Again Ethanol and Food are in Conflict

Once again the conflict between the use of corn for ethanol production and the amount of corn available for consumption by swine, beef, dairy and poultry has come into conflict.

Corn prices have increased an astounding 85% in 6 months.

There simply is not enough corn to go around, and thus the price of corn increases RusBankNet. When corn prices rise, prices of other grains also rise. Wheat, rice, even barley rise.And surprise, surprise, the price of  processed food rises.  Why is this?

First, one has to look into the dark world of agricultural economics. Corn, in many ways similar to oil, is a world-wide commodity. Many countries produce corn (for example, China grows more corn than the United States, but has a lot more people to feed). But only a few countries have enough left over to sell on the world markets. Argentina along with the United States are the main exporting countries. And when the corn crop declines in other consuming countries such as China or Mexico, they buy more corn on the open market. And as these countries move “up the food chain” to consume more red meat, pork, dairy and  poultry, they need more corn. So they buy corn from those few countries that have some to spare. But with several countries bidding for corn and a limited supply, the price goes up. It is an “inelastic” situation.  If corn is not available, wheat will do nicely, so will sorghum, etc. So these grains become more valuable. And “wala” food prices rise. Most affected are foods that rely on corn, such as pork, beef, chickens and eggs. But bread soon follows. and this brings food riots. Even the recent uprising in Egypt is being blamed in part on rapidly increasing food prices (I feel this is a stretch,but do not claim to be well-informed in such matters). Even the price of tamales goes up in Mexico. Sure they use white corn, but white corn is also good pig feed so it is bidding against our yellow corn.

Ethanol plays a central role in this fray. Processing a bushel of corn gives about 2.8 gallons of ethanol (less if one converts the energy in ethanol to a gallon of gasoline). The government in its wisdom has mandated that we must use about 12 billion gallons of ethanol by next year. That translates to a lot of corn, about 25% of all the corn grown in the United States. In Iowa, by far the largest ethanol producing state in the nation, about half the corn goes to ethanol. So when supply goes down while demand goes up, the market “bids” for corn. They buy corn from other uses by paying a higher price, and the higher price encourages farmers to plant more corn next year. More grassland and highly erodible land go into cultivation. This increases erosion and water pollution, and turns the countryside even more into a row crop desert.

It seems pretty clear that changing climate is impacting the discussion. This past year, corn production dropped in the United States by about 9%, a huge decline. Bad weather in other parts of the world have cut down on grain production as well. In the meantime, demand for meats and  for foods made from corn continues to increase.

The struggle between the farm state politicians who push for ethanol from corn (and they must or they are summarily dismissed by the farm block supporters such as Farm Bureau and National Corn Growers) and the rest of the country who are being pressured by food wholesale and retail interests, as well as by swine and poultry growers). It is all part of the farm bill, no matter how altruistic the discussion may be.

I have said for years that ethanol policy was really corn policy. Its objective was to assure a demand for corn and a stable high price. Well it worked. Now we have the unintended consequences. At least for the next few months higher prices for many food staples will increase. And to hear some say it, corn based ethanol is to blame. I tend to agree, but as you can see, it is not simple. But then nothing in the convoluted world of farm policy is.

Yakima Valley Releases Draft Air Quality Policy for Dairies

Unlike agricultural water discharges which are regulated for large farms defined as CAFO by the EPA and the Clean Water Act, most agricultural air emissions are not regulated. Water discharges and air emissions that are related to industrial scale agricultural operations in rural areas are big concerns for local communities. The Yakima Valley in Eastern Washington State is one of these areas.  The historical use of this irrigated valley for agriculture has left a legacy of wells and groundwater contaminated with nitrates, chemicals and biological agents. At this time there is disagreement among local stakeholders about the source of these contaminants.  There are no swine or poultry operations in the valley and dairy practices in the valley have changed in the last 20 years from small pasture based operations to industrial scale operations. The EPA and Washington Department of Ecology are currently conducting a groundwater study which was developed in 2008 using a community based research plan.  Many individuals in the community are certain that the extent of the groundwater contamination is due to the expansive dairy operations in the Valley.  Additionally it is becoming more apparent that large scale operations can have dramatic effects on regional water and air quality.

Leah Beth Ward presented a three-part series, “Hidden Wells, Dirty Water,” in the Yakima Herald Republic which explored the dairy industry, governmental agency policy and community concerns about the adverse environmental and public health effects associated with exposures to Yakima Valley dairy operations.    Another YouTube video exposé of the area, “Dairyman Blues,” explored some of the concerns of community residents and the work of local activist groups in response to the change in dairy processes. Read More >

New Mexico Dairy CAFO Controversy on NPR

Dairy CAFOs in New Mexico are under increased scrutiny today following this morning’s report from NPR’s John Burnett. The reporter discusses the unrelenting pollution caused by large dairy operations in the state along “dairy row,” a section of Interstate 10 between Las  Cruces, NM, and El Paso, TX.  “Everyday, an average cow produces six to seven gallons of milk and 18 gallons of manure,” Burnett tells listeners. “New Mexico has 300,000 milk cows. That totals 5.4 million gallons of manure in the state every day. It’s enough to fill up nine Olympic-size pools. Every single day,” he says. It’s worth a read or listen to. There are photos and audio on NPR’s web site.

Full Grass Access for Organic Dairy Cows

Tomorrow, Dec 23rd, is the deadline to get your comments to the USDA about the Organic Pasture Proposal. This proposal would require organic dairy cows to be pastured during the entire grazing season.  Organic standards already require some access to pasture, but depending on the producer, the standards have been interpreted differently.

For a brief overview of the issue, here is an NPR story for last week. There is a link to the entire draft rules, either in html or pdf version on the USDA comments page.