Congress: We Can't Stop Ourselves From Doing Harm

From the Washington Post, via Tom Nelson, comes a nice summary of the consequences of Congress's addiction to ethanol mandates and subsidies.  The last sentence in particular is one I have warned about for a while on this issue.

To be sure, some farmers in these countries benefit from higher prices.
But many poor countries -- including most in sub-Saharan Africa -- are
net grain importers, says the International Food Policy Research
Institute, a Washington-based think tank. In some of these countries, the poorest of the poor spend 70 percent or more of their budgets on food.
About a third of the population of sub-Saharan Africa is
undernourished, according to the Food and Agriculture Organization of
the United Nations. That proportion has barely changed since the early
1990s. High food prices make gains harder.
...
It's
the extra demand for grains to make biofuels, spurred heavily in the
United States by government tax subsidies and fuel mandates, that has
pushed prices dramatically higher
. The Economist rightly calls
these U.S. government subsidies "reckless." Since 2000, the share of
the U.S. corn crop devoted to ethanol production has increased from
about 6 percent to about 25 percent -- and is still headed up.
...
This
is not a case of unintended consequences. A new generation of
"cellulosic" fuels (made from grasses, crop residue or wood chips)
might deliver benefits, but the adverse effects of corn-based ethanol
were widely anticipated. Government subsidies reflect the careless and
cynical manipulation of worthy public goals for selfish ends. That the
new farm bill may expand the ethanol mandates confirms an old lesson:
Having embraced a giveaway, politicians cannot stop it, no matter how
dubious.

  • rufus

    How good can their opinions be if they get the basic facts wrong. We will use Produce about 6.7 Billion Gallons of Ethanol this year. After allowing for the substitution effect of Distillers Grains this will represent an "Investment" of about 10 Million Acres (out of approx. 90 Million Acres, or about 11% of our corn crop.

    In addition, study, after study, has shown that those poor African Farmers (most of them ARE small, subsistence farmers) are Much More seriously impacted by skyrocketing Petrol Prices than by the price of corn.

    The Economist, also, overlooked the fact that China, the world's Second Largest Corn Producer, suffered a Disastrous Harvest, losing somewhere between 1/3, and 1/2 of their Corn Harvest, and that the EU held 10% of their wheat land out of cultivation.

  • rufus

    It's very important to realize that in order to estimate gallons/acre you MUST take Distillers Grains into account. 1/3 of your corn comes back as DGs, a cattle feed (that's what field corn really is) that's slightly superior to corn.

    This means that you must take the gallons (150 - bu/acre - times 3 - yield of your newer ethanol plants - which are 450/acre, and multiply that number by 3/2. This give a "functional" yield of about 675 Gallons per Acre.

    Also, take into account that the energy (fossil fuel) "efficiency" of the newer ethanol refineries is up to 400% higher than in the older plants. Add to this the new "conservation tillage" techniques that 76% of corn farmers now utilize, and all of the old EROEI numbers are Grossly Obsolete.

  • rufus

    http://www.informaecon.com/NewsReleaseDec10.pdf

    A Good Study on Food Costs:

    Hint: The increased cost of corn accounts for 4% of the rise.