When Corn Kills Posted by Ilan Goldenberg

Ethanol is God’s gift to Presidential candidates.  It makes us feel like we're doing something about the environment and energy security.  Even more conveniently it is popular in Iowa.  But Ford Runge and Benjamin Senauer point out the potentially catastrophic results of the ethanol craze.

Filling the 25-gallon tank of an SUV with pure ethanol requires over 450 pounds of corn -- which contains enough calories to feed one person for a year. By putting pressure on global supplies of edible crops, the surge in ethanol production will translate into higher prices for both processed and staple foods around the world. Biofuels have tied oil and food prices together in ways that could profoundly upset the relationships between food producers, consumers, and nations in the years ahead, with potentially devastating implications for both global poverty and food security.

Ethanol is not the answer.  First, it is already driving corn prices to record highs, which in Mexico for example led to a doubling of the price of tortillas earlier this year and caused protests around the country.  On top of that, as corn becomes more profitable farmers stop growing other staples such as wheat and substitute corn.  So, you get a double whammy with the price of all basic food staples rising around the world.  This is not good for the world's poor.

On top of that, in a freakish twist, ethanol and oil prices have now become correlated.  As oil prices rise, switching to ethanol becomes a more appealing option for consumers.  Basically, when oil prices are high you can charge more for ethanol.  When they are low, you can’t.  The natural consequence is that you now have staple food prices correlated to oil prices.  This is a real gut punch for developing countries, most of whom are both oil importers and food importers.  Now, when oil prices go up, they don’t just have an energy problem they have a food problem too.

Basically, this whole ethanol craze just isn’t worth it.  It is full of scary unintended consequences.  And what does it get you?  Even if the entire crop of corn in the U.S. were used to make gasoline it would only account for 12% of U.S. gasoline.  There are better solutions to this problem.

Comments

[Jerry Mayer]

Bravo! It's even worse than you state, as you probably know. The fossil fuels that go into growing corn, in terms of fuel for the farm equipment and ingredients in fertilizer make it a substantial contributor to pollution. Sugar-based ethanol and switchgrass are better...corn is snake oil.

[DH]

okay if there are "better solutions" present a couple and you can't just say "conservation" because that only delays the end. The oil is going to run out sometime, why not try some alternatives now?

[Jerry Mayer]

Alternatives--tax utilities, not income. This introduces regressive effects, that can be taken care of through two means--variable pricing so that the first 10k gallons of water are cheap, and the price goes up dramatically afterwards, same for heating oil, etc. Second by adjusting the SS Tax. Energy taxes will induce levels of conservation undreamt of by government regulation. MUCH better than CAFE standards, because taxation harnesses the market decisions of millions. Conservation can make a huge difference. Delay allows for future technological innovations.
Second--windpower. A huge untapped resource.
Third--Continue solar research, it's getting better all the time.

[Jerry Mayer]

Oh, and I forgot to add--the price of corn really was a problem when I was down in Mexico in January. Imagine the importance of the price of gasoline in America. Now double that importance, and add historic and cultural significance going back, say, 800 years. Now add that this commodity is central to the majority of Mexicans who live on less than $3 a day. Calderon's stature with his citizenry was really weakened by the corn price crisis. So ethanol causes instability in one of our most important allies.

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In growing corn, you have to be patient. We need to apply fertilizer inorder for them to bear fruits finely. Aside from that, if there are many corns harvested, there is a great chance to have greater volume of ethanol that will be produced. We must know the ways on what kind of fertilizer to be used and how it will be applied.

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