How Al Gore is Getting Fat Off a Starving World

Always read to the end of the report; that’s where the good stuff is. Case in point an obscure little stat was released on Friday with the not-quite-tantalizing title “Agricultural Prices”. Tables and tables of words with numbers after them – soybeans, price per bushel – wheat, percentage change year over year – imported fruits…exported nuts…you get the idea.

If you do the shopping for your family as I do (don’t snicker, I also chop down trees and bench 300), you’re probably not surprised to find out that agricultural prices rose quite rapidly in May. In fact the monthly price changes are beginning to look disturbingly like annual price changes. This is not good. But the really interesting stuff is in the details. Foods seem to be rising in price in direct proportion to their proximity to ethanol subsidies. Feed grain is up an amazing 41% in the past year. Fruit and nuts are down 3% over the same period. Why? Because we turn corn into ethanol, but we don’t do the same with walnuts or bananas.

Here in the center of the world economy, this means high food prices. Out at the edges, it means famine. When food gets expensive here, we tap into a little more credit, or perhaps skip restaurants for awhile. When food gets expensive in Malaysia, they riot in the streets. When food gets too expensive in Cape Town, some men take to the streets in violent roving bands, maiming and murdering refugees who’ve come from other countries in search of something to eat.

You’ve heard the arguments, some put forward, sadly, by some in this administration, by their big business welfare queens in the corn states, and by ultra-smug wing of the environmental movement. They say that very little of the jump in food prices comes from ethanol, that it’s mostly energy prices, or a weak dollar, or general inflation. This is why we have to read to the end of the report, so that we can recognize nonsense when we hear it. Why would general inflation cause corn to a rate of doubling every two years, and yet leave meat, fruit, nut and some vegetable prices dropping? How could high energy prices do that? Don’t vegetable farmers use tractors? Don’t sugar farmers fuel their tractors with the same diesel? Don’t the trucks and trains which deliver almonds run on the same kinds of fuel as the ones which deliver grains?

It’s not a general inflation problem; it’s a problem of political corruption. America’s first presidential primary happens to be in Iowa. That gives ethanol first dibs at the pork barrel. Add Republican farm voters to Democratic environmentalists, shake vigorously and you get a brew called ethanol. The farmers get rich on taxpayer subsidies, the venture capitalists who focus on alternative fuels (I’m looking in your direction, Mr. Gore) get fat on profits. Good deal for everybody, except people who happen to eat food.

It’s not the dollar either. Yes, the dollar is a problem; the Treasury Secretary and the Fed have neglected it. But the falling dollar isn’t causing these price spikes. First of all, the world’s hungry don’t trade in dollars. They trade in Ringits, Bahts, Yuan, Rubles and Rands. Foreigners are not starving because the dollar lost value. In fact, the drop in the dollar helps them. And it’s not even the dollar that’s the problem here in America either. We generally export food, especially grains. But Americans are getting hit with the worst price spikes in precisely those agricultural sectors where we supply our own food. We’re the bread basket of the world! I’m sorry, but when I buy high fructose corn syrup from Iowa, it doesn’t involve the foreign exchange markets. The problem isn’t the dollar – the problem is that we’re burning food. We’re taking carbohydrates which would have gone into someone’s stomach, chemically altering them and putting them into our gas tanks instead. One SUV fill-up is roughly the same amount of calories as it takes to sustain a man, woman or a child – for a year. I believe that future generations will look back in history at the hungry of this world, and the preening self-satisfaction of the ethanol lobby and call it what it is, a crime against humanity.

This article is a load of crap.

There were hungry people long before ethanol became in vogue. I suspect that corn is not a huge part of their diet anyhow.

We have sent billions of dollars of free food aid to Africa and they are still starving.

Corn prices were $2.00 a bushel for most of the 60’s, 70’s and 80’s, not even keeping close to rising equal to the inflation rate.

Much of the corn consumed in America is made into corn syrup, which is consumed in Coke, Pepsi,RC and other cola type drinks. From the looks of the obese population, cutting back on that consumption might not be a bad thing.

Kelloggs buys corn for say $5.00 a bushel. 56 pounds. Sells approximately 70 boxes of corn flakes for $4.00 a box.
Thats Kelloggs making $280.00 a bushel from the farmers $5.00.
And the article complains that farmers are getting wealthy??? Looks like the consumer’s end is where the mark up is, not from the producers side of the financial picture.

Farmers traditionally sell their grain to brokers and have no control over the price they recieve. They are unable to pass on increases in fuel, fertilizer, transportation and equipment, and increased property taxes. Even the cost of storage has to be accounted for. Many years farmers made no money, and the crops rotted on the ground because there was not enough demand. The government subsidy kept them afloat. But now they are making some money and the subsidy is no longer available to grow corn. In fact, pressure from the EU and the Worldly fair traders on government subsidys is causing those subsidys to be reduced or eliminated so the rest of the World can “compete” on a fair and equal pricing system.

A farmer friend told me last week that it costs $178.00 an acre “JUST FOR FERTILIZER” to grow corn. A #50 pound bag of seed corn is $60.00 and plants an average of 3 acres. The tractor passes over the field at least twice before the crop is planted. Diesel fuel is $4.69 a gallon for the tractors. One more pass over after the crop germinates to keep the soil loose. One more pass over with the combine to harvest. Then the truck bill to the terminal.

Looks like a very substantial investment just to plant corn. And there are no guarantees that the crop wont be wiped out by drought, hail, flood, insects etc after the investment.

Another farm friend never even combined his corn crop last fall because the storage bins were full and there was no place to take the crop.

Corn prices will continue to go up because the cost of planting is too high. The planting expenses, and the fertilizer costs, are all tied into the cost of transportation and oil. If it costs over $200.00 an acre just to plant corn, without accounting for the other expenses like fuel, equipment, taxes, with no guarantees on income, most farmers are planting soybeans.

Also here in the midwest, there has been so much rain any corn planted from now on will have reduced yields.

Health and Energy

The Immorality of Ethanol

“The ethanol mandates that have been foisted on American taxpayers are not just fiscal insanity, they are immoral. Congress has created a system of subsidies and mandates that requires the U.S. to burn food to make motor fuel, at a time when there is a global shortage of food and no global shortage of motor fuel.”

Science Daily

Grist.org

....and drumroll please.....

I R Squared

(snip of above below)

“So, where did the claim that ethanol is more energy efficient originate? I believe it originates with researchers from Argonne National Laboratory, who developed a model (GREET) that is used to determine the energy inputs to turn crude oil into products (4). Since it will take some amount of energy to refine a barrel of crude oil, by definition the efficiency is less than 100% in the way they measured it. For example, if I have 1 BTU of energy, but it took .2 BTUs to turn it into a useable form, then the efficiency is 80%. This is the kind of calculation people use to show that the gasoline efficiency is less than 100%. However, ethanol is not measured in the same way. Look again at the example from the USDA paper, and lets do the equivalent calculation for ethanol. In that case, we got 98,333 BTUs out of the process, but we had to input 77,228 to get it out. In this case, comparing apples to apples, the efficiency of producing ethanol is just 21%. Again, gasoline is about 4 times higher.

OK, so Argonne originated the calculation. But are they really at fault here? Yes, they are. Not only did they promote the efficiency calculation for petroleum products with their GREET model, but they have proceeded to make apples and oranges comparisons in order to show ethanol in a positive light. They have themselves muddied the waters. Michael Wang, from Argonne, (and author of the GREET model) made a remarkable claim last September at The 15th Annual Symposium on Alcohol Fuels in San Diego (5). On his 4th slide , he claimed that it takes 0.74 MMBTU to make 1 MMBTU of ethanol, but 1.23 MMBTU to make 1 MMBTU of gasoline. That simply can’t be correct, as the calculations in the preceding paragraphs have shown.

Not only is his claim incorrect, but it is terribly irresponsible for someone from a government agency to make such a claim. I don’t know whether he is being intentionally misleading, but it certainly looks that way. Wang is also the co-author of the earlier USDA studies that I have critiqued and shown to be full of errors and misleading arguments. These people are publishing articles that bypass the peer review process designed to ferret out these kinds of blatant errors. I suspect a politically driven agenda in which they are putting out intentionally misleading information.

One of the reasons I haven’t written this up already, is that 2 weeks ago I sent an e-mail to Wang bringing this error to his attention. I immediately got an auto-reply saying that he was out of the office until March 31st. I have given him a week to reply and explain himself, but he has not done so. Therefore, at this time I must conclude that he knows the calculation is in error, but does not wish to address it. In the interim, ethanol proponents everywhere are pushing this false information in an effort to boost support for ethanol.

Look at the Minnesota Department of Agriculture claim again: "the energy yield of ethanol is (1.34/0.74) or 81 percent greater than the comparable yield for gasoline". If the energy balance was really this good for ethanol and that bad for gasoline, why would anyone ever make gasoline? Where would the economics be? Why would ethanol need subsidies to compete? It should be clear that the proponents in this case are promoting false information.”

The last time I posted this I got lambasted by pro-Cornballs, so here it goes again! (Donning FLAK jacket and helmet....)

Article is crap—First off farmers get no subsidies,
or price supports, Big Oil get a tax credit, but it is
a small fraction of the credits that they get for all their
oil operations here and abroad.

There is no corn shortage, as farmers have increased production the last 10 years a third for food and feed,
plus the amount going toward ethanol/high protein feed
production. And that high protein feed by the way makes
over 15 billion lbs of meat. It is more valuable than
the ethanol, which in practical terms is the by-product.

Now there is a higher corn price due to improperly
regulated speculation in the farm commodities markets,
and that is what is causing high prices. And in oil
also which has driven up farmers costs to raise anything
by twice as much as two years ago......But action is
going to be taken to try to rein in speculators
as following news excerpt mentions——

“Citing people who have been briefed about the agency’s plans, the Times said that the new measures would be announced by the Commodity Futures Trading Commission, which oversees exchanges central to the establishment of prices for commodities ranging from corn to crude oil worldwide.
Facing mounting political pressure and farm industry demands, the CFTC is expected to outline measures to address the role played by new financial investors in the futures markets, the Times said, in particular those who invest through commodity index funds, which have grown from a $13 billion stake in 2003 to some $250 billion this year, it said.
Index funds differ from traditional commodity investors in that they do not sell commodity futures, but only buy them, the Times said. Critics say this has helped drive up commodity prices artificially.””

All farmers around here want the wild speculation
that they know has cased the problems, to be reined in
as they don’t want starving people, and they also know
that when speculated price gets too high that there will
be be a crash back down to prices lower than a third the
cost to raise crops. Then there won’t be any of them left
to raise any.....Ed Hubel

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