuel" is clearly not paying attention. All hydrogen will ever be is an energy transport mechanism, like electricity, only with higher losses. There is no free, exploitable source of H2 on this planet, period. All H2 that could be put into the car fleet fuel system would have to be generated from one manner or other.
My contention in auto mileage issues has always been the same. If we were listening to actual engineers instead of a bunch of environmental activists, lawyers and politicians, we would be looking at diesel engines in our car fleet much, much harder, and we wouldn't be deliberately making it more difficult to import highly efficient diesel engines by adopting California's nutjob stance on NOx and soot emissions.
We could increase the fleet fuel efficiency of the US auto fleet by 25% or more without any new "groundbreaking science" by simply adopting recent, highly efficient diesel engines. That's it. That would be all that is required. But the environmentalists are in search of perfection, and as every engineer will tell you, perfection is the enemy of the practical, achievable solution. The reason why we don't adopt practical solutions is because the vast majority of the US population, and 99%+ of our politicians, are lacking in fundamental science, mathematics and engineering that would enable them to formulate better policy and not be buffaloed by the idiots in the environmental movement.
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