Ethanol Subsidies and Food Production

[Norman Albers]

It seems several of you are ahead of me in your awareness. I did not understand what I just heard, that one-fourth of the US corn crop has been offered to the ethanol market. Am I correct that this is so, by government policy? It is crazy.

 

 

(Mod note: This thread was split off from Virgin Atlantic to run 747 on Biofuel.)

[iNow]

Yeah. It's one of the main drivers for the recent global increase in food prices. I heard this morning on the radio a figure that it was 30-40% responsible for the recent price increase, but you might wish to verify that. Either way, law of unintended consequences, indeed. A lot more people are starving right now because the decision was made to subsidize ethanol instead of solar.

 

 

http://www.pbs.org/wgbh/nova/programs/ht/tm/3507.html?site=22&pl=wmp&rate=hi&ch=3

[Pangloss]

Starving? Who is starving?

[Norman Albers]

Protests in Cairo; stay tuned... we shop harder for bread less than $3, but many people are hurting. OK, just now NPR said there is a world shortage of rice. The US is a strong exporter so we see only somewhat higher prices, but many are seeing subsistence prices soar.

[iNow]

Starving? Who is starving?

 

Do you really need to ask this, or are you just trying to move the conversation along? The simple answer is those people who make on average one dollar per day and were already having a difficult time feeding themselves and their families before costs rose.

 

Here are a few sources discussing the potential for famine and starvation as a result of rising food prices:

 

 

http://www.npr.org/templates/story/story.php?storyId=89545855

 

http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_hassett&sid=arSRWU0yDL7M

 

http://www.washingtonpost.com/wp-dyn/content/article/2008/04/19/AR2008041901601.html

 

http://www.guardian.co.uk/commentisfree/2008/apr/16/biofuels.alternativeenergy

 

 

 

 

The price of corn has more than doubled in the last two years, boosted in part by demand for ethanol.

[SH3RL0CK]

Ethanol production from corn uses only the inedible parts of the corn kernel. The remainder, called distillers grain, has as much food value as pure corn and is fed to livestock as is/was corn.

 

The rise of food prices is more of a reflection of the cost to ship the food than because of ethanol production.

 

http://www.ethanol.org

[iNow]

Ethanol production from corn uses only the inedible parts of the corn kernel. The remainder, called distillers grain, has as much food value as pure corn and is fed to livestock as is/was corn.

 

The rise of food prices is more of a reflection of the cost to ship the food than because of ethanol production.

 

http://www.ethanol.org

 

Not completely, no.

 

While increased oil prices do lead to increased transportation and shipping costs, and this is part of the overall price equation, the actual corn ethanol comes from the seeds. The same stuff we would eat and the same stuff we would feed to cattle.

 

There are two processes. One, they use the kernel, and it only takes one step. Two, they use the cellulosic biomass, but this takes two steps to break down into fuel, and is hence more expensive.

 

In sum, we use the kernels more, and further, the increased demand has risen prices, as farmers are growing toward the subsidy instead of the market.

 

 

Good program on NOVA last night, the section specific to biofuel linked for your viewing pleasure below:

 

http://www.pbs.org/wgbh/nova/programs/ht/tm/3507.html?site=22&pl=wmp&rate=hi&ch=3

[Norman Albers]

iNow figured the increased ethanol demand accounts for a third of the corn price increase.

[Mr Skeptic]

Yeah. It's one of the main drivers for the recent global increase in food prices. I heard this morning on the radio a figure that it was 30-40% responsible for the recent price increase, but you might wish to verify that. Either way, law of unintended consequences, indeed. A lot more people are starving right now because the decision was made to subsidize ethanol instead of solar.

 

Perhaps it was not completely unintended. Surely it could not have been unanticipated; politicians may be stupid, but surely not so stupid as to not realize that turning food into fuel would increase fuel prices. The US is the largest exporter of corn in the world, and we import oil. From a macroeconomic point of view, decreasing our oil imports, and raising the price of corn, are both highly advantageous (perhaps even at the expense of some exports).

 

World Corn Exports - 2003/2004 (source:http://www.ncga.com/trade/main/trade_stats.html)

 

Plus, the politicians get brownie points for being "green".

 

edit: it seems ethanol is replacing another, cheaper but product (), that is being banned

 

Regardless of the decrease in corn exports caused by ethanol, our agricultural exports (in dollars) have increased(pdf warning, see page 19). Haven't read the whole thing yet, just skimmed.

[Pangloss]

Do you really need to ask this, or are you just trying to move the conversation along? The simple answer is those people who make on average one dollar per day and were already having a difficult time feeding themselves and their families before costs rose.

 

Here are a few sources discussing the potential for famine and starvation as a result of rising food prices:

 

Potential? You said people are starving right now. Who is starving?

 

A lot more people are starving right now because the decision was made to subsidize ethanol instead of solar.

 

My store shelves are stocked, guy. I've got five Publix supermarkets 30,000 square-feet+ within a mile of my house, not one of which are short on supplies.

 

Do we ship corn overseas as food aid? Could that be what you mean? Are we not able to do that anymore? I have heard about shortages at food banks, but I've not heard anything like "people are starving", even when John Edwards does a drive-by for the camera -- then it's just "well we passed bridge and there were a bunch of homeless under it" (and then refuses to say where the bridge was, etc etc).

[iNow]

Pangloss,

 

It's not as if I cannot see the point you are making, however, you seem to be missing mine. Your "I live in Florida and have 3 supermarkets within 10 miles" life experience is non-representative of the rest of the world.

 

I find it either disrespectful, dishonest, or discombobulating that you are refusing to frame this issue on a global scale, as opposed to the scale of your narrow and limited south Florida personal experience.

 

 

Have you ever had to eat bugs and worms for protien? Have you ever fasted for reasons other than personal choice? Have you ever had to kill your own food to make it through a winter? Have you ever had to find buckets to carry water home for drinking the next several days?

 

Please, take the above into account before pretending that your own personal experience is somehow representative of life as a whole on this planet.

 

 

People really ARE starving as a result of this, and your suggestion that I'm fu(king retarded for suggesting this is insulting.

[Pangloss]

Dude, chill out, it's an honest question. I did see talk in those links about shortages in the UN Food Bank, which seems like it would point to starvation probabilities, but I didn't see actual statements that people are starving, and it sounds like what needs have been served by food banks (and the like) continue to be met currently. You said a lot of people are starving over ethanol subsidies, and I still see no evidence of that, however if you want to amend that to "people may starve", it appears to be a legitimate concern.

 

Actually this was quite informative to me -- I didn't realize until your reply earlier that other countries also subsidize corn, or that it was used in food bank efforts. Apparently it's a legitimate "fu(king" concern, I agree.

 

The UN apparently asked for a moritorium on ethanol subsidies in 2007, and that seems like a rational thing to do.

[Mr Skeptic]

Even if many people affected aren't actually starving, if they have trouble buying food already then they may need to sacrifice in other areas like education or medicine.

[Pangloss]

Agreed.

[iNow]

We're all on the same page.

 

To be clear, though, all it takes is one example of death as a result of lack of food due to cost to prove my point above. Just one.

[Pangloss]

Well I think there are a lot of reasons why people are starving, but I take your point, and actually this just underscores the basic interconnectedness that the world's food supply has become. This has both positive and negative aspects.

 

I'm extremely reticent to look at this problem as if I owe some kind of personal debt to starving Africans, but I thought it was interesting to hear Jeffrey Sachs of the Earth Institute talking yesterday about how if we were to better equip African farmers with a little more education and a few tools, we would be able to double food production there within just a couple of years.

 

But what was really interesting about his comments was the suggestion that doing so would reduce food costs here at home, just on the basis of more supply equalling lower prices.

 

That's a good way to look at it, and one that might actually produce change.

 

 

(Mod note: This thread was split off from Virgin Atlantic to run 747 on Biofuel.)

[waitforufo]

Ethanol subsidies in the US are about the Iowa presidential caucus. Since this caucus is so important in picking presidential candidates, these subsidies will never end. No potential presdential candidate will ever suggest or vote for reducing these subsities. All federal politicians hope one day to be president.

[Realitycheck]

We're only talking about corn here.

[ecoli]

We're only talking about corn here.

 

I don't know how you could say this, considering it's by far the most widely grown crop in North America, (270 million metric tons annually). It supports much of the livestock industry, sweeteners and now ethanol production.

[iNow]

Ethanol subsidies in the US are about the Iowa presidential caucus. Since this caucus is so important in picking presidential candidates, these subsidies will never end. No potential presdential candidate will ever suggest or vote for reducing these subsities.

 

What else do you see in your crystal ball?

[Mr Skeptic]

I'm extremely reticent to look at this problem as if I owe some kind of personal debt to starving Africans, but I thought it was interesting to hear Jeffrey Sachs of the Earth Institute talking yesterday about how if we were to better equip African farmers with a little more education and a few tools, we would be able to double food production there within just a couple of years.

 

But what was really interesting about his comments was the suggestion that doing so would reduce food costs here at home, just on the basis of more supply equalling lower prices.

 

So, you're saying it would reduce both our exports and our prices? Permanently? I can see that one going down nicely with our farmers and politicians.

[Pangloss]

That seemed to be what he was saying, yes. I haven't seen any math on this, though. I'm hoping to hear more about it in the near future.

[coreview2]

Perhaps it was not completely unintended. Surely it could not have been unanticipated; politicians may be stupid, but surely not so stupid as to not realize that turning food into fuel would increase fuel prices. The US is the largest exporter of corn in the world, and we import oil. From a macroeconomic point of view, decreasing our oil imports, and raising the price of corn, are both highly advantageous (perhaps even at the expense of some exports).

 

 

I think that when politicians have their heads in the pork barrel, they may as well not have a head.

 

Corn and food as an export is one of our big pluses on balance of trade, burning it in gas tanks at a time when the dollar is weak seems doubly foolish.

 

We need some real solutions to oil and fossil fuel dependency, not pork-barrel logic devoid of foresight.

 

I think we need a lot more engineers in Congress because we have way too many lawyers there. Lawyers think in terms of words and their product and their victories are all in the land of word processors.

[SH3RL0CK]

After some research, other posters were correct, the production of ethanol does indeed reduce the nutritional value of the corn as animal feedstock (which is where a very large portion of the corn grown in the US goes).

 

http://www.ddgs.umn.edu/overview.htm

 

from the article:

 

"yielding a DE [dietary equivalent] value that is approximately 91% of that found in corn. "

 

But the loss can be minimized to only 9% with proper treatment of the distillers grains, so I still do not buy the argument that we cannot generate both food and fuel from the corn, nor do I see why rationally, biofuels can be blamed for the price increase of grain on the international markets. Perhaps inefficient use and conversions of the distillers grain? If so, surely this could be overcome?

 

Also, regarding the cost of a gallon of ethanol, see:

 

http://www.energyfuturecoalition.org/biofuels/fact_ethanol.htm#4

 

from the article:

 

"The two largest variables in the cost of ethanol are the cost of corn and the cost of natural gas or other sources of heat needed to process the mixture. When corn costs $2 a bushel, it costs between $1 and $1.20 to make a gallon of ethanol. Because ethanol has only two-thirds the energy content of gasoline, that’s equivalent to $1.50-$1.80 per gallon of gasoline (wholesale), or $50-$60 per barrel of oil. At that price of corn, ethanol is competitive with gasoline with the current subsidy for gasoline blenders when oil costs $30 a barrel or more. It is economically competitive with gasoline without a subsidy when oil costs $50 a barrel or more."

 

see also: http://devafdc.nrel.gov/pdfs/4898.pdf

 

Granted the raw materials cost of both corn and natural gas have increased above the above values. However, it seems to me that with grain costs roughly doubling at $4.28 a bushel, and natural gas costs not doubling either since 2006, and other costs (labor, equipment, etc) remaining the same as in 2006, you could safely assume ethanol is still cost competitive, without a subsidy, to gasoline with oil at $120 a barrel.

 

I am still convinced we should be converting as much corn into ethanol as we can. It would greatly reduce the greenhouse gas emissions, reduce other pollution effects, and keep money in the US (and away from the dictators in the middle east), along with other beneficial side effects.

[iNow]

cost of natural gas or other sources of heat needed to process the mixture. When corn costs $2 a bushel, it costs between $1 and $1.20 to make a gallon of ethanol. Because ethanol has only two-thirds the energy content of gasoline, that’s equivalent to $1.50-$1.80 per gallon of gasoline (wholesale), or $50-$60 per barrel of oil. At that price of corn, ethanol is competitive with gasoline with the current subsidy for gasoline blenders when oil costs $30 a barrel or more. It is economically competitive with gasoline without a subsidy when oil costs $50 a barrel or more."

 

 

Granted the raw materials cost of both corn and natural gas have increased above the above values. However, it seems to me that with grain costs roughly doubling at $4.28 a bushel, and natural gas costs not doubling either since 2006, and other costs (labor, equipment, etc) remaining the same as in 2006, you could safely assume ethanol is still cost competitive, without a subsidy, to gasoline with oil at $120 a barrel.

 

I am still convinced we should be converting as much corn into ethanol as we can.

 

Short term economic benefits aside, we need to incorporate into our cost calculations also any environmental impact. While corn may be cost competitive with dino fuels, it cannot hold a match to the environmental altruistic and renewable sources already available to us via sources such as solar.

 

While corn reduces greenhouse gas emissions when compared relative to petrol, it falls flat on it's face when compared to nuclear and solar.

 

We need to begin to incorporate into our collective understanding the acceptance of the of the fact that cost is more than a mere monetary concept, and that corn, while likely to play a part in the overall solution, does not even begin to knock on the door of the true change which we all need in the global energy infrastructure.