Iowa Corn Indy 250
Also contributing to this story is Dennis Keeney, PhD, MS. | Over the next six months, this bimonthly blog series, “Corn-Fed Cars: On the Road with Ethanol,” will initiate a conversation about ethanol and the current environmental and economic impacts of its use. This first post addresses the progression of ethanol use in the U.S., and the forces that have gotten us to where we are today.
This June at the “Iowa Corn Indy 250,” flags touting “Iowa Corn” and t-shirts promoting “Corn Power” were a common sight at the Newton, Iowa racetrack. The slogans are no surprise, given two facts: first, that the race is sponsored by the Iowa Corn Promotion Board, and second, fellow racing giant NASCAR’s announcement last year that they will partner with American ethanol producers to fuel its fleet with a gasoline blend containing 15 percent corn ethanol.
At a time when the buzz about corn ethanol seems to have died down on the coasts, its advocates are speaking up, and production in the Midwest continues to ramp up to record levels in light of government subsidies and mandates that spurred the growth of the industry over the last decade. Today, 40 percent of the corn crop in the U.S. goes to ethanol production. Read More >
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. 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.
In mid-October of every year, Iowa State and Central Iowa sees its fair share (or more) of dignitaries, current and former agricultural lobby folks, Farm Bureau top brass and even usually a cabinet officer or two. This is not the presidential primary, but the World Food Prize week. This year, over 1,000 policymakers, researchers and other experts will be involved in the programs, including the keynoter, former U.N. Secretary General Kofi Annan, now chair of the Alliance for a Green Revolution in Africa. A number of lectures and side events occur during this time. The award ceremony is modeled after the Nobel Prize ceremonies.
The award winners this year are perhaps the most deserving ever. The WFP laureates for 2010 are David Beckman, who is head of the Christian-based Bread for the World, and Jo Luck, CEO of Heifer International. Both organizations have worked with small farmers in alleviating hunger and building incomes. A full description of Beckman’s and Luck’s activities are at the WFP webpage. Their lectures at the Borlaug dialogue were superb.
The World Food Prize has become a going concern. It was started about the time I came to Iowa State as director of the Leopold Center and over time grew from a luncheon in the Marriott Hotel in Des Moines to its present configuration and as the place to be seen if you are in agriculture. Norman Borlaug, the 1970 winner of the Nobel Peace Prize, originated the prize and soon it was embraced by Iowa industrial leaders. It has been a good business model.
But beneath the gloss lurks the soul of industrial agriculture. After the glitter has settled one wonders if this is a classic greenwash for the biotechnology and pesticide industries, their associated lobbyists, and the ever-omnipotent Farm Bureau. Indeed, no better setting could be found than mid-Iowa and Iowa State University, the heart of industrial agriculture.
A prime example is the side-event I attended was the Biodiversity World Tour, October 12, on the Iowa State University campus “to bring together farmers around the world to discuss what they are doing on a daily basis to preserve our planet and how they see these practices improving in the future.” It featured U.S. Secretary of Agriculture, Tom Vilsack, and a five-member panel including an vegetable farmer from India (who recently published in The Wall Street Journal on why India needs to participate in the “Gene Revolution”), a corn-soy farmer from Brazil, a corn-soybean farmer (and member of the National Corn Growers and the Iowa Corn Growers Board) from Iowa, a professor of entomology at the Seed Science Center at ISU, and a staff person for the International Food Policy Research Institute. Read More >