February 17, 2011

The Guns of August: The Corn is No Longer as High as an Elephant's Eye

This from today, February 2011: "The U.S. Department of Agriculture predicted last week U.S. corn farmers will have just 675 million bushels of corn at the end of August, before next year's harvest begins. That's just an 18-day supply, Nagel said. -- World Bank report says food prices are at "dangerous levels" after rising 29 percent in a year - 2/15/2011 3:39:28 PM | Newser

This from August, 1919:


a-americow.jpg

And this from February, 1917:

ababy-bird-as-world.jpg

Subsidizing Food to Make Fuel so prog-schmucks can feel good about their gastanks. How's that working out?

Corn is the top crop for subsidy payments. The Energy Policy Act of 2005 mandates that billions of gallons of ethanol be blended into vehicle fuel each year, guaranteeing demand, but US corn ethanol subsidies are between $5.5 billion and $7.3 billion per year. Producers also benefit from a federal subsidy of 51 cents per gallon, additional state subsidies, and federal crop subsidies that can bring the total to 85 cents per gallon or more.[17] (US corn-ethanol producers are also shielded from competition from cheaper Brazilian sugarcane-ethanol by a 54-cent-per-gallon tariff[18][19]) -- Agricultural subsidy - Wikipedia, the free encyclopedia

Posted by Vanderleun at February 17, 2011 5:35 PM
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"It is impossible to speak in such a way that you cannot be misunderstood." -- Karl Popper N.B.: Comments are moderated and may not appear immediately. Comments that exceed the obscenity or stupidity limits will be either edited or expunged.

If it results in fewer humans walking holy Gaia, then the left is happy. Renewable fuels + fewer humans = happy Left!

Posted by: Mikey NTH at February 17, 2011 7:34 PM

You beat me to it, Mikey. My thoughts exactly.
Green is the enemy.

JWM

Posted by: jwm at February 17, 2011 7:52 PM

The cavemen figured out this food thing; don't use food for transportation! This scheme violates even caveman logic:

"Ugg, why you feed horse corn?"

"Well, Ogg, he carry me to eat grass."

"Hmmmm, Think more, Ugg. Ur doin it rong!"

--Gray

Posted by: Gray at February 17, 2011 8:42 PM

Meanwhile, we seem to have a genuine Communist insurrection in Wisconsin. Apparently, Obama's "Organizing for America" is busing in street mobs.

Posted by: rickl at February 17, 2011 10:24 PM

@ rickl
Make sure the buses are parked properly, so that Obama can toss the unions under them when he sees his poll numbers plummet.

Posted by: Peccable at February 18, 2011 1:57 AM

The left loves to scold the rest of us about "sustainability", yet none of their schemes are ever sustainable from an economic standpoint. There is a long list of consequences from subsidizing the production of ethanol and it starts with higher food prices and higher government spending. We will soon grow weary of borrowing to pay for it all.

In the interests of "sustainable energy", we grow corn on farmland that overlays a vast sea of hydrocarbon resources, primarily oil, gas and coal. Yet we are forbidden to exploit those resources and now require ourselves by law to burn corn instead. Yet we cannot eat coal, so it is an unsustainable food source!

Meanwhile, through no fault of our own, an increasing number of people in the rest of the world are prevented from being prosperous enough to afford to buy food make from our corn. How do the leftists propose to solve this problem? To give money to these oppressive governments to help drive down local food costs, and in the process destroy the lower tier of their local agricultural sector who cannot compete against us.

von Mises and Hayek were right. The more that government mucks in the economy, the more they must muck to adjust for the effects of prior mucking. And all this mucking only destroys prosperity and liberty.

Posted by: theBuckWheat at February 18, 2011 4:55 AM

Well said, Buck.

Posted by: Casca at February 18, 2011 6:14 AM

Bio-fuels are not the problem. Production vs. demand is the issue. Bio-fuels are a very small percentage of the corn crop. The grain commodities across the board are in the process of a price correction. The cause of high grain prices are varied and legion. If you had to point at one single variable which is driving prices right now.. it would have to be the volatile weather patterns or lack there of. Couple that with demand and the grain to buy just isnt there. It is quite possible within the next 24 months to see a market condition which the price isnt the issue but instead the issue will be.. Can a processor even get the grain in the first place????

Posted by: Bill Henry at February 18, 2011 7:10 AM

Bill Henry writes:

"Bio-fuels are not the problem. Production vs. demand is the issue. Bio-fuels are a very small percentage of the corn crop."

The problem is that bio-fuels are a small percentage of the corn crop. That percentage should be zero. Could someone please explain to us mere mortals why it makes sense to make fuel out of food, when food is scarce?

Even if food is not especially scarce, a small change in supply can make for a huge change in prices. People have this funny fear about starving to death, and have this odd compulsion about stockpiling food when it looks like it just might be in short supply.

Posted by: Hale Adams at February 18, 2011 7:28 AM

So little of the world corn production is actually used in basic food production. Most of it is used for oils, sugar, etc..

Biofuels are a distraction. The real issue is supply. I am not an apologist for biofuels. We can completely eliminate the biofuels industry and the supply problem still exists. Is biofuels the cause of the recent cataclysmic floods in Australia? Is biofuels the cause of the recent drought in Russia, Argentina, Canada?

The issue is this.. we have sold all of the hysteresis in the supply system forward for the last 50 years. We thought we could do this and replace it with advancements in efficiency and productivity. It worked for a while...

We have ran out of slack. Keep beating the biofuels drum... its empty.. just like the reserve bins....

Posted by: Bill Henry at February 18, 2011 9:02 AM

Bill, what's the solution?

Posted by: Casca at February 18, 2011 12:29 PM

Casca,

I'm not sure if there is an immediate solution.

As Hale Adams States ..."The problem is that bio-fuels are a small percentage of the corn crop. That percentage should be zero. Could someone please explain to us mere mortals why it makes sense to make fuel out of food, when food is scarce?"


... He poses a good question, but in his question he illuminates my point... the fact that biofuels are such a small portion of the total grain production and the perception being.. that this small demand on total production can drastically effect the price of foods directly points to the issue of lack of production to meet desired market demand.

Like I said earlier.. I am not sure there is a solution.. but I do know that you can expect the following ...

Quite possibly the greatest shift in wealth in our countries history.. from finance to agriculture..

Higher food prices..

Something resembling "victory gardens" on a massive scale..

Sell your stock in Applebees... Buy John Deere and Monsanto...

Also find a "Garden Mentor" Those men and women are going to be a national treasure.

And dont eat your seed corn...

Posted by: Bill Henry at February 18, 2011 7:31 PM

So little of the world corn production is actually used in basic food production. Most of it is used for oils, sugar, etc..

Ah, yes, like "high fructose corn syrup", which has replaced sugar in most processed foods. Another fine result of government policies, namely sugar subsidies.

Posted by: rickl at February 20, 2011 7:13 AM