Comments on: Now I’m Really Mad at Ethanol Subsidies

By: Craig

Craig — Mon, 07 Jan 2008 05:41:24 +0000

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.

By: David B

David B — Sun, 06 Jan 2008 17:47:08 +0000

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

By: bahser20

bahser20 — Sun, 06 Jan 2008 05:11:19 +0000

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.

By: rufus

rufus — Sun, 06 Jan 2008 00:51:06 +0000

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.

By: rufus

rufus — Sun, 06 Jan 2008 00:34:21 +0000

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

I rather suspect a Poor "Business Model."

By: Bearster

Bearster — Sat, 05 Jan 2008 03:24:32 +0000

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.