Food Prices Soaring
How much longer will we starve people on the altar of ethanol?
Riots from Haiti to Bangladesh to Egypt over the soaring costs of basic foods have brought the issue to a boiling point and catapulted it to the forefront of the world’s attention, the head of an agency focused on global development said Monday.
“This is the world’s big story,” said Jeffrey Sachs, director of Columbia University’s Earth Institute.
“The finance ministers were in shock, almost in panic this weekend,” he said on CNN’s “American Morning,” in a reference to top economic officials who gathered in Washington. “There are riots all over the world in the poor countries ... and, of course, our own poor are feeling it in the United States.”
[...]
The issue is also fueling a rising debate over how much the rising prices can be blamed on ethanol production. The basic argument is that because ethanol comes from corn, the push to replace some traditional fuels with ethanol has created a new demand for corn that has thrown off world food prices.
Jean Ziegler, U.N. special rapporteur on the right to food, has called using food crops to create ethanol “a crime against humanity.”
“We’ve been putting our food into the gas tank—this corn-to-ethanol subsidy which our government is doing really makes little sense,” said Columbia University’s Sachs.
Former President Clinton, at a campaign stop for his wife in Pennsylvania over the weekend, said, “Corn is the single most inefficient way to produce ethanol because it uses a lot of energy and because it drives up the price of food.”
I’ll give points for trying. It’s important to explore options for alternative energy sources, and since the dominant market forces and political interests have such a vested interest in the status quo, a nudge from government may be necessary to encourage innovation.
And that said, when it begins to become clear that something isn’t working, like corn-based ethanol, government should be smart enough to pull the plug and focus its efforts elsewhere.
If it has to be ethanol, we’d be better off focusing on cane ethanol, which is about six times more efficient in terms of production, and is derived from waste product. Or cellulosic ethanol. Or biodiesel, for that matter.
But man, the corn growers and corporate farms own a lot of politicians, Republicans and Democrats alike. Too bad, since I think there’s a growing consensus that corn-based ethanol is more of a problem than a solution.
Posted by Recess Supervisor on April 14, 2008 at 2147 hrsBanning DDT didn’t fulfill the Malthusian quotas, so this tactic had to be used.
Posted by Steve Burri on April 14, 2008 at 2200 hrsWe just need more food stamps. Duh.
Posted by Aaron on April 14, 2008 at 2211 hrsAnd that said, when it begins to become clear that something isn’t working, like corn-based ethanol, government should be smart enough to pull the plug and focus its efforts elsewhere.
Geez RS You of all people should know that when it is clear something isn’t working government tries to find away to make it BIGGER, and in this case subsidize it more.
And mark my words. That is what Mr. Luther Olsen will try to do.
The Olsen family Did NOT sink all of their money, into Renew Energy just to see the Jefferson plant fail.
Posted by on April 14, 2008 at 2222 hrsJust like Bear Stearns, the Ethanol guys need to be put out of business.....no one guaranteed them anything.....it’s not working. Time to move on rather than have government compound the problem.
Posted by on April 14, 2008 at 2310 hrsHaha. Yes Michael, sadly you are very much correct. We will all be told in earnest voices by politicians with checks from ADM flowing out of their pockets that the problem is that we need to invest more money to figure out how to make corn-based ethanol more efficient… or some claptrap like that.
The problem here isn’t so much Luther Olsen as it is the enormous power that corporate ag and the corn lobby have over so many politicians in Congress. Luther’s one guy. The farm lobby owns whole state congressional delegations. And once again, subsidies for corn-based ethanol will drag out because below-average legislators are completely beholden to corporate interests that can’t find the food unless it’s put in the trough by government, and voters are too stupid and/or asleep at the wheel to notice.
Posted by Recess Supervisor on April 15, 2008 at 0012 hrsOf course ethanol is not the ONLY cause of rising food prices.
It’s inane and stupid on its own, however, and on the merits of “Burn Food, not Fuel” (or demerits) the program should be stopped.
Now.
Posted by dad29 on April 15, 2008 at 0657 hrsThe Pioneer Press did a story about a year ago in which they detailed the cost of ethanol subsidies to plants that have been making huge profits for years (no longer available). The state of MN still doles out millions to those involved with the plants. The Gov tried to get rid of the payments, but the farmers screamed. The article also mentioned that a new ethanol plant with a $150 million price tag will generally be paid off with NINE months. Nice ROI.
I can’t imagine anything changing regarding ethanol. Iowa caucuses are far too “important” for anybody in Congress to ever think of telling farmers to make it on their own without subsidies and mandates.
We’ll just sit here and watch prices on oil and food sky-rocket for years because we won’t drill for oil in Alaska or in the Gulf of Mexico, even though China is sucking it out of the Gulf. But, don’t worry environmentalists, I’m sure China’s safety standards are MUCH higher than the US’s.
Posted by on April 15, 2008 at 0828 hrsThe one thing that disturbs me (although it shouldn’t) is that the farmers seem to be the ones getting lumped in with the ADM’s of the world.
To listen and read the different opinions out there you would almost swear that people think the farms are all owned by ADM. or Renew Energy or whomever. The farms or at least the ones I go to yes, are huge operations (typically100-1000+ cows).
But the farmer is just selling his crops to the highest bidder, which in this case just happens to be ethanol.
It is just the Free Market System at work, We may not all be happy about it, but that is the way our system is set up.
Posted by on April 15, 2008 at 0926 hrsMichael,
Great point. The reality is that the farmer is a price taker and always has been. so, whatever the market offers they take and do the best they can. They also suffer the high fuel prices that everyone else does. So, they may get more money for their products but much of that money is eaten up in additional costs.
The real crooks here are the ADM’s of the world. Especially ADM itself. That company is as crooked as they come. The dishonesty starts at the CEO position and works its way down.
Suffice it to say the farm economy is integral to the success of the nation and it is not as easy as saying that we need to stop putting corn into ethanol production that is far to simplistic a view.
Posted by on April 15, 2008 at 0935 hrsBut the farmer is just selling his crops to the highest bidder, which in this case just happens to be ethanol.
Ethanol can afford to be the highest bidder only because of all the government grants, loans, subsidies, etc. It’s not the Free Market when there’s government intervention.
Posted by on April 15, 2008 at 0951 hrsI just feel more and more like a serf every day.
I subsidize major league baseball paying for stadiums so teams can make millions and pay players millions.
I subsidize ethanol plants so that some company can make millions while i turn around and pay more for groceries and get gas.
I mean if this was a political cartoon you’d see joe taxpayer strapped to the front of a combine pulling it thru the fields with Uncle Sam sitting fat and happy on the machine whipping the taxpayer harder while the corn is being harvested into a big truck called “corporate interests” with executives sitting in the front seat with a big ass smile on their fat face counting the money.
Gee I can’t wait for government to get involved in the healthcare business too…
You can be sure of one thing. Where business and goverment mix, the taxpayer will get screwed.
Posted by on April 15, 2008 at 1206 hrsxxpilot - I encourage you to draw that cartoon - you nailed it.
But don’t cut the farmers too much slack. They organize pretty well and demand that politicians give them hand-outs. There I said it out loud and now I can be labeled anti-family farmer despite the fact that I am from a family of farmers. The fact of the matter is, there are no “family farms” any more. There are businesses that farm and some are run by families but they are not the mythical family farm we are all lead to think of when election season roles around. Farming is business and either you can make it or you can’t. It should be that simple. If we lost 20% of the farmers we would be fine. Remember that we still have programs that intentionally remove “excess crops” from the market and that pay farmers not to cultivate their land.
Posted by on April 15, 2008 at 1220 hrsJoe:
What do you mean there are no family farms anymore?
How many Farmers do you know personally Joe?
I spend everyday on these family farms, and I talk to these farmers, and they struggle day in and day out to make ends meet just like the rest of us.
I’m not going to call you anti-family farmer.
I am however gonna call you an idiot.
Posted by on April 15, 2008 at 1258 hrsMichael
How about me (for part of my childhood) or my father (until he was in his late 30s), or my Uncle (the same – he was my Dad’s partner), of 50% of the people I grew up with in rural northern Wisconsin. I don’t dispute that there are families who engage in farming. My point is farmers are not some special idyllic class of people. They are running businesses the same as a carpenter, or roofer and I am saying it is time to recognize this fact and stop treating them like they comprise some special class of persons who is beyond reproach and who should be insulated from the market forces. You state they are “just like the rest of us” but they are not. If I were running a diner and there were too many diners in my town, would the gov’t pay me not to sling hash? Would they pay me not produce my product? In the short term through welfare or job training or a gov’t loan perhaps, but what other segment of the economy is deliberately set up to subsidize failing businesses who produce a product that has so much excess that the gov’t buys a bunch of it for no other reason than to keep the price higher?
As for calling me an idiot, well I guess now know the level of intellectual debate you are capable of. Maybe later I could call you dumb and then my friends could double-dog dare me to challenge you to a fight by on play ground when school lets out.
Posted by on April 15, 2008 at 1325 hrsOK let’s tone down the name calling and get back to what is the issue here. The cost of food and fuel are increasing for everyone. It is not the farmers fault it is the constant messing around the government does in order to make “everyone” happy. They were pretty good at it for a long time. At one time the amount of disposable income spent on food by the average American was 11 cents on the dollar. Now it is significantly higher. This will lead to big problems all over the world never doubt the power of desperately hungry people.
Posted by on April 15, 2008 at 1424 hrsI agree with anon, and Joe I apologize for my Obama moment.
I am just finding it irritating that people are under this mistaken assumption that farmers are being lumped in with big business. When it is simply not the case.
Anon brings up the point that this is what happens “when government tries to make everyone happy” and I could not agree more with that sentiment.
You would think at some point someone in the Government would realize this.
Posted by on April 15, 2008 at 1528 hrsThe problem here isn’t so much Luther Olsen as it is the enormous power that corporate ag and the corn lobby have over so many politicians in Congress.
LOL. It’s just as bad on the local level. I remember one elected official who was as conservative as it got. He voted against accepting federal grant money. He voted against everything even remotely related to spending money.
Yet a certain program that assisted farmers was taken away by the state. It wasn’t 6 months later he was in the Executive Branch’s office with 5 farmers railing at the state for taking away their program.
It was restored, at taxpayer expense.
Posted by on April 15, 2008 at 2123 hrsSure there are poor corn farmers who aren’t part of the problem, but many corn farmers in MN (at least) are members of ethanol co-ops, and they should be lumped in the the ADM’s. They also fund lobbyists and ad campaigns to push through mandates.
Iowa has about 27 plants currently (nearly all farmer owned, ADM and Cargill have 3 of them), and they are in the planning/building phase of 27 more. With that many ethanol plants, I find it hard to believe that there are many corn farmers that aren’t in the ethanol business.
Posted by on April 16, 2008 at 0910 hrsMichael,
Not a problem.
Posted by on April 16, 2008 at 0942 hrsIf you were a farmer why wouldn’t you be planting corn for ethanol? Isn’t it one of the most profitable crops you can raise? You can’t blame your average farm for taking advantage of the market.
These subsidies need to be stopped. A smart young politician would go out on a limb and speak out against them. It might be unpopular with the powerful lobbies and the politicians they bought, but eventually the people’s outrage will reach a level that politicians won’t be able to ignore. A smart politician would try and get out in front of the eventual tide that is going turn on farm subsidies. That tide should have turned years ago.
Posted by on April 16, 2008 at 1027 hrsI may be mistaken but the ethanol subsidies are not farm subsidies because they are not paid directly to the farmers. They go the the ethanol producers. They may be coops but that does not mean that the farmers get that money directly. There is not enough room in this blog for me to tell you all of the ways that farm coops get around paying farmers money. They do not run like local grocery coops.
As someone who is intimately familiar with the dairy and grain crops businesses i can tell you that while farmers are taking in more money now than they have in a long time they are also spending much more than they have in a long while. Net income is up but not as much as many would like to believe. Yes, there are isolated cases, but most farmers are still having to work very hard for their money.
And no local farmers should not ever be lumped in with ADM.
Posted by on April 16, 2008 at 1444 hrshttp://www.twincities.com/ci_8966472
Ethanol makes politicians stupid.
Posted by on April 18, 2008 at 0908 hrs
Ol' Army
