Ethanol - the true cost
From
Modern Farmer:
Ethanol: The Farmers� Frenemy
In the summer of 2007, I spent several days in Shenandoah, Iowa, in the state�s rural southwestern corner, working on a series of newspaper stories.
A company called Green Plains was putting the finishing touches on its first ethanol plant on the outskirts of town; bumper stickers and pamphlets lauding the benefits of ethanol featured prominently in the stack of promotional literature the folks at city hall handed me.
Today, that plant in Shenandoah is turning 23 million bushels of corn into 65 million gallons of ethanol per year, and Green Plains now has 12 plants collectively putting out more than 1 billion gallons of ethanol annually. Across the country, more than 200 ethanol plants produced 13.3 billion gallons of ethanol in 2013 � up from 3.9 billion gallons produced in about 90 plants in 2005, when the first federal Renewable Fuels Standard, or RFS, was adopted. That law, updated in 2007, set minimums on the amount of renewable fuels sold annually in the United States, starting at 9 billion gallons in 2008 and increasing each year to 36 billion gallons in 2022. While the law mandated increasing use of ethanol made from cellulose and biodiesel, corn-based ethanol has and continues to account for the vast majority of renewable fuel produced to satisfy these requirements (cost-effective manufacturing of ethanol from other feedstocks remains an elusive goal).
When the RFS was enacted, a bushel of corn cost roughly $2. It has risen dramatically since, hovering for most of the past five years above $5 per bushel and spiking over $8 per bushel in 2012 (when a severe drought crimped the country�s supply).
Yikes -- from $2 to $8 -- don't forget that this also influences the export prices and those nations who buy our corn see a corresponding increase in their food prices. These are people who can barely afford the food in the first place.
A bit more:
But in Virginia, where I live, farmers raise a lot of cattle and chickens and have been singing a very different tune. Those corn price spikes that are a welcome development in Iowa have driven the cost of feed through the roof, much to the dismay of the livestock industry.
Pointing out that ethanol production now consumes more than 40 percent of the American corn crop (up from less than 15 percent in 2005), livestock groups like the National Turkey Federation and the National Beef Cattlemen�s Association directly blame federal ethanol policy for a host of problems and have called for an RFS repeal.
Say hello to high meat prices. We buy a half-cow at a time and pay about $3/pound. Shopping in the grocery store is a different story -- did a beef brisket last week and paid almost $6/pound for
brisket! Time to get another half-cow...
Posted by DaveH at January 28, 2014 1:32 PM