The ethanol food crisis

[GliderGuider]

This article is by a conservative Canadian columnist I normally despise. This time he gets it right.

The ethanol food crisis

The latest "science" report from the Intergovernmental Panel on Climate Change landed Friday, but it contains not a word on the latest climate-science fiasco. Somewhere there should have been a typical IPCC alarm-riddled sentence to alert us to a very real and immediate climate crisis: the ethanol-food disaster.

As the IPCC might have said: "As a result of misguided attempts to mitigate the global climate-change scare we've created, it is extremely likely (with a 99% degree of certainty) that governments will introduce energy-control programs and subsidy regimes for biofuels and other products that have a 70% chance of bringing chaos to other markets, such as food supply. It is very likely such policies, including massive subsidies for corn and mandated ethanol use, will cause prices to rise by as much as 50% and disrupt basic distribution networks, triggering a chain reaction of inflationary forces that would be felt most by vulnerable populations in low-lying urban areas not on the receiving line of massive farm handouts.

On the other hand, there's no need for the IPCC to make such predictions, since all of the above is already happening. Thanks in large part to Bush and Harper government programs to subsidize and support ethanol production, food prices are starting to rise. The Wall Street Journal yesterday reported on soaring crop prices that are boosting food-price inflation all over the world.

One of the chief causes of rising food prices, said the Journal, is new demand for ethanol and biodiesel, energy products that can be made from corn, palm oil, sugar and other crops. Global grain stocks are at their lowest in 30 years. By next year, about 30% of the U.S. grain harvest is likely to be devoted to ethanol production, up from 16% in 2006, says the Journal.

Chinese officials have begun limiting the construction of corn-based ethanol plants to ensure there is enough corn for humans and livestock. The Wall Street Journal reports that analysts believe China has only about 30 million tonnes of corn stockpiled, down from 100 million tonnes 10 years ago.

:banghead:

[jaksavage]

1. Slow down, cliff ahead

so many things can get us
and we don't seem to care

[jpak]

2. Yes, this guy is despicable

Does he realize that "global grain stocks" include wheat, rice, sorghum, millet and small grains other than corn and soybeans - that are not used for biofuels???

nope

Does he realize that corn and soybeans used for biofuels are not removed from the human food chain???

nope

Most of the US corn and soybean crops are used for cattle feed - not people feed. Spent corn distillery mash and pressed oilseed meal are...um...high quality cattle feed...and are used as such.

This is something the biofuels haters tend to conveniently forget.

Does he realize that small farmers in Latin America and elsewhere are benefiting from the increase in corn prices - and planting more corn????

nope

Globalization had a far greater negative impact on small marginal corn producers than biofuels production - and, with increased global prices for corn, new small farm income will boost rural economies in the developing world.

Does he realize that???

Finally, where are the bodies?????

:shrug:

[4dsc]

5. Say what??

jpak claims "Most of the US corn and soybean crops are used for cattle feed - not people feed."

Yet people eat the BEEF AND EGGS!! They'll see prices go up as corn prices go up because of ETHANOL!!

[jpak]

6. Distillery mash and pressed oilseed meal ARE livestock feed

and they ARE used to make bacon and eggs and thick burgers.

As corn and soy prices increase - so will corn and soy production, which will stabilize prices.

And the *high* price of gasoline, diesel fuel and natural gas have nothing to do with the recent rise in food prices???

do tell...

[4dsc]

7. Corn is used greatly..

How is Our Corn Crop Used?
(2005/06 Statistics)

Animal Feed
6.1 billion bushels of corn went to feed animals. Your bacon and egg breakfast, glass of milk at lunch, or hamburger for supper were produced with U.S. corn.

* Livestock in Iowa consumed about 550 million bushels of Iowa’s crop. Of that, about 53% went to hogs, 29% to beef cattle, 12% to poultry and 5% to dairy cattle.


http://www.iowacorn.org/cornuse/cornuse_3.html

So out of 11.2 billion bushel of corn, over 50% was used in animal feed.. Now tell us that rising corn prices are not going to effect our food prices again!!

[NickB79]

8. The number I've seen a claim thrown around E/E is that 70% of the food value remains in mash

Extracting ethanol removes the most easily digested sugars from the corn, since the sugars are what is fermented into ethanol. Similarly, the oils in the oilseed mash are high-calorie and thus high-value foodstocks. If the 70% stat is true, that means you are effectively removing a sizable portion of an animal's daily caloric requirement, and would thus have to feed more to make up for that loss. Making up that extra 30% of the caloric requirements lost to ethanol/biodiesel production can add up, especially when you are processing millions of bushels of corn and soybeans.

"As corn and soy prices increase - so will corn and soy production, which will stabilize prices."

This is funny, because right afterwards you state:

"And the *high* price of gasoline, diesel fuel and natural gas have nothing to do with the recent rise in food prices???"

North America is peaking in natural gas production, and world oil production is peaking in oil production. In order to increase corn and soy production in our current farming system, you have to increase use of fuels and fertilizers made from oil and natural gas. Yet, at the same time these commodities are becoming more scarce. As prices for these go up, the costs will have to be passed down the line to the consumers, whether they are ethanol plant owners, livestock ranchers, or me at McDonald's. The high cost of gasoline, diesel, and natural gas AS WELL AS the use of foodstocks into fuel are all driving up food prices.

Finally, check out where they are planning to expand corn production this year. The Dakota's, for example, are greatly increasing corn planting despite corn being a very iffy crop on the dry plains. The southern states that used to plant cotton are converting to corn, despite the fact their soils are poor and require large amounts of fertilizer. In fact, if this link from North Carolina State is accurate: http://www.soil.ncsu.edu/publications/Soilfacts/AG-439-43/fertmgt07-30-021.pdf, corn requires TWICE the nitrogen needed to produce a crop. Table 5 states corn removes 112 lb/acre of N, while cotton only removes 63 lb/acre.

[bananas]

3. He got it wrong, you can continue despising him.

[JohnWxy]

4. pea hits head - methinks the sky must be falling. Cotton acreage down .....

USDA predictions of a 20% decline in acreage planted to cotton may prove to be conservative:

http://agecon2.tamu.edu/people/faculty/robinson-john/plantings2007.html

The 20% decline in cotton plantings opens up more thn 3,000,000 acres to some other crop.


Mid-South cotton producers cutting acres: http://deltafarmpress.com/cotton/070323-cutting-acres/

The analysts ( participating in the Ag Market Network’s March 13 teleconferenc_JW) agree that Mid-South cotton plantings could fall below 3 million acres in 2007, representing a 30 percent decline. Southeast cotton producers are expected to cut acres by 26 percent.

~~
~~
The combination of stagnant cotton prices and a bull market for corn could lead to substantial declines in U.S. planted cotton acreage this spring, says Neeper. “Right now, I’m all the way down to 12.23 million acres, down 20 percent from last year.

"The Southeast is down 26 percent, to 2.48 million acres, the Mid-South is down 30 percent, to 2.97 million acres, Texas, Oklahoma and Kansas are at 6 million acres, down 12 percent, and upland acres in the Far West are 440,000 acres, down 16 percent.
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Most of the farmers getting out of cotton are going into Corn, as the prices are so good now for Corn. Of course once the supply of corn goes up it will have a downward pressure on corn prices. (worried parties should note: cotton is NOT a food crop - unless you are a boll (sp?) weavil.

END OF THE COTTON EXPORT SUBSIDY?

This article doesn't even talk about the possibility that the export subsidies for cotton may come to an end (the Reepublican controlled congress of 2005-06 sent up a bill for Bushters signature ENDING the COTTON EXPORT SUBSIDIES in Feb of 2006. He so far has ignored it. Since cotton growers around the world brought a complaint to the WTO about the U.S.'s use of export subsidies to keep down the price of our cotton exports and the WTO upheld the complaint - if we do not do something about the export subsidies the complaining countries will be free to slap tariffs on our cotton. Either way, cotton could rapidly become quite unprofitable to grow. NOw the total amount of acreage planted in cotton is about 138% of the acreage planted in corn (for ethanol). NOt all the land planted to cotton would be suitable for corn but most of it would be. This will probably turn out to be a big source of additional acreage for corn.

During the ethanol production process virtually all the protein from the corn is captured and is sold as a high value feed supplement. As more of this (Dried Distillers Grains and Solubles) product is produced the prices for it will go down and cattle producers and dairy farmers will become more familiar with it and use more of the product. Thus the DDGS will begin to replace some of the corn previously used for cattle. Thus, The protein in the corn remains in the food chain.

But the main thing is the recent spike in corn prices will be moderated as supplies of corn increase. It's certainly possible that a lot of the increased supplies of corn will come from acreage formerly planted to cotton.


U.S. will grow more corn in 2007 than any time since World War II, thanks to demand for ethanol; prices plummet.

http://money.cnn.com/2007/03/30/news/economy/corn_plantings/index.htm

U.S. farmers plan to grow corn on 90.5 million acres, up 15 percent from 2006, according to an Agriculture Department report issued Friday. That's the most acreage planted with corn since 1944, the last full year of World War II, when 95.5 million acres of corn were planted.

(note if all those 3 million acres being freed up by former cotton farmers were to be planted in corn that would make the acreage increase about 18% over 2006__JW)

"This really points to a record corn crop," said Cristoph Berg, a commodities analyst with F.O. Litch, a commodity research firm.

The news sent corn prices plummeting. The December contract, the first contract that will trade after the fall harvest, fell 20 cents to $3.83 a bushel on the Chicago Board of Trade before trading loss-limiting rules kicked in and prevented prices from falling any lower, a rare occurrence.


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Meanwhile,.... gasoline prices are up http://www.usatoday.com/money/industries/energy/2007-03-29-oil-thu_N.htm

"The nationwide average price of a gallon of regular gasoline, meanwhile, rose Friday to $2.639, highest in 6½ months, according to motor club AAA.

Retail gasoline prices have risen 25 cents in the past month and oil costs are up 17% since the recent low of $56.59 hit March 19. Several analysts said they expect more of the same. "All the pieces are in place for higher prices," Alaron Trading analyst Phil Flynn says. "

[NickB79]

9. Did you read my post above?

What is your opinion of the increased amounts of nitrogen-based fertilizers required for corn over cotton? Does it concern you that replacing cotton with corn will continue to eat up the diminishing amounts of natural gas remaining in the North American continent?