May 16, 2007
Ethanol Demand Decreases Corn For Animal Feed

Regular readers know that I think biomass energy is a bad idea that shows just how ignorant or morally corrupt our elites can be. Please excuse me if I'm boring you with repetition. But repetition doesn't just breed acceptance of lies. Repetition also breeds the acceptance of the truth. US government subsidies of biomass energy are decreasing the amount of corn available to feed livestock.

The surging biofuel industry will use 27% of this year's American corn crop, challenging farmers' ability to meet food demands, the US government says.

How to think about this? We are feeding over a quarter of our corn to our cars. Our cars are becoming corn hogs. Imagine we all rode horses and fed them corn. What we are doing is like that. But we ride mechanical horses (hence the term "horsepower") and with car computers that provide driving assists (e.g. anti-lock braking, traction control, and electronic stabilization control) those mechanical horses are well on their way toward becoming robotic horses. Cars are robotic horses that consume a lot more energy and hence more land.

Even with the projected, record 12.46 billion-bushel crop this year, the US Department of Agriculture (USDA) says national corn stockpiles will run low going into the next crop year, when voracious ethanol demand will rise again.

In its first projections of this year's crops, the USDA says ethanol is already boosting crop prices, and will reduce the amount the amount of corn used to feed livestock in the coming year by 3%.

Note that the US population is growing, not shrinking. So the demand for meat will rise even as the amount of corn available to feed livestock shrinks.

The Grocery Manufacturers Association (GMA) sees many harms from the rapid increase in use of corn as an energy source.

"Consumers have already seen an increase in the cost of food, as corn traditionally used for livestock feed and processed food is increasingly used for fuel.

In fact, the price of corn has nearly doubled in the last nine months.

"In addition to its inflationary impact, there are many unintended, but nonetheless important, consequences of an ambitious corn ethanol strategy.

"For example, a 35 billion gallon ethanol mandate will require a substantial increase in the use of fossil fuels for corn and ethanol processing and transportation, as well as an additional fifteen million acres devoted to corn crops, which will encroach on agriculturally-marginal and environmentally- sensitive land.

Some people are under the mistaken impression that the United States has such huge amounts of unused space that a massive ramping up of agriculture to produce biomass energy won't impose substantial environmental costs. But the amount of land available for farming shrinks as the population grows and suburbs around cities expand outward.

How about world hunger?

"An aggressive ethanol mandate will also require the U.S. to significantly reduce its corn exports to ensure an adequate supply of corn for food and fuel.

"Such a reduction will result in a decrease in the amount of food available overseas, which in turn will have a negative affect on world hunger.

But biomass ethanol is green. Hunger? Encroachment on wildlife areas? Okay, but corn plants have a green color. End of argument. Shut down your neocortex. Suppress any thoughts that begin with "But". Corn stalks are plants that sop up the goodness of solar energy They aren't humans. How can the grocery companies oppose something that politicians running in primaries in Iowa find to be the best thing since Mazola corn oil spread on sliced bread?

The GMA wants an end to the US government subsidy for ethanol. I agree (my neocortex refuses to shut down).

"In addition, GMA supports a broad-based approach to alternative fuels that includes the increased use of cellulosic ethanol, the elimination of the fifty-four cents per gallon tariff on ethanol imports and the expiration of the taxpayer-funded fifty-one cents per gallon ethanol subsidy.

But elimination of the ethanol tariff will just speed the deforestation of the Amazon. I wonder what greenies are thinking when I see some of them interviewed on TV extolling Brazil's production of ethanol as an example of morally virtuous behavior. What about the rain forests?

In a 12 month period ending August 2004 Brazil's rainforests shrunk by an area the size of Massachusetts.

Government officials acknowledge that loggers, ranchers and farmers gobbled up 10,088 square miles of Amazon rain forest in the 12-month period ending last August, an area about the size of Massachusetts.

Strains of soy developed for Brazil are enhancing the attractiveness of soy as a crop for Brazilian farmers. So is the increased use of soy to make biodiesel. What's the result? Destruction of Amazon rainforests.

But, to the horror of environmental activists, soybeans are claiming increasingly bigger swaths of rainforest to make way for plantations, adding to the inroads by ranching. The Amazon lost some 10,000 square miles of forest cover last year alone -- 40 percent more than the year before.

In Querencia, cowboy-hatted ranchers recently transplanted from Brazil's prosperous south rub shoulders with Amazon Indians as streams of tractor-trailers kick up dust hauling fertilizer in and huge tree trunks out. Nowhere is the doubled-edge thrust of soybeans more apparent than in this dusty boom town on the rainforest's southern edge.

"The farmers are cutting down everything to make way for soy and that's good business for me," said Ivo de Lima, a lumber man who moved here recently.

The shift of US acreage way from soy toward corn for ethanol increases demand for soy from Brazil which increases the destruction of the Amazon rain forests. So the US corn ethanol subsidy increases the rate of destruction of the world's rainforests.

Share |      Randall Parker, 2007 May 16 10:39 PM  Energy Biomass

Brian Hayes said at May 17, 2007 12:13 AM:

I agree that our ethanol policies are premature and will shunt damage to adjacent sectors. The UN announced today many of the world's indigenous tribes will be thrown off their land, already 2 million displaced to urban poverty due to the palm oil rush in Malaysia and Indonesia, (sorry, no link). I posted a tongue in cheek jab teasing that today's 'farmer' is moving closer to money and power.

"They're growing, no pun intended, toward the lucrative and powerful energy business where they will supply not only our food, but fuel for our electricity, our heat and our transportation as well.

"It's important for us to recognize how close big agricultural producers have been to the money all along. We need to pay attention before we find ourselves crippled under a dreaded Corn Cartel."

rs said at May 17, 2007 12:42 AM:

Maybe, maybe not. Fusion is almost certainly on the horizon, between Boussard at the low end and the persistent net reports that the Australians have cracked the nut on the high end.

Most interestingly, on the destruction of the Rain Forests, the soy crops do tend to output more oxygen per acre than the forest.

Tim said at May 17, 2007 7:53 AM:

Don't know about the Australians if you have a link let us know. Don't think Bussard has gotten funding yet but there was a recent breakthrough out of Sandia Labs that looks very interesting:

purenoiz said at May 17, 2007 11:59 AM:

The one benefit to increased corn consumption via automobiles is a depletion in the methane and other greenhouse gasses produced by cattle (at least potetnialy). This could force cattle ranchers to go more grass fed which would reduce their need for Antibiotics as well as corn can cause ulcers in cows stomachs.

This could also maybe lead to a higher cost in High fructose corn syrup, which would lead to a spike in the cost of low nutritional value high caloric sodas, candies etc, leading to a downturn in the obesitity epeidemic, which would put less burden on our already ravaged health care system.

purenoiz said at May 17, 2007 1:05 PM:

The one benefit to increased corn consumption via automobiles is a depletion in the methane and other greenhouse gasses produced by cattle (at least potetnialy). This could force cattle ranchers to go more grass fed which would reduce their need for Antibiotics as well as corn can cause ulcers in cows stomachs.

This could also maybe lead to a higher cost in High fructose corn syrup, which would lead to a spike in the cost of low nutritional value high caloric sodas, candies etc, leading to a downturn in the obesitity epeidemic, which would put less burden on our already strained health care system.

Francesco DeParis said at May 17, 2007 2:04 PM:

One: corn shouldn't be used for ethanol, Two: if we do use corn, use ALL OF IT. I think the US will have to compete effectively with Brazil on cellulosic ethanol as well as sugarcane ethanol. The article on Biopact renewed my excitement over cellulosic ethanol, and so I analyzed the business side of this development and how "Brazilís Biofuel Empire is About to Grow in a Big Way".

I would love to hear from the enzyme guys on this one.

I comment regularly on the business/investor side of alternative energy on Energy Spin: Alternative Energy Blog for Investors-Served Daily

Francesco DeParis

Doug Dante said at May 17, 2007 2:05 PM:

Good news. Cellulosic ethanol from corn may be nearly here in the form of transgenic corn that includes its own enzymes that break down cellulose.

Better news. This transgenic corn can probably make more ethanol using the same amount of corn in conventional production facilities that only use kernels. This is because it helps to break down the cellulose in the kernels as well as in the rest of the plant. We don't even have to retool to get many of the benefits.

Also good news. There's no reason that these modifications can't be applied to sugar cane also for the Brazilian market.

I think that we'll be at "peak corn" very soon, so most of the increases in ethanol (or strictly "energy") that we extract from corn will come from technology enhancements, rather than planting more of it.

Best news. It is politically wise and feasible to shift the the 54 cents per gallon ethanol tariff from corn kernel derived ethanol to corn cellulose derived ethanol. Then energy production would subsidize food production!

Shakespeare's Fool said at May 17, 2007 10:30 PM:

FuturePundit, are you saying, "No blood for corn?"

Randall Parker said at May 17, 2007 11:04 PM:

Shakespeare's Fool,

I'm saying I do not want to send soldiers abroad to fight for control of corn fields.

Brian Hayes said at May 17, 2007 11:07 PM:

A feature story at the LA Times, up for 3 weeks, slams ethanol policies.

"Our politicians may be drunk with the prospect of corn-derived ethanol, but if we don't adopt policies based on science and sound economics, it is consumers around the world who will suffer the hangover."

"Corn farmers and ethanol refiners are ecstatic... But it will be an expensive and dangerous experiment for the rest of us."

TTT said at May 18, 2007 5:31 PM:

Why not just reduce the consumption of meat by 10% in the US?

Americans eat too much red meat anyway. It is unhealthy in multiple ways, gross, AND environmentally bad.

Anyone want to bet that radical environmentalists team up with PETA to air gruesome commercials about slaughterhouses, that reduce meat consumption in the US? It could very well happen..

Sageberush said at May 18, 2007 5:38 PM:

I agree with purenoiz that a price increase in corn would have a massive beneficial health effect. Food prices will go up, but that is not such a bad deal. Here's why: It will make healthy calories competitive with the wildly unhealthy ones that dirt-cheap corn brought about. (Trust me. I do research in this field for a living. What we haven't been paying in our grocery bills has come back to rob us blind in our health insurance premiums and Medicare tax contributions.) The low market price for corn and corn products was the result of a market manipulation at the Federal level. About a generation ago, the Agriculture Department started subsidizing corn by guaranteeing farmers a set price to grow it, regardless of the market price. So, of course, they grew it by the megaton and the market price plummeted, and more and more tax money went to making up the difference. (Before this became the policy, the Federal corn subsidy was a per-bushel LOAN. This encouraged farmers to store corn until the market price went up.)

The competition for ethanolic use of corn will at least drive the bushel price up to a real market price. That will end the federal pass-through subsidy of high-fructose corn sweetener and corn-fed livestock. I wouldn't take the Grocery Manufacturers Association complaints too seriously. They're just looking at that FAT tax-fed bottom line they've grown to expect as a constitutional right. Seeing it slim down before their eyes has got them spooked, but it's okay. They'll just have to re-learn how to make money the old-fashioned way...

Nick said at May 21, 2007 4:00 PM:

Randall, not much of the blame should go to environmentalists. The blame should go to business, especially ADM, for bribing government.

What we need is more transparency and independence for government from business. IOW, more democracy.

Also, I'm puzzled as to why we, as a country, allow Iowa's caucuses to have so much power - it's hard for politician's to say no to ethanol when it's an essential litmus test there.

Bob Badour said at May 23, 2007 9:05 AM:


One could argue that the introduction of late blight to Europe increased the price of potatoes to make healthier foods more competitive. It is certainly true that the Irish of today have better access to higher quality foods, but I suggest that a million or more Irish who depended on that inexpensive staple would question your logic and your reason.

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