Wednesday, May 16, 2007

Oh, this is going to be good...

Responding, I believe, to the growing concerns by consumers and our own livestock sector that ethanol is forcing corn prices a tad too high, legislators who think they can now mandate economics, are devising ways to shift to the "cold fusion" of agriculture: cellulosic ethanol.
"When I talk about energy and I talk about cellulose, you know, switch grass can be a commodity," Harkin said. "It may not be a commodity now, but in the next five to 10 years it could be a very big commodity ... Why are commodities just limited to what we've done in the last ... 50 years? Maybe there are new commodities out there we should be investing in."
To support future cellulosic ethanol sources, Harkin said, Congress should consider shifting some funds away from the billions of dollars slated to go to traditional crop farmers through direct government payments over the next five years. [More]
Meanwhile, corn growers have deployed a full-court press to deny the idea that corn prices affect food, and I don't think they will stand idly by as farm subsidies start flowing to switchgrass. Nor will ethanol producers.

I don't think we know what high corn prices are yet. But a few more ethanol startups and a teensy production hiccup will show us.

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