What he said … Johanns Meets the Press Club

In Current News, Ethanol, Food vs Fuel, General by Cindy

It was inevitable that when Agriculture Secretary Mike Johanns spoke at the National Press Club on July 27 someone would ask about ethanol. The transcript says it all:

QUESTION: Corn-based ethanol may help the nation reduce its dependence on foreign oil, but critics say that ethanol costs almost as much as the energy it produces. Isn’t corn-based ethanol a wasteful way to produce energy, and won’t it increase the cost of food?

SEC. JOHANNS: No, and it isn’t.
[Laughter.]

Johanns PressWe studied that a lot at the USDA, and years ago when the plants were not as efficient, when ethanol was barely used in our country, there were a lot of articles about the inefficiency of producing ethanol and all the energy, etcetera. We’ve debunked that in our studies. We’ve put that issue to rest. Independent studies have looked at the same issue. You very definitely have efficiency here.

The other thing I will tell you, in the United States we’re going to grow corn. We just simply are. We do it very well; we do it better than any country in the world, and our farmers are going to grow corn. And I think it’s important that we do everything we can to create a marketplace.

Let me offer a thought, and we’re talking about maybe an address that really gets down to this issue of food versus fuel. Every year we have some inflation relative to food, 2 percent, 3 percent, somewhere in that vicinity, some years maybe a little bit more, a little bit less. This year with all of this debate raging we anticipate that food prices across the board will be impacted 2 to 4 percent, about average, maybe a little bit higher. Then when you look at that, many articles I read see that and then they go right to the conclusion, it’s because of ethanol, it’s because the price of corn got high and that’s the reason.

They leave out a whole big piece of the analysis. What’s the big piece of the analysis? The farmer doesn’t get all of that. I’m sure they wish they did. But they get about 20 cents of the retail dollar. Actually the increase in the price of energy to ship that food can have as much or more of a profound impact on the price of that food than the corn you feed to the animal.

I’m just telling you, this is a very, very complicated supply chain. And if you have reached the conclusion that because food is up 3 percent this year or 4 or 2 or whatever it is, that that’s because of ethanol, and you’ve missed all of that, you’re not telling the full story. And you’re not telling an accurate story, in all due respect.

We have the accurate story at the USDA. We study this all the time. We buy or provide money for nutrition programs, so of course we want to know what the price of food is doing. And anybody who wants to write an in-depth article on that or do a series on it, we’d love to provide you with the information on just how complex the food chain is and how impacts in that food chain relative to fuel to transport it, or to promotion costs or whatever it is, can actually have a more important impact on the cost of that food than the price of bushel of corn.

You go, Jo!
Link to USDA transcript

Feed Price Outlook Favorable For Livestock Producers

In Current News by Chuck

Recent rains in the Midwest have led to an improvement in the overall corn crop which is also leading to lower prices. What that means is that livestock producers are likely to see lower feed costs, despite the increased demand for corn to make ethanol.

The University of Illinois’ Farm Gate has an article that does some number crunching and paints a more favorable picture for the livestock industry as prospects for an abundant corn crop continue to look brighter.

Popcorn Propaganda Popped in Iowa

In State Groups by Chuck

A state corn growers organization decided to use a picture to make a point on how out of control the food vs. fuel debate is getting. The The Iowa Corn Promotion Board (ICPB) and the Iowa Renewable Fuels Association (IRFA) got together for a joint press conference and photo-op to dispel claims that ethanol and higher field corn prices result in higher popcorn prices for moviegoers. The “Popping the Popcorn Propaganda” event clearly illustrated this point by displaying what $5 will buy you at a movie theater versus $5 from a farmer.

Here’s the details from their event:

“The ‘blame ethanol’ game has gotten completely out of control,” stated IRFA Executive Director Monte Shaw. “From a consumer standpoint, for $5 you can buy 1 tub of popcorn at a movie theater or 38.5 pounds of popcorn from a farmer, which, when popped fills nearly a dozen 33-gallon trash bags.

IA Popcorn“From a farm standpoint, in 2006 the farmer received about 1.4 cents for the corn in that $5 tub at the movie theater. In 2007, that same farmer will receive about 2 cents to fill that tub. How can an increase of 0.6 cents to the farmer justify a price hike to movie goers or crazy headlines in the news media?”

To illustrate the point, IRFA intern Paul Brees spent 6 hours popping 38.5 pounds of popcorn – the amount you could buy from a farmer for $5. During the press conference, the 12 bags of popcorn stood in stark contrast to the one small bag of popcorn from the movie theater.

“We had a very visual example today of what actually goes to the farmer. You can use this same example when you talk about other products made with corn. For example, a six-pack of soda includes just 6 cents of corn sweetener, or only 1 penny per can. If your soda at the store is going up more than 1 cent per can, then you have to wonder where the rest of that increase is going,” said Craig Floss, CEO for Iowa Corn. “We know that it is not making it to our corn growers, so to blame them for the increase in prices at the grocery story is simply not right.”

A Chicken Little Story?

In Current News by Chuck

Remember all the crying foul by Tyson this spring on the price of corn? Tyson’s earnings have fared well this past quarter despite its repeated stirrings of the food versus fuel debate (pdf). The Financial Times also reports that Tyson managed to have a healthy profit this past quarter–$111 M. Tyson managed to rebound on last years losses by posting a larger than expected profit. The food giant posted a loss of $52 million for the same time period last year.

That doesn’t sound like the sky is falling to us!

Welcome To Corn Commentary

In Activism, E85, Policy by Chuck

Food and fuel. Corn prices. Ethanol. Farm policy. Issues in agriculture. Welcome to Corn Commentary. We’ll be discussing these issues and more. We hope to have some fun along the way so it’s only fitting our inaugural post is related to the power of viral marketing and ethanol.

If you haven’t yet seen the series of ethanol videos on Project Phin, Clean My Ride, Flex My Fuel, you’re missing a great laugh. The star-studded cast touts the benefits of e85, the need for improved ethanol infrastructure and improved mileage standards. Here’s how it got started. You’ll find more on their site.

www.cleanmyride.org has all the elements of a strong grassroots campaign. It’s got a strong message, a catchy theme and a call to action.

We liked Ben Affleck in “Hollywoodland” and have caught his numerous appearances on Saturday Night Live. However, his role as an ear of corn is truly praiseworthy.