Ethanol and higher food costs

America’s great drought, although bad in many ways, may have a positive outcome. It may force policy makers and others to debate and finally come to a levelheaded decision on the use of food crops for fuel in our cars, and end the debacle that is raising food prices globally.

Public relations of high-fructose corn syrup

I realize that’s asking much out of American politicians and bureaucrats, but it needs to be done. The indication that food prices are rising globally because of America’s decision to use corn and other food staples as a fuel additive in American automobiles is nothing new, and it’s going to be continually fueled as proponents push for cleaner sources of energy.

Arguing for clean air is easy. Nobody wants to breathe polluted air. Nevertheless, the consequences of pushing too fast for untested forms of cleaner energy are not wise. Remember the MTBE debacle and the literal mess it caused?

“But corn is natural,” people argue. Yes, and it’s also a food staple for humans in much of the world. It’s also an ingredient in a large percentage of the food we buy here in America, not to mention a key ingredient for the feed used by animal agriculture.

A bit of history

As part of the 1990 Clean Air Act passed by Congress, reformulated gasoline was mandated to achieve smog reduction across the nation. In this mad dash for cleaner air, MTBE (methyl tertiary-butyl ether) began to be pushed in higher quantities in our gasoline. According to the EPA, MTBE was introduced in 1979 as a means of replacing lead in gasoline. Its purpose was to eliminate the knocking or pinging in gasoline engines that were now forced to use unleaded gasoline.

Fast forward a number of years and it was discovered that MTBE was responsible for polluting drinking water sources. Still, according to the EPA, no national standard has been set for MTBE in drinking water.

Agriculture’s role

I recall several years ago there was a big push in California to build ethanol plants because, as it was being discovered and touted, American corn was an excellent alternative to MTBE and a great way to reduce America’s dependence on foreign oil. The buzz at the time was that corn ethanol was going to save the world from MTBE and help fulfill tenets of the 1990 Clean Air Act. As with all so-called good intentions came the unintended consequences of higher food prices and higher animal feed prices as corn was diverted from human and animal consumption to fuel consumption in automobiles.

“Currently over 40 percent of the United States corn crop is being sent to ethanol producers, which is over half of what is used for livestock feed. Whereas farmers have enjoyed years of propped up corn prices, the march to burn more corn for fuel puts livestock producers in a pinch.” ~ Excerpt from  Washington Examiner commentary

What happened in the ensuing years was almost predictable. While investors were sadly discovering that ethanol production was not economically viable to stand on its own, taxpayers were being bilked by the government to subsidize this failing new industry.

Story after story in the media began to highlight the economic failure of ethanol as a profitable fuel source. While the mandated sales of corn was a sure-thing for some farmers, nobody else was singing the praises of this from an economic standpoint.

Consumers hit the hardest

Common economic sense suggests that when a commodity becomes more attractive to a wider audience and thus more in demand, its price will increase accordingly. Such has been the case for corn, even though American farmers have attempted to cash in by planting more acres of corn. As seen in California, dairy farmers  were forced to grow more corn to feed their cattle in an attempt to avoid the increased cost of corn on the open market. I witnessed this in Central California as plots of land typically planted in cotton every year were suddenly growing corn instead.

As recent as this week, the United Nations purportedly jumped on the band wagon, calling on the United States to cut its ethanol mandates because of the detrimental impacts its having on corn and food prices globally. Livestock producers in the United States have made a similar plea.

As with many “good things” there are unintended consequences that must be weighed in the decision making process. Such is the case with America’s move to using corn for fuel additives. As an aside, America has no shortage of oil-based reserves within its borders and otherwise at its disposal.

It’s time that America’s decision to use corn and other crops for fuel additives be reversed and America’s food production be utilized to do what it does best — feed humans around the world and provide an inexpensive means of feeding the livestock that we likewise rely upon to feed ourselves and our neighbors around the globe.

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