Corn Commentary

Food vs Fuel a “Global Myth”

An op-ed in the Chicago Tribune this week that calls the food versus fuel fight “a global myth.”

“It seems so obvious: With so much corn being turned into fuel, food shortages must inevitably result, and biofuel programs must be the cause. However, that’s completely untrue.”

The increased demand for food from the hundreds of millions of people in China and India rising out of poverty and moving to a more calorie-rich diet affects the price of food the most. Second is the price of fuel.

Set America FreeThe editorial is written by “Energy Victory” author Robert Zubrin and Gal Luft, executive director of the Institute for the Analysis of Global Security, both members of the Set America Free Coalition which is concerned about the national security and economic implications of America’s growing dependence on foreign oil.

They rightly note that the real culprit in high food prices is the Organization of the Petroleum Exporting Countries. “This year, with OPEC-rigged oil prices exceeding $100 a barrel, the U.S. will pay $800 billion for its oil supply, and the world as a whole will pay $3.2 trillion. These figures are both up a factor of 10 from what they were in 1999 and represent a huge regressive tax on the world economy.”

So, rather than shut down biofuel programs, we need to radically augment them, to the point where we can take down the oil cartel. Congress can make this happen by passing a law requiring that all new cars sold in the U.S. be flex-fuel vehicles that can run on any combination of gasoline, ethanol or methanol. The technology costs only about $100 per vehicle.

They conclude, “That, and not blindly accepting the naysayers’ propaganda demanding the preservation of the oil monopoly, should be our course.”

Thanks to Mark Lambert with the Illinois Corn Growers for sending us the story.

Illinois Farmers on Food Prices

Something fun and informative on the Internet:

Why are food prices on the increase?  Illinois Farm Bureau has created a new website to provide consumers with the proper answers.   Farmingforyou.org discusses and explains the five major reasons food prices are on the rise.

The bureau also offers a blog on ethanol here.

Corn Growers Testify on RFS

National Corn Growers Association CEO Rick Tolman offered testimony in support of the national Renewable Fuels Standard during a hearing Tuesday before the House Subcommittee on Energy and Air Quality.

Rick Tolman“This policy has been critical to the growth and economic development of rural America and has added value to our product which for so long has been priced below the cost of production,” Tolman told the subcommittee.

“Recently many critics have questioned the value and consequences of the Renewable Fuels Standard, they are quick to point to biofuels as the primary reason for global food increases,” said Tolman. “A look at the facts surrounding food prices simply doesn’t support that logic. The effects of $120 a barrel oil have far more reaching effects on consumer prices for food. Petroleum is used in virtually every step of the supply chain that begins with the farmer and ends at the consumer’s table. In fact, just 19 cents of every consumer dollar can be attributed to the actual cost of farm products.”

Listen to Tolman’s complete testimony here.
Read his remarks here.

Yo Adrian!

Corn ethanol is starting to look a little bloody and battered lately – a bit like Rocky Balboa at the end of the original 1976 movie.

RockyLike Rocky, corn ethanol has always been “a million to one shot” underdog. Like Apollo Creed, the oil industry is cocky and undefeated. The Renewable Fuels Standard is ethanol’s World Heavyweight Championship. The question now is, will Congress stand by the legislation and let ethanol go all 15 rounds, or will it end the match prematurely?

In the movie, Creed initially takes the fight lightly, but Rocky unexpectedly knocks him down in the first round and the match turns intense. Sounds a bit like what is happening here. Big Oil thought Little Ethanol was just a pushover – now they are pulling no punches in trying to knock out the underdog.

Like Rocky, the ethanol industry doesn’t expect to “win” the fight – there is no way that ethanol can replace all the imported foreign oil that we use in this country. But, this little industry is a contender and does want to survive – to help rural communities prosper and to do something to at least reduce our dependence on foreign oil.

Rocky may have ultimately lost the fight in a split decision at the end of the original film, but there were five sequels. In the second, Rocky beats the champ in the end.

Yo, Adrian! Let’s hope it doesn’t take a sequel to do it.

Understanding Inflation

NYT inflation chart

One of the benefits of the Internet is that traditional media can use it for projects that just don’t technologically fit with their format. Here’s a fascinating example from the New York Times, especially when we’re looking at this debate over food prices.

You can drill down into each piece of this pie chart, wherein you learn that fuel prices have increased much more dramatically between 2007 and 2008 than food prices. And the chart itself says … “The high price of oil is a factor that has made food prices rise quickly.”

Ethanol is Getting a Bum Rap

Kudos to Business Week reporter John Carey for daring to ask the question “Is Ethanol Getting a Bum Rap?”

Business Week Corn ImageAlong with this clever illustration, Carey makes the point that corn ethanol “isn’t quite the villain critics make it out to be,” especially with regard to food prices.

“Biofuels are a very, very small factor” in rising food costs, says David Morris, vice-president of the Institute for Local Self-Reliance, a nonprofit group that tries to strengthen communities politically and economically around the world. Absent corn ethanol, food prices would still be up dramatically because of soaring global demand, fast-rising prices for oil and natural gas used to make fertilizer, and climatic factors such as Australia’s drought. It’s also worth noting that these high crop prices save taxpayers billions of dollars in reduced subsidies to farmers—far more than is spent to subsidize ethanol.

Certainly, a rapid rise in food prices brings misery to poor countries. But over the long haul, “it’s not obvious that high grain prices are inherently bad,” asserts Nathanael Greene, senior policy analyst at the Natural Resources Defense Council. Years of cheap, subsidized grain in the U.S. and Europe have left farmers in the developing world unable to compete. They can’t invest in better seed, machinery, or cultivation practices (page 26). As a result, global average yields for corn, wheat, and rice are less than half what the world’s top 10% of farmers achieve. While American corn farmers produce 150 bushels per acre, farms in the developing world often get only 30. “If there is a crime against humanity, it is these low yields,” not biofuels, says Richard Hamilton, CEO of Ceres Inc., a Thousand Oaks (Calif.) startup developing biofuel crops. Those low yields will improve if farmers make more money. In the long term, “high prices will lead these countries to produce more of their own food,” says Morris, easing the supply shortages.

Lots more in this balanced article – read it yourself here – and add your voice to the comments, many of which continue to be anti-corn ethanol.

South Dakota Launches Blender Pump Program

SD Corn Utilization CouncilOn Thursday, the South Dakota Corn Utilization Council (SDCUC) and the Ethanol Promotion and Information Council (EPIC) launched a blender pump program aimed at helping gas station retailers in the state obtain funding and the equipment needed to sell blends of ethanol ranging from 20 to 40 percent to be used in flex fuel vehicles.

EPIC Fueling LogoEPIC Director of Operations Robert White said South Dakota is the perfect place to launch this new program. “South Dakota is where the blender pump movement started and we are happy to partner with the corn producers there to get this initiative off the ground,” said White.

SDCUC Executive Director Lisa Richardson says South Dakota’s ethanol industry is uniquely positioned to increase the use of higher ethanol blends to meet the Renewable Fuels Standard.

“The two largest ethanol companies are here, people in South Dakota are highly educated about ethanol and our goal is simply that we need to figure out we can use more product and we need to give consumers the choice and the blender pump does just that,” Richardson said.

There are currently about 20 blender pumps in the state and the goal is to install a minimum of 100 new blender pumps over the next year.

Read more here.

Little Bo Peep or the Ax Murderer?

Is ethanol Little Bo Peep or the Ax Murderer?

RFA Press Conference Rick TolmanThat’s the question National Corn Growers CEO Rick Tolman presented to the media during a press conference in Washington DC on Wednesday, pointing to the front page article on ethanol and corn prices in the Washington Post as being the latest example of making ethanol out to be the ax murderer. “There’s a lot of misinformation, slanted information that is just inaccurate,” Tolman said. “While we do have some role in higher food prices in the corn industry, we are certainly closer to Little Bo Peep than the ax murderer.”

Tolman pointed out the importance of the US corn industry, the dramatic increases in yields and production and the fact that prices for petroleum products have a much greater impact on food prices than corn does.

“What do corn prices have to do with food riots in China and Pakistan and India over rice?” Tolman asked. “Absolutely nothing. There is no connection to rice production around the world with biofuels production in the United States. Absolutely none.”

Tolman blamed the disinformation in the media on a very clever marketing campaign by those with deep pockets. “If you want to know who the real ax murderer is slashing our grocery food budget, look at $4 a gallon gasoline, look at $120 a barrel oil,” Tolman said.

Listen to Tolman’s comments here:

Press Turns Out for Food Price Briefing

RFA Food Price press conferenceThe media was very interested in hearing the story that agriculture and the ethanol industry had to tell about food prices during a press conference Wednesday at the National Press Club.

Former Agriculture Secretary John Block, National Corn Growers CEO Rick Tolman, National Farmers Union president Tom Buis and Renewable Fuels Association CEO Bob Dinneen gave opening statements about the facts on food price increases and entertained about 40 minutes of questions from reporters present and on the phone. They covered nearly every topic on the food and fuel waterfront and gave highly informative answers to probing and intelligent questions from the press. Hopefully this will translate into some balance in reporting about the food versus fuel issue.

Listen to the entire one hour plus press conference here:

You can see an online photo album from the press conference here: RFA Press Conference Photo Album

Food Price Press Conference – Updated

Updated with recorded video

Today at 1pm eastern time, agricultural and ethanol industry leaders are holding a press conference at the National Press Club. In attendance will be:

The Honorable John Block, former Secretary of Agriculture
Tom Buis, President, National Farmers Union (NFA)
Bob Dinneen, President of the Renewable Fuels Association (RFA)
Rick Tolman, CEO, National Corn Growers Association (NCGA)

The topic will be: “Farmers and Ethanol Industry to Present the Facts On Food Price Increases.”

We are working to try and stream the press conference live on UStream.tv using the player below. At the time of the conference, you should be able to click on the player and see the live stream. This is an experiment, so we will see how it works. Regardless, we are recording the conference and will have a full update available here afterward.


Update:
The live stream worked! Here is a recording of the first 20 minutes or so:



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