Thursday, September 28, 2006

It's like owning a pit bull...

Dennis Avery from the Hudson Institute has been a favorite on the ag lecture circuit as "one of our" science guys. The problem, however with science guys is their commitment to science first, and then (in this case) a political philosophy (free market capitalism), and then issues like ethanol.

Now Avery has written a new paper on ethanol that corn farmers should read, if only because it seems to be part of a nascent ethanol backlash. At the very least, depending on whether "pocketbook conservatives" can gain any traction this fall, we may be growing ethanol under more competitive economics (no blender tax credit) and possibly lower direct subsidies simply because the food vs. fuel argument begins to balance the energy argument. I don't think this is a problem - economics are not our enemy.
There are significant trade-offs, however, involved in the massive expansion of the production of corn and
other crops for fuel. Chief among these would be a shift of major amounts of the world’s food supply to fuel
use when significant elements of the human population remains ill-fed. Even without ethanol, the world is facing a clash between food and forests. Food and feed demands on farmlands will more than double by 2050. Unfortunately, the American public does not yet understand the massive land requirements of U.S. corn ethanol nor the unique conditions that have allowed sugar cane ethanol to make a modest energy contribution in Brazil.
The United States might well have to clear an additional 50 million acres of forest—or more—to produce
economically significant amounts of liquid transport fuels. Despite the legend of past U.S farm surpluses, the only large reservoir of underused cropland in America is about 30 million acres of land—too dry for corn— enrolled in the Conservation Reserve. Ethanol mandates may force the local loss of many wildlife species, and perhaps trigger some species extinctions. Soil erosion will increase radically as large quantities of low-quality land are put into fuel crops on steep slopes and in drought-prone regions.
But wait - there's more:
If the U.S. wants to divorce its energy sources from the unstable Middle
East, it would make more sense to suspend the 54-cent-per-gallon import
tariff on ethanol and buy its ethanol from Brazil. The ethanol import
strategy is further supported by the fact that Brazil is the only country in
the world with lots of good, underused cropland. Brazilian Agriculture
Minister Luiz Fernando Furlan claims that the country could costeffectively
grow sugar cane on 225 million acres of land. 44 Only its
southern regions are too cool for the cane.
While ethanol may not be peaking, it is naive to assume a change of this magnitude will not generate some resistance - and not just from our favorite bogeyman: Big Oil. Mandated markets are tough to portray as anything but a government guarantee to make money regardless of the economics. Huge investment returns will not escape envious notice.

1 comment:

1029barn said...

John:

I read yesterday that Brazil is about at the point that 100% of their fuel needs can be met by domestic produced ethanol from sugar cane. If we are to have a global economy, then tarriffs against Brazilian ethanol should be dropped.