Sunday, June 24, 2007

The backlash continues...

The Food vs. Fuel disagreement is intensifying. Ron Bailey - a science writer I greatly admire - backs up his opinion with good data:
Another way to look at it is that it takes 450 pounds of corn to make enough ethanol to fill a 25-gallon gas tank. Four hundred and fifty pounds of corn supplies enough calories to feed a person for one year. The USDA projects that in 2010 the ethanol industry will consume 2.6 billion bushels of corn. A bushel weighs 56 pounds, so a quick calculation yields the result that 2.6 billion bushels of corn could supply enough calories to feed nearly 325 million people for a year. [More of a must-read for corn farmers]

Even the popular ag speaker Dennis Avery is objecting.
Unfortunately, U.S. corn land produces only 50 gallons worth of gasoline per acre per year—against an annual gasoline demand of 135 billion gallons. New U.S. ethanol plants coming on line could take 30 percent of next year’s U.S. corn for auto fuel—an unprecedented diversion of the world’s scarce cropland. Supplying the Bush goal of 35 billion gallons of ethanol per year would currently force farmers to clear more than 200 million acres of Midwest forest to supply even 10 percent of our gasoline demand from corn ethanol. [More]

Too little, too late. It looks like the 35B gal. mandate will sail through Congress, locking our crop plans for the foreseeable future. The apparent benefits (energy independence without scrimping!) are too powerful for the actual numbers.

Meanwhile, just in case we do get desperate enough for Brazilian ethanol, ADM is pursuing a rational strategy.
Archer Daniels Midland, the nation's largest producer of ethanol fuel from corn, is setting its sights on a move into Brazil's sugar cane-based ethanol business, according to a published report.

The Wall Street Journal says ADM (Charts, Fortune 500) is exploring a variety of strategies to enter Brazil's ethanol market, ranging from building sugar-cane mills and ethanol plants from the ground up to acquiring sugar-cane companies. [More]
Mandates mess your your mind - not just your economics. I don't think we can predict how this legislated demand will change American agriculture because it is outside the realm of market economics.

I'm getting the feeling this could be a spectacular ride for corn farmers.


Anonymous said...

the thing that bothers me is just like the globel warming scare...everybody's number vary so the math on these two quotes that you doesn't work

John Phipps said...


I try to walk fine line between appropriating other work wholesale and quoting out of context. Please use the links to [More] to make sure you get the full message from the author.

You are right about ethanol-inspired projections - the numbers are all over the map. We just don't know how accurate our assumptions are.

Thanks for reading.