# What Is The Real Cost Of Corn Ethanol?



## Live Oak (Dec 22, 2003)

An interesting article with a different take on ethanol. Kinda lengthy but has some interesting points and links to other areas of energy production and conservation. You may or may not agree with the author but the article does bring up some interesting points to consider.

What Is The Real Cost Of Corn Ethanol? 


Ronald R. Cooke
The Cultural Economist 
www.tce.name 
February 07, 2007 

Introduction
Corn is the most widely produced feed grain in the United States, accounting for more than 90 percent of total feed grain production. Around 80 million acres of land are planted to corn, with the majority of the crop grown in the Heartland region. Although most of the crop is used to feed livestock, corn is also processed into food and industrial products including starch, sweeteners, corn oil, beverage and industrial alcohol, and fuel ethanol. The United States is a major player in the world corn market. Approximately 20 percent of its corn crop is currently exported to other countries.

The United States Department of Agriculture (USDA) has announced American farmers are expected to get 55 percent more for a bushel of corn in the 2006/2007 growing season than they received in the 2005/2006 growing season. Average annual prices are expected to increase from $2.00 per bushel to about $3.10 per bushel.

Thanks to Federal mandates and subsidies, corn used for the production of corn ethanol is expected to increase from ~ 700 M Bushels in 2000/2001, to 3.2 B bushels in 2007/2008 – an increase of 357 percent. On December 11, 2006, the USDA estimated 2006-2007 U.S. ending stocks would be 935 million bushels, down from 1.97 billion bushels in 2005-2006. That decreases the ending stocks by more than 50 percent and puts the ending stocks to use ratio at 8%, - the lowest in 11 years. It should be obvious to all, we are going to need a lot more acreage and big yield improvements if corn production is going to keep up to demand. Prices could exceed $4.50 per Bu by the end of 2008. That’s a price increase of 125% over 2005/2006 season prices.

Score one for the agribusiness lobby.

Consumers Will Pay

Higher Food Prices
If corn prices increase by ~ 55 percent, year over year, then will the corn used for hog, cattle, chicken, turkey and fish feed go up 55 %? Doesn’t that increase the price of meat, poultry, fish, milk and eggs? If corn is used in corn meal, corn flakes, corn oil, and hundreds of other food items goes up 55%, doesn’t that increase the price of all these foods? Maybe. Since 2000, the price of beef is up 31%, eggs up 50%, corn sweeteners up 33%, wet corn milling up 39%, and corn flakes are up 10%. Chicken prices haven’t changed very much. Yet. Food producers are predicting higher prices.

The word on the street is that corn futures prices have risen because of the soaring demand for corn to produce corn ethanol. Iowa’s corn ethanol production is projected to exceed 3.6 billion gallons a year. At that rate, corn ethanol production would consume nearly 1.3 billion bushels of corn, or two thirds of the corn Iowa farmers harvested in 2006. Corn for July 2007 delivery, quoted on January 3, 2007, was $3.82 per bushel. That’s a ~ 60 percent increase over the average price for a bushel of corn from 1988 through 2006. But the net increase in the price of food is less than 60%. When processed into corn ethanol, a 56 pound bushel of corn can yield about 16 pounds of distillers grain, gluten meal, and corn oil, thus replacing some of the corn products lost to corn ethanol production. The inflationary impact of higher corn prices is also mitigated by the percentage of corn used in each item of food. The greater the percentage of corn used in the ingredients, the higher the final price paid by a consumer. Final consumer prices will also be driven by the impact of export demand, the efficiency of cultivation (including the use of fertilizers, herbicides, and insecticides), the increasing use of lower yield marginal land for corn production, corn belt weather, consumer demand, and the greed (or fear) of Futures Market speculators.

Corn prices don’t move in a vacuum. As the price of corn increases, there is a corresponding upward pressure on the price paid for other grains, such as rice and wheat. Poor growing conditions in Europe, the United States, the Ukraine, and Australia; along with low stocks of stored wheat; and an increase in production of biofuels; have combined to push international wheat prices up to levels not seen in 10 years. We can expect the price of bread, pasta, and cereals to increase in 2007.

If corn prices follow the upward trend in demand,
will the price of food double by the end of 2008?

Probably not. But food prices are headed UP. Families will be forced to spend a greater percentage of their budgets on groceries. Low income families face the specter of possible nutritional deficiency.

More For Fuel
Proponents argue we can “grow” our way out of our dependency on oil. E-85, a fuel blend containing 85% ethanol, along with blends of up to 10 % in other gasoline grades, and the manufacture of flex fuel vehicles that can burn any blend of ethanol with gasoline, promise to create a long term demand for fuel grade alcohol. It will be a profitable business.

At taxpayer expense.

Congress, anxious to do something – anything – about the price of gasoline, has given the agribusiness industry a mandate it can not refuse. Corn ethanol production must rise from 4.0 billion gallons in 2006 to 7.5 billion gallons by 2012. Anxious to make sure its corn ethanol mandate gets done, Congress has also decided to take our tax money and use it to subsidize the production of ethanol. The current ethanol subsidy is a flat 51 cents per gallon of ethanol paid to the agent (usually an oil company) that blends ethanol with gasoline. Some States add other incentives, all paid by the taxpayer.

But there is more. It costs money to store, transport and blend ethanol with gasoline. Since ethanol absorbs water, and water is corrosive to pipeline components, it must be transported by tanker to the distribution point where it is blended with gasoline for delivery to your gas station. That’s expensive transportation. It costs more to make a gasoline that can be blended with ethanol. Ethanol is lost through vaporization and contamination during this process. Gasoline/ethanol fuel blends that have been contaminated with water degrade the efficiency of combustion. E-85 ethanol is corrosive to the seals and fuel systems of most of our existing engines (including boats, generators, lawn mowers, hand power tools, etc.), and can not be dispensed through existing gas station pumps. And finally, ethanol has about 30 percent less energy per gallon than gasoline. That means the fuel economy of a vehicle running on E-85 will be about 25% less than a comparable vehicle running on gasoline.

So. How much does the consumer pay for a gallon of corn ethanol? Let’s sum it up.


Cost For A Gallon Of Corn Ethanol 



Corn Ethanol Futures Market quote for January 2007 Delivery
$2.49

Add cost of transporting, storing and blending corn ethanol
$0.28

Added cost of making gasoline that can be blended with corn ethanol
$0.09

Add cost of subsidies paid to blender
$0.51

Total Direct Costs per Gallon
$3.37




Added cost from waste
$0.40

Added cost from damage to infrastructure and user's engine
$0.06

Total Indirect Costs per Gallon
$0.46




Added cost of lost energy
$1.27

Added cost of food (American family of four)
$1.79

Total Social Costs
$3.06




Total Cost of Corn Ethanol @ 85% Blend
$6.89


These numbers are estimates. We can speculate about the real cost of corn ethanol. It may cost more – or less – than $6.89 per gallon. But the real price we pay for corn ethanol is much higher than the one we see at the filling station.

Energy Boondoggle
Under optimum conditions, using the latest technology, assuming “normal” corn yields, and also assuming energy credits are allocated to the co-products of corn ethanol production, the USDA estimated in 2002 that corn ethanol can provide us with an adjusted 19,287 Btu/gal. Wait. Co products? Isn’t that the energy mostly derived from feeding corn products to animals? What do distiller’s dried grains with solubles from dry milling, and corn oil, corn gluten meal, and corn gluten feed from wet milling have to do with motor fuel?

Nothing. Nada. The 2002 study supports a net fuel energy gain of 8.2 percent. A later 2004 study concluded the net fuel energy gain was 5.9 percent. Critics of the USDA’s methodology point out that it does not include sufficient input energy for facilities, process equipment, and farm machinery. It fails to account for corn ethanol losses during blending, distribution, and consumption. We must also consider that corn crops are very dependent on the weather. In good years, prices will be “normal”. Bad weather, on the other hand, will not only increase the price we pay for corn ethanol and food, it may also lead to fuel shortages.

Sorry. But we Americans have been used to deriving our energy from oil, where the historical return was more like 100:1, and where the return on land extraction still exceeds 10:1. In my opinion, if we wish to build our energy reserves, a viable liquid mobile fuel production process must yield at least twice the energy it consumes. By contrast, many believe corn ethanol consumes more energy than it yields. And I agree. We could easily waste more than 8.2 percent of the corn ethanol we make in the distribution chain. That means the Congressional corn ethanol mandate is destructive, rather than constructive.

So. What did we accomplish with this rush to a politically expedient pop-culture solution?

The Benefits?
It can be done. We can ramp up corn ethanol production to 7.5 billion gallons per year by 2012. But if corn ethanol is not a cheap alternative to gasoline, and corn ethanol production increases the price of food, are there any offsetting benefits to make these higher costs worthwhile?

Cleaner Air
When most cars had a carburetor, adding corn ethanol to gasoline tricked the fuel system into delivering a leaner mixture to the engine. Since proponents tended to ignore the loss of fuel economy, it was assumed that all vehicles running on a 2 to 5 % mix would cause less air pollution. But that was 20 years ago. Today’s fuel injected engines self-adjust to the fuel mixture regardless of fuel composition. Sensors tell the fuel system computer if the mix needs to be rich (when the engine is warming up), or can be lean (for increased fuel efficiency and lower emissions). Corn ethanol does little, if anything, to reduce the tailpipe emissions of late model cars.

The environmental benefits of E85 are both uncertain and confusing. Test results vary depending on water contamination, engine temperature, test vehicle fuel system design, ignition system performance, and the ideological convictions of the tester. It is likely E85, when compared with standard gasoline, will reduce tailpipe emissions from oxides of nitrogen, 1,3-butadiene, and benzene. Methane and total organic gas emissions are greater. Carbon monoxide ad CO2 results vary from reasonably good to really terrible. The real eye opener is a large increase in formaldehyde (isn’t that the stuff they use to embalm dead people?), and a huge increase in acetaldehyde emissions. A suspected neurotoxin, exposure to acetaldehyde vapor will irritate the victims eyes, skin and respiratory tract. The State of California has determined that acetaldehyde is a carcinogen.

And we should consider this concept. Do we release far more pollution into the environment during the production and processing of corn into corn ethanol than we save in act of consuming corn ethanol as a motor fuel? Probably. Corn is monoculture cultivation on a massive scale, requiring copious quantities of oil and natural gas for herbicides, pesticides, and fertilizers. These – along with tons of eroded soils – are deposited as a polluted waste in our rivers and oceans. If the agribusiness industry attempts to increase current levels of food production by deforestation and the use of marginal land, the net result is an acceleration of greenhouse gases and a decrease in biodiversity. Corn derived animal feeds are a potent source of methane, a greenhouse gas.

In my trusty Honda Accord, straight gasoline gave me roughly 31 MPG. When California added a low percentage of corn ethanol to the mix, my mileage dropped to 28 MPG. I had to use 9.7% more fuel to go the same distance. I just completed a like comparison in my Honda Pilot. My mileage dropped from an average of 22.5 MPG, to 20.4 MPG, a reduction of 9.3%. If the improvement in air quality is marginal (at best!), then doesn’t the energy loss of corn ethanol actually increase the release of CO2? Perhaps it is time to challenge our obsolete assumptions. This is 2007. Does corn ethanol in the mix continue to make any sense?

That, of course, is a rhetorical question. If we evaluate corn ethanol as a fuel system, we must add the hydrocarbon and poisons produced during planting, growing, harvesting, conversion, transportation, blending, distribution, and consumption to the additional hydrocarbons released by corn ethanol waste, and the hydrocarbon penalty from energy inefficiency.

More questions. 

Does our enthusiasm for corn ethanol actually increase global warming? 
Have we deceived ourselves with vaporous logic? 
Does corn ethanol reduce the production of green house gases, - or does it merely encourage the increased consumption of hydrocarbon fuels? 
Does the federal corn ethanol program encourage the perpetuation of our energy intensive lifestyle? 
Are we laboring under the self induced delusion we do not have to develop an energy detensive culture? 
If we burn a hydrocarbon fuel, what difference does it make when these hydrocarbon chains were created? 
Green house gas is green house gas. Every puff adds to global warming. Our pop culture romance with corn ethanol – all carefully nurtured by agribusiness interests – obscures the realities of corn ethanol combustion. It does not force us to do the one thing we must do to protect our environment – increase the efficiency of fuel consumption.

Addressing Global Warming, Air Pollution Health Damage, and Long-Term Energy Needs Simultaneously, Mark Z. Jacobson, Dept. of Civil and Environmental Engineering, Stanford University, June 6, 2006. “Proponents of corn ethanol suggest that it is a clean and renewable fuel that will reduce air pollution and address climate change. Data, computer model results, and new emission information suggest that corn ethanol is neither clean nor has it been shown that it can slow global warming. To the contrary, its promotion will continue the public health crisis that has resulted in thousands of premature air-pollution-related deaths and millions of cases of asthma and respiratory disease each year in the U.S.” …..

So. Does adding corn ethanol to fuel mix do anything to help in our quest for cleaner air? The ecology of our planet? Global warming?

I could be wrong. You decide.

Makes Us Less dependent on Oil
A controversial conclusion. In the name of political expediency, Congress has failed to pursue a coherent energy policy. For example: Congress gives American auto manufacturers “excess mileage” credits for building E-85 flexible fuel vehicles, saving them $ millions in penalties they should have paid for not meeting this nation’s CAFÉ mileage standards. The result: the American auto industry builds lots of big cars, SUVs, and trucks. The net effect of Congressional policy is to increase tailpipe emissions and our nation’s dependency on foreign oil.

More controversy. Best case, it takes almost as much energy to make corn ethanol as we get from the resulting corn ethanol fuel. Deduct waste and energy consumed in the supply chain, along with a sharp decrease in fuel efficiency, and what do you get? At best, if we reach the goals set by Congress, corn ethanol will make America less than 1 percent less dependent on oil as a fuel resource.

I remain skeptical.

Unintended Consequences
I read somewhere that 80 million humans starved to death in the 20th century. That number seems low. Only 2 percent out of an average population of 4 billion humans. 
Are body counts a State secret?

In any event, famines occurred throughout the 20th century: The Allied blockade of Germany from 1915 – 1918; Armenia 1915 – 1917; The Soviet Famine of 1932 – 1934; Poland 1940 – 1942; Leningrad 1941 to 1944; India 1943 – 1944; China 1928, 1942, 1958 - 1962; Biafra in the late 1960s; Cambodia in the 1970s; and more recently the famines in North Korea, Sub-Saharan Africa, South Asia and parts of Latin America. Pockets of starvation and malnutrition happened all over the globe. We can blame them on crop failure, drought, and pestilence. But most were either created or exacerbated by man. Hatred, war, genocide, lousy economic policy. Hunger has been politicized and globalized. Famine is invariably attended by disease, malnutrition, poverty, inflated food prices, declining education, disrupted medical systems, social disintegration, and – bloody senseless conflict. Most of the dead are little children and old people. More men than women. Millions suffer from severe malnutrition – the bride of crippling disease. And things are getting worse. We humans are destroying our arable land. The cost of the amendments and chemicals that spurred the green revolution are becoming prohibitively expensive. By the end of the 2oth century, the basic infrastructure of food production was breaking down in many parts of the world. In Brazil, for example, the replacement of small farms with vast seas of industrialized sugarcane monoculture has led to a decrease in biodiversity, the conversion of more forests to farmland, increased food prices, and rising social problems from vandalism, unemployment, political unrest and violence. Food production has declined at many subsistence farms in Africa, Asia, Mexico, and elsewhere. Although the demand for corn promises to increase the income of poor farmers in Mexico, they will have to chose between planting crops for food or crops for fuel.

Will the quest to “grow our way out of our dependency on oil” lead to greater hunger?
Is that the real cost of corn ethanol?

A study of third world cultural economics suggests millions of Third world farmers face increased deprivation. If impoverished farmers are forced to raise fuel crops because they increase the wealth of those in power, the farmers will starve because they did not grow enough food. Sadly. The prerequisite pattern of oppression has already been established in Third World countries. Inorganic fertilizers, herbicides and pesticides are already too expensive. So farmers plant the land without them until it is exhausted. Useless.

Current corn ethanol production plans will take most of America’s corn crop off the world market. Corn and grain crop prices paid by millions of people in multiple nations will go up. For some, there is not enough money to pay these inflated prices.

Given the desperation of existing worldwide malnutrition and hunger, and knowing corn ethanol production will increase the price of almost everything we eat, 
is it ethical to use arable land to produce ethanol?

You decide.

There Are Better Alternatives. 
I will admit to angst. Frustration. Disgust. Many, many very bright people are working on the energy solutions. Wind, solar, biomass, coal, nuclear, oil, natural gas, currents – the list is very long. The Department of Energy has launched a number of constructive programs and projects. The work being done by the DOE’s Argonne National Laboratory, National Renewable Energy Laboratory, National Energy Technology Laboratory, Oak Ridge National Laboratory, and other organizations in basic science, fuel technology, fuel resources, and energy efficiency are highly commendable. But all to often the objectives are as much driven by political considerations as by practical program management. We can fault Congress for the misuse of wonderfully talented people. If we expect these programs to produce credible, viable results, they must be pursued without regard to pop culture or political influence. A good energy program is a well managed product development program. Goals. Objectives. Time lines. Decisions based on real benefits.

We would get a far better return on our investment if we took all the money Congress is spending on corn ethanol subsidies and spent it on automotive and industrial fuel efficiency. The benefits are immediate and quantifiable. Increased fuel efficiency reduces oil consumption, eases the problem of our dependence on foreign oil, and reduces the emission of green house gases. 
We could do a far better job of building our energy stocks and reducing global warming if we found a way to use dirty natural gas – the gas flared during the production and refining process - as a fuel . 
Biodiesel and cellulosic Butanol appear promising. It would appear that the wide variety of feedstocks, the possible production of electricity from the combustion of lignin, and the higher net gain in energy all work to make cellulosic Butanol far more attractive as an energy solution than corn ethanol. 
And on and on. There are multiple ways to reduce global warming. So. By comparison, what did this burst of enthusiasm for corn ethanol accomplish?

The Real Cost
Congress has decided to use our tax payer dollars to raise the price of food, increase the cost of motor fuels, and promote global warming. One could make the case Congressional action has also increased malnutrition, hunger, and disease. And why did Congress fund this immoral program? Because our politicians leaders are locked in a nasty battle for political power. It was a politically expedient decision. A pop-culture solution.

Is this what we want?

The marginal benefits of cleaner air will be offset by increased pollution in the corn ethanol supply chain. On a net energy basis, one can make the case corn ethanol increases America’s consumption of natural gas and oil. We have been warned by academics, staff at the United Nations, and many, many of others: The specter of famine promises to accelerate exponentially in the 21st century. Every acre converted to the production of fuel is an acre that will not be used for food. And finally, there are alternative energy solutions available to us that would be far more effective if we really want to do something constructive about global warming.

And despite all this – Congress wants to use crop land to grow fuel? Has motor fuel become more important than eating? Why has Congress chosen to ignore the impact their program will have on the price of food? And why corn ethanol? Is it because corn is a crop Iowa farmers know how to grow? Is campaign financing and the 2008 election cycle more important than constructive strategic planning? Was corn ethanol an overly simplistic response to our looming energy shortages? Has most of the campaign for corn ethanol been financed by agribusiness interests? Do they have a financial interest in the outcome? Has the environmentalist community been hoodwinked? Was the claim that animal feed is energy deceptive?

You decide.

By all means, we should explore the development, production, and distribution of biomass fuels. Many are working diligently on the conversion of plant wastes and other organic materials into motor fuels. My son and I have talked frequently about alternative fuels. With great patience he has sketched out the chemical reactions needed to get from raw material to motor fuel. Pieces of paper scattered about the kitchen table. Each promises a potential solution. All need work. He has his own ideas about the conversion of agricultural, commercial, industrial, and municipal wastes into useful fuels. We agree on the objective (you can read about it at http://www.c8tce.blogspot.com/ ).

What ever we do, let’s base our alternative fuel decisions on good science, cultural economics, and a consideration for the use of these fuels within the context of our environmental goals. Pop culture solutions forced on us by the selfish-best-interest political power of the proponents is a trap we shall regret.

That’s the way I feel. How about you?

Ronald R. Cooke
February 07, 2007 
The Cultural Economist 
www.tce.name 

1I encourage you to do your own homework. Analyze the best data you can find. Then plug your findings into the above Table. Just remember. Every box has a data point.

2The Energy Balance of Corn ethanol: An Update. By Hosein Shapouri, James A. Duffield, and Michael Wang. U.S. Department of Agriculture, Office of the Chief Economist, Office of Energy Policy and New Uses. Agricultural Economic Report No. 814. July, 2002.

3Apparently, when Brazil tried using agricultural crops other than sugar cane for ethanol, it achieved only a 1:1.20 energy conversion rate. It wasn’t worth the effort.

4I encourage you to look up the evaluation done by David Pimentel (Cornell) and Tad Patzek (U. C. Berkeley). They believe it takes more energy to make ethanol than we get from ethanol.

5The same technique can not be used to mix ethanol with diesel fuel.

6If we are willing to ignore the environmental impacts, it would take ~ 6 units of energy to get ~ 1 unit of net new energy – best case – or a mere 60 gallons of net gain per acre of corn. If we think we can grow our way out of oil dependency, we had better plan on consuming corn at a rate of 77 acres per second! 

7Despite working toward energy independence since the 1970s, in 2000 Brazil found out that a bad crop year was as devastating as a reduction of imported oil. It was forced to import corn ethanol from the Archer Daniels Midland Co.

8See “The Federal Energy Policy Act of 2005” at http://www.federalenergypolicy.blogspot.com/

9See “Dirty Natural Gas” at http://www.theculturaleconomistblog.blogspot.com/

10Iowa is a critical “must win” State for America’s politicians. Serious candidates do everything they can to please Iowa’s voters. Is the use of taxpayer money to subsidize corn and ethanol production a form of bribery?

11And with great patience, he has explained most of these alternative energy solutions were well known when he received his Masters Degree in Chemical Engineering at U. C. Davis – over 20 years ago.


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## Archdean (Jul 15, 2004)

I AGREE wholeheartedly, it has to tell you something when meat producing states see this exactly opposite from the meat consuming ones i.e. generally the ones consuming the most gasoline!

IMO the ethanol production craze will become one of most misconceived and wrongheaded growth limiting economic ideas of this century!!!!

Dean


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## johndeere (Sep 17, 2003)

I would rather see my corn go to the use of energy rather then feed some country who can not pay for it.Its about time the American farmer gets a little closer to a fair price for his product.Rather then being exspected to just break even or in many cases not break even.

Funny how so many feel the farmer is suppose to just get by.See it and hear it all the time from the city dudes.They do not realise what there paying at the grocery store has nothig to do with grain markets and the income a farmer makes.Corn market prices could triple and there would be no reason for grocery store prices to rise a cent.They inflated the prices years ago.

Everyone is exspected to make a good living but not the farmer.I here it all the time also from the city dudes.When I gripe about the cost of everything being way out of line.I here but they have to keep the lights on and pay there bills.Well so does the farmer and the cost of machinery and seed and fertilizer and herbicides is threw the roof.But does that drive up market prices?The answer is no!

I also do not worry about feeding the world.My thoughts are feed the parts of the world willing to pay for it.Put are farm land back into production rather then turning it into Cookie Cutter houses for Yuppies.Then let ethanol and Bio Diesel from Soybeans and waste fat take off.I realise we can not produce 100% of our fuel needs.But we could knock a chunk out of it.Then drill forll that oil in Alaska.Just waiting to be tapped.Then tell the Arabs where to kiss there camels.

American city dudes are willing to pay $300.000 for a slap together house and $30.000 for a slap together vehical.They pay $100.00 for a cell phone they dont need.They pay big prices for sports close and tennis shoes slapped together in Mexico and Viet Nam.But will Gripe if they think there food cost might rise a little and if they get it in there heads the farmer might profit from it.Then all Hell will snap.


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## Archdean (Jul 15, 2004)

Nick,

In case you missed the real point of the ethanol boondoggle which incidently will not reduce the price of fuel in the aggregate but serve to increase the price of "FOOD" drastically accross the board!

Now if you and your family only eat corn and raise your own meat, poultry and dairy products as well as any products processed from corn!! Then you will be among a very small elite group of winners only if of course you don't have to pay the real cost of ethanolized fuel to accomplish all of that!!

There really is a cause and effect principal at work here and it takes place outside of YOUR cornfield!!!

Dean


:cowboy:


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## ducati996 (Dec 27, 2003)

> _Originally posted by Chief _
> *
> In my trusty Honda Accord, straight gasoline gave me roughly 31 MPG. When California added a low percentage of corn ethanol to the mix, my mileage dropped to 28 MPG. I had to use 9.7% more fuel to go the same distance. I just completed a like comparison in my Honda Pilot. My mileage dropped from an average of 22.5 MPG, to 20.4 MPG, a reduction of 9.3%. If the improvement in air quality is marginal (at best!), then doesn’t the energy loss of corn ethanol actually increase the release of CO2? Perhaps it is time to challenge our obsolete assumptions. This is 2007. Does corn ethanol in the mix continue to make any sense?
> 
> *


This part pretty much sums it up for me - real world averages show me Im loosing 7 mpg off the top in city driving with one vehicle, compared to states that do not bother with adding ethanol. Im now consuming more fuel as well as emitting more Co2, since I now burn more fuel to go the same distance... defeats any arguement on 10% ethanol merits in my opinion


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## chrpmaster (May 5, 2004)

Great article Chief! Thanks for sharing it and starting a good conversation.

I thnk the ethanol effort is a good idea that went wrong. The good idea is looking for alternatives to imported oil. Unfortunatly whenever the government gets involved it pushes the ideas that are least difficult politically not the ones that make the most sense. 

My thoughts are as follows(and in no particular order as usual!):

1. I think the American farmers can grow lots more corn if there is a need for it and the price is high enough. Just end the set aside program that pays farmers to leave ground fallow and let that ground get back into production and then you have more corn( and any other crop we need). I am willing to pay higher prices for food so that farmers can earn a good living. I have nothing but respect for anyone who starts their own business using amazingly expensive equipment and raw materials (seed, fertilizer fuel etc) and figures out a way to make a living and support their family when the biggest factor in the success of their business is the weather.

2. I am willing to spend more on fuel or get lower gas milage if it starves those d**n ******* b*&^%$ds of money that is then used to try to kill me.

3. I think we should stop being so wishy washy and drill in ANWAR and anywhere else that has oil in our own country.

4. I think we should have a national goal of total energy independence. I think we should build lots more nuclear and coal fired electric power plants so we don't need to use oil or natural gas to make electricity. We have coal reserves that we couldn't use up in several hundred years in this country and people out of work in West Virginia and elsewhere who would love jobs digging it up. This would also speed up the end of importing oil and natural gas and help domestic production meet our needs quicker by lowering demand.

5. I think government should get out of the way of American ingenuity and allow us to figure out better solutions without looking over our shoulder wondering what "big brother" is going to do next. Noone can convince me that it requires government involvement because private industry doesn't have the money to pay for it hasn't been reading the paper. Wasn't it just last week the press was having heart palpitions over how much profit Exxon/Mobil made? 

6. The same thing goes for all the tax credits the government throws at problems. If they would just stay out of our way we could decide on our own whether we want ethanol or not. I don't need some politician deciding for me how to spend my money or raising my taxes to fund something they think is a good idea.

7. The articles point about increasing world world hunger is way off the mark. There could be enough food produced today to feed all the worlds people. The one of the main reason for hunger in the world is corrupt governments not allowing their citizens to profit from their own labor and use those profits to freely buy the food (and other things) they need. 

I guess I just believe that the free market will work out better solutions than exist now. Just keep government (and the d*&n *************) out of it.

just my two bits

Andy


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## johndeere (Sep 17, 2003)

All im saying is if the farmer can benifit.Then im all for it.I really do not care if it is the answer.I just like the higher grain prices.As for food prices raising.They will anyway.Just like every other thing.Maybe im greedy?But I feel its time the farmers gets a chance to feel what greed is like.:furious:


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## Archdean (Jul 15, 2004)

> _Originally posted by johndeere _
> *All im saying is if the farmer can benifit.Then im all for it.I really do not care if it is the answer.I just like the higher grain prices.As for food prices raising.They will anyway.Just like every other thing.Maybe im greedy?But I feel its time the farmers gets a chance to feel what greed is like.:furious: *


Nick, I know in your heart of hearts that you really don't mean that!! Do You :question: :question:

Dean


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## johndeere (Sep 17, 2003)

Dean to make money for a change and finally replacing old equipment.Having machinery options open to me and replacing old worn out equipment that was putting me under.I sold corn a year ago for $2.18 and have sold corn in the past for less then $2.00.I sold part of my corn this year for $3.82 and im holding the rest for $4.00 its offered in.I just sold beans for $7.02 and have sold for as low as $4.96 in the last few years.Beans were $12.00 when Nixon was in whats wrong with that picture?I would like to see beans at $12.00 now and corn at $5.00.But I will settle for near $4.00 corn and $7.00 beans.I do not think thats asking for a lot.It atleast opens the door to some good used equipment that I have been purchasing this winter.I could not even look before.


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## Live Oak (Dec 22, 2003)

> _Originally posted by chrpmaster _
> *Great article Chief! Thanks for sharing it and starting a good conversation. *


I was beginning to wonder what it would take to get folks to post something and have some good conversation. :argh:   Nice to see folks jumping into the arena for a change.


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## Archdean (Jul 15, 2004)

Now your talking Nick, and I couldn't agree more!! The problem in this country, it seems to me, is we as individual groups of disconnected peoples will hop on any cart passing by with a snake oil salesman (usually a politician) promising the be all to end all to each economic group which in the long term accomplishes nothing but pit American against American!!!

For instance this whole ethanol scam was perpetrated by the urban yuppies (your word) pssing and moaning because oil prices went to $2 dollars a gallon back in 05, now we have totally turned the economic balance of agriculture supply and demand on it's head with no plan to put it back on it's feet with the exception of more federal subsistence doled out to the next snake oil salesman's constituents!!

What effects your neighbor is also going to effect you!! This rush to pacify the fuel cost whiner with a temporary feel good policy is just plain NUTS!!!

As the world consumes more oil (mainly developing China) oil prices will ultimately increase with supply and demand! There are several other SMART options that would in fact, although unpopular with the same group that caused this god forsaken mess) decrease our dependence on oil both foreign and domestic like Nuclear, Coal, drilling where we know it is (Anwar) and so on!! But no that is too logical for them and would cost votes!!! This madness won't stop until people like you Nick finally get sick of it and say to them that you have had enough of this BS!!

I agree that farm commodity prices are to low but that is primarily due to the excess in production!! Beef/pork/and the like is no different!!

But to leap headlong in the goofiest of ideas that benefits no one by removing one important product to be used for tilting at wind mills, that has allowed the others to produce will be felt for years to come if this cock-a-mainia is allowed to continue!!

Dean

:cowboy:


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## johndeere (Sep 17, 2003)

I know what your saying Dean.But hey if it makes the Yuppies feel better.Why not let them feel good awhile if it helps the farmer.I dont mind telling them what they want to here.Saving the earth and hugging a tree and not killing the seals and turning around global warming and saving the rain forrest all that jazz.That gives a good democrat like my self a bad name.LOL.If it keeps the grain markets up.I say ethanol is a good thing


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## Eddinberry (Dec 3, 2006)

Nick,

There was a blurb in the news the other day about the Poor folks in Mexico having to pay double for tortillias, and the matter is causing a bit of a panic.

It seems the poor Mexican folks get 40% of thier dietary protien from Tortillias, and now that they have to pay double, many will starve.

I'm with ya on cashing in on the idiot liberal yuppies that want to do anything, even if it is wrong, when it comes to alternative fuels.

Just know that the bottom will drop out just as fast as it got here!!!

When the Hippies and econazi's get around to considering Silage , there will be another wave of silliness....

Cash in while ya can.... Like any good Conservative.

Stay safe down there!!!!
Eddinberry


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## johndeere (Sep 17, 2003)

Around here there are all kinds of rumors about Ethanol plants?I here word of one being built here and there.Problem is there not building?Im not sure what to think of it.


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## Archdean (Jul 15, 2004)

Nick, you said "Why not let them feel good awhile if it helps the farmer."

Back to you! Would you not agree that Those of us that raise and market Poultry/Pork/Dairy and Beef (granted those BEEF guys get the fancy title of ranchers) are also farmers and this does not help them one IOTA!!

One of these days soon I'm going to fly to Illinois just to help you find an exit to that corn field maize that you are trapped in!!! 

It's the least I can do!! 

Dean

:cowboy:


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## johndeere (Sep 17, 2003)

Yea I know it hurts the live stock producer.I often forget about them.Because they all got out while the gitting was good around here.Low markets and we were feeding them are own corn and hay.

There is corn around here that is shipped to Califonia to feed cattle.

But check out the cost of Anihydrous per ton and the cost of hebicides per acre and did you know a bushel of seed corn with all the BT technology kernal gaurd and all that stuff average Joe on the street has no clue what means is now over $200.00 per bag and plants 3 acres.Then top it off with grainular incecticides like Force.That bag of seed corn @ $200.00 per bag is the cheap expence in raising corn.Average is $1.60 per bushel to break even and that was the average before a few more price increases recently I have not figured in.That does not maintain the machinery maintenace costs.Walking into your local John Deere or New Holland or Case IH etc. Parts counter and you can easily walk out with a bill for a few grand in parts.When a combine cost a quarter of a million dollars new.You run what you have and parts are not cheap.Also that $1.60 does not include fuel costs and property taxes.

We also started hauling our own grain to the local elevator one wagon at a time rather then having it hauled by truck.Because of fuel cost driving up trucking costs.8cents per bushel to haul it 4 miles was getting out of hand.They can haul 1000 bushel legally and $80.00 to haul it 4 miles seemed like robbery to me.So we cut them truckers off.I gladly spent $9000.00 on a slightly used Unverferth 550 bushel grain wagon and haul it my self.Beat $15000.00 for a new one.Yea thats right!$15000.00 for a wagon.

I guess what im saying Dean is things are tuff all over:furious:


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## Archdean (Jul 15, 2004)

*Update!! or maybe it should be called FALLOUT!!*

Demand for Corn Driving Up Meat Prices 



Friday March 9, 10:21 AM EST 


WASHINGTON (AP) — Strong demand for corn from ethanol plants is driving up the cost of livestock and will raise prices for beef, pork and chicken, the Agriculture Department said Friday.

Meat and poultry production will fall as producers face higher feed costs, the department said in its monthly crop report. Ethanol fuel, which is blended with gasoline, is consuming 20 percent of last year's corn crop and is expected to gobble up more than 25 percent of this year's crop.

The price of corn, the main feed for livestock, has driven the cost of feeding chickens up 40 percent, according to the National Chicken Council. The council says that chicken, the most popular meat with consumers, will soon cost more at the grocery store. The industry worries the competition from ethanol could cause a shortage of corn.



The average price of corn, unchanged from last month, is $3.20 a bushel, up from $2 last year.

For soybeans, analysts said prices are averaging $6.30 a bushel, up from last month's average of $6.20. Last year's price was $5.66. Wheat prices are averaging $4.25 a bushel, unchanged from last month and up from $3.42 last year.

Also in the crop report, the department updated the citrus forecast to include the effects of a January freeze on California oranges. The California crop will be 39 percent smaller than last year, and combined with freezes that are expected to reduce the Florida crop, the nation's crop is expected to be 18 percent smaller than last season.


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## wass (Jan 3, 2007)

I figured out 20 years ago that I couldn't afford to grow corn. I've been renting out our open ground ( to corn farmers ) and generally make more per acre than them and always swap fewer dollars. Maybe if the price goes up, fewer farmers will go broke.:smoking:


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## Archdean (Jul 15, 2004)

Wass, 

The fiasco in this ethanol boondoggle (goat rope) is what I tried to point out to John Deere early on, "Farmers also include the meat producers" that now must compete with the ethanol craze!!

Watch what is about to happen to the Soccer Mom's food budget when her meat counter bill jumps 40% and she/he is already paying in real costs way above $3 a gallon for her/his trip to the grocery store in her/his POS minivan having just congratulated her/his self on filling up with a tank of EBS!!

Economics 101 on Meth!! But hey were helping kick the oil companies butt!! <B>NOT</B>!! Were just being complacent in kicking our OWN!

Dean



:cowboy:


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## johndeere (Sep 17, 2003)

Dean where did they come up with those low grain prices?Here on the Chicago board of trade those prices or way off.Corn is a little over $4.00 Soybeans are 7.20 there abouts.

I sold a little under half my corn for $3.86 in January.I sold a few thousand bushel for $4.02 a few weeks ago.Im holding the other half probably until May after planting season.Im holding out for $5.00 and im sure it will get close and the watchers anilisers say it will make it.I could hold it until September if I had to.But will need the space for the new crop in October.

I sold all my Soybeans $7.00 for most but had more then I thought so after that contract was filled I sold the remainder for $7.26 now that I am out I am watching the futures.I will more then likley sell both corn and beans out of the field.Wish I could see the future to know how many bushel I will have and if prices will go higher if I hold.

I do not like chicken anyway:furious: I have a few head of cattle that land in my freezer.Believe me im not the reason your food bill is going up.What was there excuse when corn was $1.60 all those years.

Besides my fuel cost are up also.We go through a lot of diesl fuel and lp propane to dry corn to 15% the prices are still not as high as they truely should be.Why is it everyone else is allowed to make a decent living.But when the Farmer does everyone belly aches.I realise the live stock guys are having a tuff time.But we have been mostly bearly breaking even since about 1981 and a few drought years we lost are rear ends.Hog producers were forced out in this area about 5 years ago.Gone and will never come back im sure.Thanks to low prices and EPA requirments.


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## Archdean (Jul 15, 2004)

Nick, I really don't know, it's a government report ( alrighty then) Your corn prices are reflective of the demand caused by the euphoric need to produce more ethanol!! Which is good for you personally until the same government bean counters figure in the inflationary impact on the dollar and then your picnic celebration ends and this is where your going to feel it!

1. Wife says you know Nick that Ole hot water heater is about toast, we better replace it soon, so off you go to Lowe's/Sears/somewhere in search of a new one only to discover that they are 3 times what you paid for the last one only 7 years ago!!

2. That pail of Lube you used up last fall needs to be replaced for your spring planting needs and it's now $18 more!!

3. Your own butt is about to hang out of that pair of brown carharts that you have worn for the last 3 years (don't tell me thats not true) I saw them when you were trying out your 2 year old snowblower for the first time!! Anyway they will cost you $17.87 more now then they did then!!

The point is whether you like the Colonels chicken or not and raise your own beef instead your still going to have to pay more to live because you sold your corn at a higher price then you did last year!!

The sad truth is Nick, we all lose and guys like us have already seen the best it will ever be!!

Dean


:cowboy:


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## johndeere (Sep 17, 2003)

I dont think grain prices will drive up the prices of my Carharts or grease or applinces.Everything is going up and was doing it when corn was $1.60 per bushel.

When Nixon was President Soybeans went to over $12.00 and things were cheap then.When the botton fell out that when prices of every thing went through the roof.There is no need for grocery stores to up there prices.They inflated there prices long ago.The farmer gets a small portion of the profit they rake in.$4.00 for corn and $7.00 for beans is still low compared to everything else Dad was getting $1.60 for corn in the early 50's of course yields were lower then.Grain farmers got to good at what they raise.Back then they never had the seed, herbicide, and fertilizer we have today.But they were also not paying out the kind of money we do today for the technology.Thats not counting inflation for the products.Just they simply did not have it back then.

I do not feel bad about the ethanol craze.The need for alternitive fuels.When I see every city dude driving a big full size truck to work.It sets in a parking lot and is basically a comuter vehical.Or a big SUV that could haul 8 people but has one or two people in it.

When I mention this I here they have the right to drive what ever they want.True but this is the price they pay.They burn twice as much gas as they need to.Gas comes from oil its a fossil fuel.There were only so many dinasours.

Do I think were running low?No not really but we do need to cut our dependents on other countries to supply our needs.

If everyone would drive like they have a brain in there head.Slow down drive the speed limit.Drive sinceable vehicals that get 30mpg highway give or take a few mpg.Look what a differance that would make.

90% of the full size truck and SUV'S on the road are a waste.Very few people need 4 wheel drive.Front wheel drive vehicals are the best thing since sliced bread on snow and ice.If people would just give it a chance.I drive past a nit wit every winter who is in the ditch because they think 4 wheel drive is the answer.

They might say oh! but I have to have a big gas guzzler to pull my boat.Wrong they do not need a boat.Or there big camper.Wrong you can stay in a motel fo a little bit more after gas probably cheaper.

So dont blame the Corn producer for the ethanol mess.It was and still is preventable.The goverment should put a tax on driving a truck rather then a car if you do not have a business that requires it.


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