The Corn-Ethanol Industrial Complex
FORBES -- Ethanol, once heralded as the homegrown Nicorette gum of America's oil addiction, is getting a second look from lawmakers suddenly concerned about the unintended consequences of merging the fuel and food markets.
Thanks in part to a wave of well-intentioned Washington policies, corn previously consumed by just people and animals now feeds cars as well. The goal of the government's Renewable Fuels Standard is for 9 billion gallons of renewable fuel to be produced this year--legislation calls for 36 billion gallons by 2022.
In addition to the goals of the Renewable Fuels Standard, blenders--who help create the stuff--receive a 51 cent-per-gallon tax credit, increasing profits and the amount of ethanol they produce. The industry is further buoyed by a 54 cent-per-gallon import tariff, which limits competition from foreign ethanol producers.
No wonder more and more of the corn harvest is headed for your car (see chart above), and the cost of bread is on the rise.
15 Comments:
lawmakers suddenly concerned about the unintended consequences of merging the fuel and food markets.
Hah, "unintended consequences"...
The consequences are exactly what the farm lobby intended, which is why they pushed ethanol in the first place.
Mr. Gartman is not taking DDGS (Distillers Dried Grains) into consideration. When you make corn ethanol you are, actually, only using the starch out of the kernel. For every bushel (56 lbs) you refine you get back 17.5 lbs of high protein cattle feed (80% of corn is used for cattle feed.)
These DDGS, as they are called, are approx 33% more efficient at weight gain than rolled corn. The more advanced plants also produce ash soil supplements, CO2, corn oil, etc., but we'll save that for another day.
Anyway, a thumbnail is that you get back 40% of your cattle feeding ability in the form of DDGS.
So, the numbers are: 151 bu/acre X 2.8 gal/bu Divided by .60 = 704 gallons/acre. 9 Billion divided by 704 = 12.8 million acres Divided by 85 million acres of corn = 15% of corn crop to produce 9 Billion Gallons of Etanol.
BTW, of 1.2 Billion acres of Arable land in the U.S. we only rowcrop about 246 million acres. We pay farmers NOT to farm 34 Million Acres.
Enough with the numbers. Wanna see some Pretty Pictures? Some "Really Pretty" Pictures?
The Old Gal's Lookin Pretty GOOD :)
rufus...that's a stellar link.
Thanks, Shawn; I've always enjoyed pikturs of pretty girls. :)
Even without Ethanol, because of huge subsidies for corn, it is already used way too much in processed foods and feed. Most stock animals cannot properly digest corn feed and thus need huge amounts of antibiotics to alleviate the associated health problems. This is why over half of all antibiotics administered are given to livestock.
This is also why high fructose corn syrup is in almost all processed foods. Many believe that this is a major contributor to the obesity of America. This leads to, you guess it, huge health care expenditure that people now want to government to manage. One huge government spending program leads to the creation of another one.
Unintended consequences...
Heh,
First verified Polar Bear death from Global, uh . . . . Climate Change. :)
Now, we know Where All the Polar Ice Went.
rufus, very good point: "BTW, of 1.2 Billion acres of Arable land in the U.S. we only rowcrop about 246 million acres. We pay farmers NOT to farm 34 Million Acres"...
We probably waste more tax dollars this way than we do floating ethanol plants...
I'm curious as to the definition of, "arable land"...
I mean how much of that land would the tree huggers and root kissers claim are being occupied by one particular but endangered species of noisome horsefly or something equally silly?
Has corn production stayed the same during the years indicated?
All of it?
Seriously, Arable land is non-forested land that is suitable for agriculture. The top of "Old Smokey," and the Mohave Desert wouldn't qualify. Your neighbor's meadow, with a few trees, and a couple of cows grazing on it would.
We have an enormous amount of land that could be farmed if we had a market for the products. Our biggest resource is "marginal" land that would be great for sorghum, switchgrass, etc. We could probably ramp up a couple of Hundred Million Acres before breakfast.
No, from memory we harvested about 69 Million Acres in 06', 87 Million Acres last year, and will probably do 85 Million Acres this year.
Yields also bounce around; but, the trend is "Up" about 4%/yr.
BTW, Juandos, the ethanol plants are "Big" winners for the economy. That little tax credit is overwhelmed by the $11 Billion/yr that the higher prices are saving us on price supports.
Also, the sales taxes, payroll taxes, employment, etc that the industry is generating (and, keeping at home, I might add) are probably paying us back 10:1.
rufus says: "Seriously, Arable land is non-forested land that is suitable for agriculture"...
Oh that I understand, its the cranks who have a luddite agenda and what they'll try to do is what I'm wondering about...
"That little tax credit is overwhelmed by the $11 Billion/yr that the higher prices are saving us on price supports"...
Very interesting point...
Same for the upsides of more employed people and property taxes...
Thanks...
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I noted at least part of this issue over 5 years ago, when ethanol was first being heavily pushed. I hadn't really expected much issue on the domestic front, but it was clear that it would mean that excess production, having once been either given away gratis to other starving nations, or at least sold at low prices on the world market, would now become fuel, instead. The obvious moral question of feeding starving people or driving somewhere was blatantly a problem none of the promoters were spending any time considering.
> We have an enormous amount of land that could be farmed if we had a market for the products.
Rufus, not to disagree with your general premise, but modern ag is moderately high energy use -- which makes growing corn to convert it to gasohol one of the more lidicrously stupid examples of government subsidization possible.
The net energy derived from growing corn, processing it into gasohol, and *then* using it for fuel is likely to be negative, and is certainly marginal at best.
The primary advantage of growing corn for fuel is to fatten the pockets of a narrow economic class which probably doesn't need more fat pockets (not to suggest I object to them having fat pockets, I just object to subsidizing their fat pockets at my expense).
I'm still on the fence about biowaste-derived gasohol. That may be worth doing, although I doubt it. I'd want to see the longer-term effects of gasohol usage on existing functional engines, as well as specifically gasohol-oriented ones, for one thing. The actual long-term numbers on "real use" vehicles using biowaste gasohol would also be worthwhile.
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Bloody, how long have cadillacs been running on "Premium" gas? It has, in most cases, contained 10% ethanol ever since the end of Lead as an additive.
In the real, honest to goodness, overall scheme of things ten or twenty percent ethanol blends ain't no big thang. At least from a cattle feed/land availability standpoint. It might be a pretty big thing when it comes to holding fuel prices down, though.
The thing I like about the Cane/Sweet Sorghum/Tropical Maize deal, though, is it's NOT very energy intensive, and will mostly take place on marginal/underused lands. It's also local; I like that.
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