Saturday, December 6, 2008

Why ethanol is a bad idea for vehicle fuel

One thing that people don't really understand about food is that it is perishable. That may seem like an obvious thing, but it's not really.

If you're a farmer and are growing a crop of corn, or grain, you try your best to get the best price for what you're growing; and, if you're a typical farmer, you're going to sell all of what you produce. You see, it costs money for you to store your crop, or any portion of your crop.

Maybe you'll store it hoping for a better price at a different date, but from the farmers point of view most of the crop is sold as soon as you can sell it. In fact, getting to market sooner is a grail that you chase -- because the first crops to the market for any given product get a better price than later production. As the production increases, the price goes down.

Every year you plant what you believe you can sell and not have to store. You choose your crops based on your soil, and what you believe will be in demand, and what you have experience planting. But remember that the goal is that the entire crop is sold, so if you produce too much of something, you'll have to sell it at a loss, or, worse yet, you'll leave it in the field. Anyone who lives near a pumpkin farmer has been looking at surplus globes for a couple of months now.

Even though ethanol accounts for only a few percent of our total corn production, that extra demand entered a system that is already very finely tuned to the demand; that is precisely tuned. So even a little bit of extra demand means that there's now more buyers than sellers, and the bidding begins. Corn, grain, silage, hay -- all forms of feed are effected. As the price of one goes up, other farmers choose cheaper alternatives, and this "hunting" for an economic way of feeding animals means that everything goes up.

So for me, the feed I was paying $280/ton for in 2006 I'm now paying $330 a ton for. The feed that cost me $370 a ton I now pay $480 a ton for. Since I don't contract to produce food, I sell my products at market price, but that's a luxury that I can have since i'm a very small farm. Larger farms and industrial farms are all contracted, and depending on how the contract is written a rise in feed costs like this may be the straw that breaks my back.

Last week I read about a farmer who was contracted to sell pork at $40 per hundred pounds, but was having to pay $70 per hundred pounds to produce it. Multiply that by 10,000 hogs and you get an idea that this doesn't last very long.

Gasoline that has ethanol added to it gets lower mileage than straight gasoline -- which defeats the purpose of adding it because you use more to cover the same number of miles.

Food is food. Fuel is fuel. We should get out of the ethanol business entirely.

1 comment:

1389 said...

Absolutely!

I'm not a farmer but I follow economic issues. Burning our food in the US means burning a part of the world's food supply. Corn for ethanol uses up land and resources that could be used for growing human food or animal feed. The upshot is rising food prices worldwide, poverty, civil unrest, and sometimes war.