Told Ya. Again.

Here is the follow-up piece to my first ethanol post.


Can ya spare some change fer a pore farmer?
Originally posted August 15, 2007.

Once again, John Stossel has posted a winner. (He nearly always does, in my opinion.)

John Stossel: Dead Men Farming

I'm posting it here because it's very relevant to what I referenced in my last post, "The Ethanol Diet." Not to mention, it's something my mom and I talked about just this past weekend.

My dad grew up in Iowa and my parents were living there when I was born. Recently, Mother mentioned to me her surprise at the number of Iowa farmers she encountered -- rich ones -- who were receiving farm subsidies.

This was back in the 1970s, folks. We've been paying farmers to grow, and to not grow, certain crops for more than 30 years.

Now, I acknowledge, we can all see a peculiar "romance" in the idea of the Great American Family Farm: the Heartland warrior who battles the vagaries of nature to feed the nation; this quiet, earnest laborer who tills the soil with the help of his family, praying God will protect his harvest from the ravages of weather, disease and locust swarms.

Unfortunately, this mythic figure is just that: a myth. Those receiving government subsidies do not find that USDA check the only thing standing between themselves and a ruthless auction of their beloved homestead and all their possessions right down to Grannie Beulah's morning star quilt. Instead, this handout from the USDA (a.k.a. the American Taxpayer) more often bridges the gap between the farmer and, say, a new $45,000 pickup truck or a hot tub for the farmhouse.

Free-Market capitalism does work, America. You should try it sometime.

Told Ya.

I'm really not one to brag. (No, really.) But in this instance, I must.

The following post appeared on my personal blog on August 7, 2007. By my count: eight months ago. It's probably a stretch to call me Nostradamus, but I suppose the relevant question is: If I — a casual observer with no economic training or unique market access — can predict or identify this kind of trend, why can't the so-called "experts"?

The Ethanol Diet

Originally posted August 7, 2007

Back in May of this year, ABC News correspondent John Stossel wrote a column entitled "The Many Myths of Ethanol" , probably one of the most succinct and effective deconstructions of the ethanol fantasy that almost every politician from Hillary Clinton to Mitt Romney has been pedaling lately. Word on the street is that ethanol (a "biofuel" made from corn), as a renewable source of energy produced in the U.S., is The Silver Bullet that will solve energy shortages, pollution problems, price gouging by Big Oil, and a host of other ills.

Stossel's column details a lot of common-sense reasons why ethanol is not a viable alternative source for energy at this time and, further, makes the case that ethanol should not get the truckloads of state and federal funding it currently receives. In short, Stossel says, stop propping up this technology with government pork and let market capitalism decide when ethanol is a viable option for our energy needs.

I agree wholeheartedly with Stossel's argument and find his evidence compelling, but there is one HUGE blank that isn't mentioned in his column.

How many people do you know who eat petroleum? None? Me, neither.

What about corn? It may be just a best-guess, I'm willing to bet that most of the estimated 6.5 billion people on this planet are consuming corn in at least one form or another.

Does anyone else see a problem here?

I must confess, my attention to this issue has been sparked by one of my own anal-retentive homemaking practices: my computerized grocery list. I won't go into the reasons why I have put my grocery list into a database (there are many and they save us mucho dinero) but suffice it to say that I can usually tell you with a fair amount of accuracy the price of any given item we buy on a regular basis.

About six months ago, I could buy one dozen, Grade A Large eggs (regular cooped-chicken eggs, not free-range or anything) at the Walmart Supercenter for 88 cents. Yesterday, I paid $1.57 for the exact same product. [The price has climbed to $1.97 as of this posting.]

Okay, I'm sure you're aching for a point and here it is: with a much larger volume of U.S.-produced corn being diverted into ethanol production, there is less corn available for the production of food stuffs.

Granted, eggs are not made from corn, but chicken feed is roughly 80% corn-based. Corn also plays a large part in the formulation of livestock feeds for pork and beef. So every farmer producing a cord-fed animal for the food market (whether for primary consumption such as meat or secondary consumption such as milk or eggs) is now paying more for his feed and, thereby, charging more for his end product.

And it doesn't stop there. Just read a few labels and you'll discover that corn syrup, corn meal, corn oil or another corn-based product is in almost everything we eat. As food manufacturers pay more for their ingredients, you and I will pay more for our provisions at the grocery store.

A quick perusal of my receipt proved to me that about two-thirds of the items I bought from the grocery store yesterday had an increase in price. This is, of course, just anecdotal evidence.

But I'm not the only person who's been noticing (see other links below). It seems a number of organizations, particularly those engaged in feeding the poor, have noticed the rise of food costs and even made some connection to the increased production of biofuels such as ethanol. Communist China has gone so far as to ban corn-based ethanol production because of concerns about food shortages.

I'm a little miffed that in our mad dash to create an ethanol boom -- a commodity that not everyone in the world needs or will use -- we're on the verge of creating a food crisis that does effect everyone (poor people especially), not to mention fostering a possible economic crisis that will wreak much greater havoc than $3.09/gallon gasoline.

While Archer Daniel Midland (ADM) and the other farming conglomerates are laughing all the way to the bank, cashing in on "windfall profits" and government cheese to boot, how many working American families are having to cinch the belt tighter for every trip to buy food?

If you ask me, we need to tell Big Corn to stick to making food stuffs -- at least until they can prove ethanol can make it's way in a market that isn't subsidized by the government.

Yes, I think it's time for an ethanol diet.

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For further reading:

Rising Food Prices Curb Aid to Global Poor

Area Food Banks Feel Strain While Prices Rise

Food Price Rises Force a Cut in Biofuels

Corn Facts, Not Corn Flakes!