Tuesday, July 25, 2006

Burning Our Food

By Mark Clayton | Staff writer of The Christian Science Monitor

Iowa's corn fields may seem like endless green oceans, but if dozens of new corn-to-ethanol biorefineries now in development are all built, they could swallow most of the state's corn crop.

Amid America's rush to replace gasoline with homegrown alternatives like corn-based ethanol, some researchers worry that the results may benefit motorists at the expense of higher food costs and fewer US crop exports. It also raises ethical and environmental questions about the best uses of crop land.

After languishing for years, corn prices are projected to rise about 25 percent from around $2.00 a bushel currently to $2.45 a bushel this next crop year, reports the US Department of Agriculture (USDA). But as ethanol demand for corn kicks in, prices could go much higher in the future depending on gasoline prices.

"Ethanol has had huge impact on corn markets," says Jason Hill, a University of Minnesota researcher and coauthor of a study on ethanol's environmental impact published in the proceedings of the National Academy of Science last month. "Competition between food and fuel is growing, along with the environmental consequences as more ethanol facilities are built," the study says.

About one-fifth of the 2006 corn harvest this year will be used to make ethanol, estimates Robert Wisner, an economist at Iowa State University at Ames. By 2012, ethanol's share of the corn crop could nearly double, he says.

"This is a huge transition [for corn growers] from being a food producer to being a major source of energy," says Dr. Wisner, who says ethanol may munch the state's corn crop in a few years. "Once these plants are built, they will continue operating and purchasing corn unless conditions become extremely negative."

One key impact is that the price of feed corn for cattle, pork, and poultry could rise 60 to 70 percent over the next two years, although meat and other grocery items may not see significant price gains for up to four years, Wisner says.

"Cars, not people, will claim most of the increase in world grain consumption this year," writes Lester Brown, president of the Earth Policy Institute, an environmental think tank.

These questions don't worry some corn farmers including Ken McCauley. He and his neighbors near St. Joseph, Mo., are partners in a new ethanol facility that goes online in January.

To them, ethanol is a breakthrough that means making a profit instead of just breaking even. "You hear a lot of talk about there not going to be enough corn, but we've created this new demand, and we're actually helping meet the energy security needs of the country," he says. "We'll grow enough for everyone."

Ethanol's rise prompts worries of a corn crunch | csmonitor.com


At 7/27/2006 10:06:00 AM, Anonymous Cristobal said...

Very interesting. In my half-paying attention to CNBC all day, seems like there are many who claim that ths ethanol thing is a racket and that it'll never be cost effective. I wonder if they are taking into account the arguments from this post or have other reasons for their doubts. But then on the other hand, you have people who are going on about how the Brazillians are totally making ethanol work and even have enough left over for mojitos.

What IS the deal with ethanol?


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