The craze for maize
May 12, 2007
An Orlop hat tip to Michael Kruse for finding this article. The local hype about the ethanol plants that seem to be rising out of every cornfield proclaims a pot at the end of the rainbow for the local economy. It’s much more likely a momentary pop for our farmer friends (some of them) and the ag industry. Doesn’t anyone understand fundamental economics? I suspect this article pretty much has the right of it.
Iowa’s ethanol economy | The craze for maize | Economist.com
Corn-based ethanol is neither cheap nor especially green: it requires a lot of energy to produce. Production has been boosted by economically-questionable help from state and federal governments, including subsidies, the promotion of mixing petrol with renewable fuels and a high tariff that keeps out foreign ethanol. The federal government offers ethanol producers a subsidy of 51 cents per gallon (13.5 cents per litre); and a growing number of states are pushing for wider use of E85, a fuel blend that is 85% ethanol and only 15% petrol. Since oil prices rose above $30 a barrel in 2004 (they are more than double that now), ethanol capacity has grown especially rapidly. And although the country is experimenting with other renewable plant-based fuels of varying feasibility, from biodiesel to (much greener) ethanol derived from trees, the biggest boom has been in corn-based ethanol.
It’s hard to be objective about agricultural matters, living where I do in the middle of corn and pig country. I just haven’t been there and done that. Nevertheless, the little I’ve learned from my time at Cow College in Kansas has embued at least some sympathy for my farm friends, and I suspect that more than a few of them fully understand what the article is saying. Like the rest of us, they just want theirs, now.
Instead of worrying about the murky future, the state’s farmers are planting as much corn as they can—and hoping that oil prices stay nice and high.
Dave, a genertion removed from the farm.
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So glad to find out they’re feeding the leftovers from ethanol production to pigs and cattle! Hate the thought of living in a state with remarkable soil, gift of the glaciers, and have the corn all go to car tanks. What an incredible waste that would be! Hungry mexicans can’t afford their corn tortillas with the price jacked up by the ethanol craze, though it is a different kind of corn used. Crazy world we live in.
Correction: not crazy but fallen. But it is sad, indeed