Now I'm Really Mad at Ethanol Subsidies

OK, I was mad at the waste of tax dollars for ethanol programs that do nothing for the environment or to reduce net fossil fuel consumption.  I was mad that a technology that in no way reduces CO2 production but does introduce radical new land-use-related environmental problems could be sold as an environmental panacea, rather than the corporate welfare it truly is.  I was mad we have decided it is more important to subsidize corn farmers than to continue to provide the world's poor with cheap food.  And I was flabbergasted that Congress could call for production of more corn-based ethanol than is physically possible with our entire corn crop.

But I really am mad now that ethanol subsidies are making craft beers rarer and more expensive to make:

A global shortage of hops, combined with a run-up in barley prices, is
sending a chill through Arizona's craft-beer industry.

The hops shortage threatens to boost prices, cut into profits and close
down brewpubs. It could change the taste and consistency of treasured
local ales.

In Bisbee, "hop heads" already are weaning themselves from Electric
Dave's India Pale Ale. Dave Harvan closed his 7-year-old Electric
Brewing Co. in November, citing the scarcity and high cost of
ingredients.

So why aren't as many farmers growing hops and barley?  Because the government is paying them ridiculous jack to grow corn so we can burn food into our cars:

Papazian attributed the barley prices to ethanol subsidies that have
raised the price of corn, the main ingredient in the alternative fuel.
As a result, farmers have switched to barley for livestock feed, which
has pushed up prices.

The hops situation is more complex. Years of overproduction and low
prices led farmers to replace hops fields with more profitable crops.
Add to that corn subsidies that have caused farmers to replace hops
fields with corn, a drought in Australia that affected yields and heavy
rains in Europe that ruined much of this year's crop.

  • Bearster

    Warren,

    I know you don't mean this, but your first sentence seems to imply that wasting tax dollars to achieve a goal in the name of the environment would be ok. I know you don't mean this, but later in the paragraph you imply that an important moral driver for US agriculture is to provide for the "world's" (does the world own them) poor.

    I think any argument can be made stronger by removing that which undermines in.

    Corn mandates amount to a massive transfer payment scheme from everyone to Archer Daniels Midland and Cargill. It has unintended consequences ranging from causing increases in food prices to bankrupting brewpubs. That's the story, any claims that enviro-labelled goals are "good" notwithstanding.

  • rufus

    How much Barley and Hops do you really think is in A BEER?

    I rather suspect a Poor "Business Model."

  • rufus

    Let's see: One of the newer ethanol plants will use about 39,000 btu's of nat gas, to process a bushel of corn (which was grown using fertilizer that was made by consuming about 30,000btu's of nat gas, and grown with the use of about 5 thousand btu's of diesel.) What's that? About 74,000 btu's of nat gas?

    And, what do we get? Well, we get 3 gallons of ethanol that, used in an optimized engine, will replace 342,000 btu's of gasoline.

    And, CO2? You figure it out.

  • bahser20

    As someone with a substantial interest in this topic on the consumption side, it seems that the hops situation is much more complicated than simple acerage diversion. Apparently the yield and quality of hops produced is extremely sensitive to weather. This has caused a lot of price volitility in the market. In an attempt to stabilize prices, in the past the USDA has established marketing orders, which allowed producers to meet to set levels of aggragate production, as well as allocate shares of the aggragate among producers. (in any other industry the term for this is felony, but I digress)

    Hops are grown to add so-called alpha resins to beer to create the traditional bitter taste. Most brewers pay a premium for hops with higher alpha content, since they need to add less to produce the same taste levels, with lower handling costs due to a smaller volume of material to transport and store. Since the marketing orders allocated production by the ton, it made sense for growers to plant the highest alpha content varieties they could find, and create new varieties with even higher alpha content.

    When the last marketing order expired, some of the growers attempted to create a new program that would have allocated production based on alpha content in addition to gross tonnage. This was opposed by many of the most efficient growers, since they did not want their ability to produce limited by the government. In 2004, the USDA refused to impose a new marketing order, and allow the market to set prices and production levels.

    It seems to me that it's the fallout from the failure to establish the new marketing order program that has led to the acreage diversion first, with the corn price boost as a pleasant, but co-incidental side effect.

  • http://thegameiam.livejournal.com David B

    I think the best use for corn-derived ethanol is bourbon.

  • Craig

    John McCain said in one of the debates that he love ethanol, and that he "has a glass of ethanol every morning." Funny! I'm not a big fan, but maybe if he's elected he'll end this madness.