Posted on 04/26/2008 4:36:21 AM PDT by paltz
Reporting on the food crisis in Haiti last week, The Washington Times introduced its readership to the term "Clorox hunger," described as "a hunger so painful it feels like your stomach is being eaten by bleach or battery acid." It's horrifying stuff. But that's what the global food crisis -- which many economists now believe will push 100 million people into "absolute poverty," and which will do far worse to those already below the absolute poverty line -- looks like. Higher food prices mean less food. In America, that's an annoyance. In other countries, that's a death sentence. And it's in no small part our fault.
Somewhere between a quarter and a third of the run-up in prices is the product of increased US demand for biofuels. When you demand a lot more corn for energy, there's less of it for food. And as Tom Philpott notes, "When farmers scramble to plant corn to cash in on the ethanol boom, they plant less of other stuff like soy and even wheat, putting upward pressure on their prices."
So what's with the demand for corn? An article in this month's Foreign Affairs, entitled "How Boifuels Could Starve the Poor," lays it out, and shows how the situation could become much worse:
In the United States and other large economies, the ethanol industry is artificially buoyed by government subsidies, minimum production levels, and tax credits. High oil prices over the past few years have made ethanol naturally competitive, but the U.S. government continues to heavily subsidize corn farmers and ethanol producers. Direct corn subsidies equaled $8.9 billion in 2005. Although these payments will fall in 2006 and 2007 because of high corn prices, they may soon be dwarfed by the panoply of tax credits, grants, and government loans included in energy legislation passed in 2005 and in a pending farm bill designed to support ethanol producers. The federal government already grants ethanol blenders a tax allowance of 51 cents per gallon of ethanol they make, and many states pay out additional subsidies.
Consumption of ethanol in the United States was expected to reach over 6 billion gallons in 2006. (Consumption of biodiesel was expected to be about 250 million gallons.) In 2005, the U.S. government mandated the use of 7.5 billion gallons of biofuels per year by 2012; in early 2007, 37 governors proposed raising that figure to 12 billion gallons by 2010; and last January, President Bush raised it further, to 35 billion gallons by 2017. Six billion gallons of ethanol are needed every year to replace the fuel additive known as MTBE, which is being phased out due to its polluting effects on ground water.
That's just a ton of corn, which means it's a ton of arable land being used for the corn, and it's a ton resources that could be used for food instead going towards biofuels. Of course, corn isn't the only biofuel around. it's not even a very good one. Sugar cane, which Brazil uses, is far superior, but we've slapped a massive tariff on the stuff in order to support our farmers. As the article notes, wood chips and switchgrass are also hopeful substitutes, but lobbying from the corn industry has effectively crushed research into such alternatives.
For awhile, this just seemed a case of inefficient subsidies. A waste of money, to be sure, but little more. Now, however, it's part of Clorox hunger, a contributor to global starvation, suffering, and even death. Now, in other words, it's a human rights issue. If we insist on inefficiently subsidizing massive quantities of corn-based ethanol, hundreds of millions of people will go hungry. As populations grow pained and restless, productivity will suffer, development will slow, stability will erode, governments will be overthrown (there are already food riots wordlwide), and we can expect an increase in civil wars and regional conflicts, which will kill millions more. All because Congress doesn't want to piss off corn farmers.
So, three-quarters or two-thirds of the price increase is NOT due to "demand for biofuels", but to some "other" un-named factor (probably increased oil prices).
The article disproves its own premise.
Algor and the liberals: Burn food, not oil.
Since when?? I haven't seen any indication of any cessation of research into alternatives.
They are doing killing of each other already. Do I have some compassion for innocent people? Yes.
But am I going to give away everything I have so they can continue to fight each other anyhow? No!
There is no desire on my part to send food to a place where people burn the farms and crops and kill the operators. Starvation is of their own doing. I have no compassion. Tuff luck. Sucks to be them.
We have nothing to show for the trillions of dollars of food aid we have sent. In fact, things seem to have gotten worse. Anarchy is never productive. That is the obsticle people are going to have to overcome on their own.
People were starving long before ethanol.
Thanks Paltz, I had the exact same comparison with DDT legislation in mind.
The linked article provides no proof of any of these assertions. And since your original posting says that 3/4 to 2/3 of the price increase is NOT due to such demand, I have to say "b***s***".
What’s even worse is that when free market Bio-technology is introduced to nations who could use it, and their harvests benefit, the watermelon pinkos from Enviro U.S. groups come stomping in saying the bio-tech is bad for the environment, so regulations end up being placed on those nations not to use agricultural bio tech, and their people starve.
Are you aware of the fact that after the corn is crushed for ethanol, the byproduct is used for animal feed? It is not wasted.
There is an awful lot of whining about farmers making money on this site. I suppose everyone else is entitled to make money, but farmers are supposed to feed everyone for less than the TEN PERCENT of the US family budget that goes for food. At current prices, the corn farmer gets 6 cents for the corn in a $3 box of corn flakes. And the cost of fertilizer and fuel has gone up 60% for the farmer in the past 18 months. Many farmers, an aging population, will throw in the towel if that keeps up.
If you don’t like the job the US farmer has done all these years in feeding you and your family, start raising your own food. That should occupy a good portion of your day and cut down on your computer time.
What you say is all fine and dandy regarding free markets. And I agree. So let’s get the stupid subsidies and mandates out of ethanol and see where the market goes.
All the major conservative and libertarian think tanks have done research on the harmful effects ethanol based bio-fuel to the cost of food and gas. I have yet to see any facts backed up from you, and I trust the guys over at Heritage, CATO, The Heartland Institute, and CEI who have been involved in this research for awhile now.
And more corporate farms will continue to grow. The food business is too lucrative for people to just "throw in the towel"...and those who do are gobbled up by someone bigger who is more than willing to do the job and make the scratch.
“There is an awful lot of whining about farmers making money on this site. “
RIGHT ON!!
Not Viable Without Subsidies
Jerry Taylor, a senior fellow at the Cato Institute, explained the economics of ethanol versus petroleum fuels at The Heartland Institute’s March 17 Energy Summit in Chicago. Taylor pointed out that without government subsidies and mandates, there would be no commercial market for ethanol because it would cost roughly $4 to $6 per gallon at the pump.
“Ethanol subsidies are directly draining the wallets of American taxpayers,” Taylor said in an interview after the conference. “Not only that,” Taylor noted, “ethanol subsidies are raising prices for fuel consumers, raising prices for corn consumers, and causing a related rise in the price of numerous other food crops.”
Jake Caldwell, director of policy for the Resources for Global Growth program at the left-leaning Center for American Progress, argued at the Summit that up-front subsidies are a necessary component of the government supporting a fragile ethanol economy until it can stand on its own merits in the free marketplace.
The prices farmers get for beef, corn, soybeans, wheat, or whatever is set by traders at the Chicago Board of Trade.
Just because a farmer has an increased cost of fuel or fertilizer, or property taxes does not mean he is automatically able to pass that cost on by raising his prices. He gets what the commodity traders are willing to pay. Nothing more. A million farmers went broke back in the 1980’s because $2.00 a bushel corn couldn’t pay the bills. There was a surplus of corn then and the price was low because people had more than they could use.
An oversupply of oil kept prices down also. Now there is a shortage because we don’t drill in ANWR and other places.
Oil was $50.00 a barrell a couple years ago. Now it’s $120.00. Demand is up. So is the price, which is set by how much the traders are willing to pay to keep their customers supplied.
On the other hand, at the supermarket end of the spectrum, they can raise their prices by a nickle or dime or dollar for that matter on any item that has the price increased.
Speculators are driving up the prices. Farmers are just stepping up and meeting the demand and gratefully accepting more money for corn, just like the oil companies are gratefully accepting more money for oil products.
And the official government figures on inflation are deceptively misleading. They are not telling us the truth about the real cost of price inflation. This is another classic case of government covering their ass for the benefit of protecting themselves from the wrath of the people. Don’t blame the oil companies or the farmers for inflation. Blame stupid government and especially congress who are always pointing the blame elsewhere. Congress has to vote on the budget. Congress can say no to every government program but they don’t.
People need a lesson on the economics of supply and demand.
It appears the majority are clueless here and elsewhere.
I'm on this forum daily, and I have yet to see a SINGLE actual study with hard numbers posted or linked to. If they're out there, why don't they show up here. And if you've got'em, post'em.
"I have yet to see any facts backed up from you, and I trust the guys over at Heritage, CATO, The Heartland Institute, and CEI who have been involved in this research for awhile now.
You mean like that Heritage Foundation "study" you linked to. Let me quote you a line from one of the footnotes in that "study"----"Our estimate is that the added retail food inflation is an additional 1.2% to 1.8% above what food inflation would be without current higher farm prices."
Now, the authors of that footnote don't define precisely what their percentages are percentages "of", but this COULD be taken to mean that 98% of food inflation is NOT due to "higher farm prices".
My husband says if everyone in the country stopped breathing for 20 min., the environment would be saved. I’m thinking if just Al Gore stopped breathing for 20 min., the environment would be saved.
http://sepp.org/
http://www.heartland.org/Article.cfm?artId=19333&CFID=2799762&CFTOKEN=89473594
http://cei.org/search/node
http://find.cato.org/search?q=ethanol&btnG.x=22&btnG.y=15&btnG=Search&site=cato_all&client=cato_all&restrict=Cato&filter=p&lr=lang_en&output=xml_no_dtd&proxystylesheet=http%3A%2F%2Fwww.cato.org%2Ftemplates%2Fsearch%2Fcato.xslt&getfields=summary
http://search.heritage.org/search?ie=&site=default_collection&output=xml_no_dtd&client=heritageorg&lr=&filter=0&proxystylesheet=heritageorg&getfields=%252A&restrict=Heritage&q=ethanol&x=0&y=0
The ONE link that actually goes to an actual article has zip hard data, and is just as nebulous as the other stuff you linked to. You're batting zero.
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