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Corn farmers say "let the profits trickle down", while other farmers say quotas will kill jobs

There's a growing debate about what is put inside your fuel pump.  At the heart of the debate is a two-carbon alcohol -- ethanol.  This little fuel is creating a huge debate, which has divided the farming industry and raised perennial questions regarding the cancerous influence of special interest on the U.S. federal government.

I. Big Corn Makes Friends

When it comes to corn ethanol the message from Congress is clear: cut down on the ethanol production.  But the U.S. Environmental Protection Agency (EPA) is still waffling on whether to keep its strict quotas, or to "temporarily" relax them, after the worst drought in decades hit parts of the U.S.

With the drought hurting corn yields, farmers have been forced to compete with ethanol producers and the food industry for an insufficient supply.  Some farmers have, in their desperation, turned to feeding their cows candy, as cast-off bulk sprinkles are cheaper than the traditional corn feed.

The EPA's holds a tight grip on the amount of corn going into ethanol, thanks to its ability to regulate fuel in the U.S.  Under The Energy Policy Act of 2005 (often referred to as the Renewable Fuel Standard), which passed under President George W. Bush, fuel blenders are required to incorporate a certain amount of ethanol into gasoline blends at the pump, with the amount being bumped a little bit each year.

pumping fuel
The U.S. government mandates ethanol be blended into gasoline, to create artificial demand for corn. [Image Source: Nation Corn Growers Assoc.]

Studies have suggested that going from the corn-field to fuel pump corn ethanol is an energy negative process, consuming more energy than it produces, and offering up higher life-cycle carbon emissions that standard gasoline.  Further, automakers say gasoline-ethanol blends can harm traditional engines and deliver worse gas mileage than pure gasoline.  So the compelling question has long been why did the U.S. jump so deep into corn ethanol, and in doing so "accidentally" drive food and livestock feed prices upward.

In Congress' case, it appeared to be largely special interests.  Senators and representatives from corn farming-heavy districts/states accepted funding from farmers to help them get elected, and in turn pushed for the seemingly illogical ethanol blending requirements, which create artificial demand, driving corn prices up.  They also for some time passed billions in subsidies along to big corn farmers.

As recently as last year some senators -- Senators Tom Harkin (D-Iowa); Tim Johnson (D-South Dakota); Amy Klobuchar (D/"Farmer-Labor Party"- Minnesota); and Al Franken (D/"Farmer-Labor Party"-Minnesota) -- proposed increasing ethanol quotas via the trickily worded Biofuels Expansion Act of 2011.

II. Drought, Spending Cuts Threaten Corn Special Interests

But the ethanol special interests saw their grasp on Congress weakening last year amid the partisan rancor regarding the budget.  In a battle by each side to preserve their special interests, corn found themselves too short on the special interests pecking order to convince Congress at large to continue to vote for bloated subsidies.

In the aftermath, the subsidies were slashed, and then eliminated altogether.  Republicans in Congress also banded together to block the EPA's plan to increase ethanol blending to 15 percent nationwide, although the EPA found a way to sneak around that restriction.

But even the EPA -- who seemed firm on its ethanol commitment -- has started to show signs of doubt after an entirely external, non-political influence hit -- the drought.  The record drought is essentially forcing the EPA's hand, by creating corn shortages and hence amplifying corn ethanol's already undesirable price effects.

The EPA announced it would make its decision [PDF] about a potential waiver on blending requirements early next month.

Amid a record drought either the quota or jobs will be lost, say many farmers.
[Image Source: AP]

Eight state governors and 200 members of Congress have written a letter (on behalf of the slightly ironically named National Pork Producers Council) to the EPA pleading with it to relax blending rules via a waiver, at least for the rest of the year.  Delaware and Maryland's governors write that without a waiver the EPA would be creating "the loss of thousands jobs."

A number or researchers also signed a letter calling for a waiver.  Among them is John M. DeCicco and Ivette Perfecto from the University of Michigan School of Natural Resources and Environment.  They write, "The (Renewable Fuel Standard) diverts potential food crops to produce fuel, which drives up food price volatility and global food prices."

III. Big Corn Farmers Argue Higher Prices are Good for Everyone

Corn farmers are opposed to the idea, which would reduce the artificial demand that they currently enjoy.  The National Corn Growers Association essentially admits that it's acting out of greed, but making the argument that higher revenue from corn farmers stimulates the economy in a trickle-down effect.  They point out that corn farmers' revenue rose from $63B USD to $90B USD between 2007 and 2012.

They comment [PDF], "Higher feed prices are only one piece of a complicated economic puzzle... [a waiver would cause] severe harm to the economy."

corn profits
Big corn argues that its profits are worth more than whatever job savings might be realized by quota cuts. [Image Source:]

Before the drought corn prices had increased nearly four-fold from 2007 levels.  The fuel supply industry was set to (by EPA requirement) deliver 15.2 billion gallons of corn ethanol this year -- up from 5 billion gallons in 2007.

But the payday for big corn may soon be over.  After all, the Obama administration has a relatively substantial degree of control over the EPA -- a federal agency -- and it may be wary of refusing the waiver request, lest it trigger the predicted job loss and hurt the President' reelection prospects.

Sources: Detroit News, NPCC, Nation Corn Growers Assoc., EPA

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Bad idea
By RabidDog on 10/12/2012 3:34:39 PM , Rating: 5
Ethanol is just a really bad idea. We traded 50% of our food for 10% of our fuel. And corn is an awful use for an alcohol based fuel. I think it's something like 1.1 to 1.0 gain wiht corn, sugar cane is something like 5:1. Grow more sugar cane!

RE: Bad idea
By corduroygt on 10/12/2012 3:53:53 PM , Rating: 3
Completely agree, I think the energy in/energy out ratio of rapeseed/soybean oil is much better than ethanol, biodiesel is the true green internal combustion fuel, not ethanol.

RE: Bad idea
By Ringold on 10/12/2012 5:07:02 PM , Rating: 3
Soybeans are another food crop, so ultimately have some of the same ethical problems as corn.

Rapeseed I can't comment on, never heard of it before people started talking about it as an oil source, but anything that'd displace food crops I think a lot of people would take issue with.

Let me appeal to your powerful internal liberal: Anything that boosts food prices is the most regressive, painful tax possible for the poor. The poor can forgo a fancy data plan, can forgo cable TV, etc. But they can not forgo food.

RE: Bad idea
By corduroygt on 10/12/2012 6:32:39 PM , Rating: 3
I was under the impression that we have enough land to plant crops without affecting the existing food situation. If that's not the case, we're better of researching algae.

RE: Bad idea
By Ringold on 10/12/2012 7:20:23 PM , Rating: 2
As long as the worlds billion-plus people in poverty are content eating the most basic and minimal of diets, you're right. But as their incomes rise, they've been aspiring to more Western, diverse, meat-rich diets. As that trend continues... We've probably got enough to arable land, but Africa especially has to boost yield, but Asia has some work to do too.

And then the population isn't going to plateau until 9 or 10 billion. That's a couple more billion people that'll aspire to occasional prime rib or rack of lamb.

A lot of loonies has been predicting apocalypse since the 70s. I think it'll work out fine, but we're not there yet.

So I agree on algae. Plus, the research seems to be pretty promising. There's just no vast, well-funded, politically connected American Association of Algae Farmers -- yet. :P

RE: Bad idea
By marvdmartian on 10/15/2012 12:15:56 PM , Rating: 1
The real problem is the conversion of cropland, which was previously used for growing other grains, to now grow corn, simply because of the (artificially) higher profit margin. This has, in effect, raised the prices of ALL grains, not just corn, which is why many of your food prices have gone up (since the animals which are fed those grains now have to have pricier feed).

Also, the USA used to export much of the corn that was grown, rather cheaply, to many of the lower income countries in the world. Just ask the Mexicans how they like losing out their inexpensive corn, which was a major staple of their diet, for decades?

The bottom line to this entire discussion is that the Congress took payoffs (disguised as "political contributions") from the farming lobbyists, to pass laws which made a bogus demand for their product, which has now artificially raised the price of that product.

The EPA has furthered that cause, likely under the direction of a president who has pushed the "green" initiative, without caring to contemplate the effects that it could have on the population. The only way we're going to get out of this mess is to replace these politicians with others who will vow to end this practice.

RE: Bad idea
By Jaybus on 10/15/2012 2:02:46 PM , Rating: 2
Wow! You want ethanol in your gasoline so badly that you would be willing to eat algae?

RE: Bad idea
By ppardee on 10/15/2012 4:15:15 PM , Rating: 2
Chances are REALLY good that you eat algae quite frequently and just don't know it. Agar and carrageenan are pretty much ubiquitous in processed foods and they are made from algae. There are tons more. And Japan eats lots of kelp just as it is, and kelp is an algae. Algae is one of the most useful plant groups on the planet.

But there has also been research into using it as a fuel source, which is probably what the other poster meant...

RE: Bad idea
By FishTankX on 10/12/2012 6:44:15 PM , Rating: 3
You might know rape seed oil better as Canola. The name was switched after it was probably difficult to market an oil with the word rape in it's name.

RE: Bad idea
By Basilisk on 10/12/2012 9:57:02 PM , Rating: 4
True. Which is another comment on the insight/education of North Americans as Rape is a huge crop internationally and the oil is marketed under that name [rape seed oil] elsewhere and has been used for hundreds of years.

"Canola" was derived from "Canadian Oil" by the Canadian seed oil industry, and as far as I know was used from the start in NA [c. 1974?]. It wasn't a permissible product in the US until plant geneticists had bred a variety that reduced specific plant-acids that are associated with health problems when exposed to high cooking temperatures, and processors found refining techniques to replace the remaining problematic acid with safe oleic acid. [It's still used in the unrefined state in China where the high temperatures of wok cooking increase the risks of unhealthy chemicals being produced.. gotta love the food industry over there.]

It's a striking lovely crop while in flower, having lemony yellow blossoms that wave in the wind much as fields of wheat do. 'Made a lovely vista as I drove past large fields of it in Britain.

In 1981 rape seed oil achieved world notoriety when an epidemic of Toxic Oil Syndrome killed nearly 1800 in Spain -- the result of improperly refined [reports called it "illegally refined"!?] oil were widely sold. It took years to identify how it became that toxic as lab animals seemed immune to the specific risks that humans experienced. Today, there are numerous Scare posts about the evil Canola industry and its threat, based on the usual sorts of distortions and miss-informed "facts".

I've probably blown some fact, above... but I'd taken note of the crop after seeing it in so many fields abroad.

RE: Bad idea
By Florinator on 10/12/2012 4:01:13 PM , Rating: 2
Yes, burning food is a bad idea indeed.

RE: Bad idea
By bobcpg on 10/12/2012 4:11:26 PM , Rating: 5
Please tell my wife that

RE: Bad idea
By Denigrate on 10/12/2012 4:07:40 PM , Rating: 2
Not to mention how muc less efficient ethanal is compared to petrol. I also seem to recall that ethanal also puts out more "greenhouse" gas and other polutants than regular gas.

RE: Bad idea
By StevoLincolnite on 10/12/2012 5:17:50 PM , Rating: 3
You could also just make a push for Dual-Fuel vehicles that can use LPG Gas.
LPG is cheaper (Here anyway, usually hovering at half the price of petrol).
Less "Greenhouse" gas and you will no longer need Ethanol that affects the worlds food supply...
And it is compatible with today's petrol engines with little/no modification.
It's fairly common in places like Australia where even Taxi's and Bus's will use it to save money, I even have it on my vehicle.

Only downside is you do loose a little bit of power and mileage, but you can flick a switch and go back to petrol anyway if the need arises.

Essentially though, Governments are sitting between a rock and a hard place when it comes to Ethanol, do they drop Ethanol and let the price of fuel skyrocket which means the prices of almost everything increases?
Or... Do they keep Ethanol and let some foods that rely on Corn and such increase and hopefully capitalism will kick in and pick up the slack?
The obvious answer is the Government will just go where the votes are.

RE: Bad idea
By RufusM on 10/12/2012 8:04:43 PM , Rating: 3
The only reason ethanol costs less than gasoline is because of the huge subsidies the ethanol producers receive for producing it. If ethanol was removed, the government could easily put that subsidy into the price of gasoline and the price would fall, not rise.

Or, the government could stop subsidizing energy all together and all producers would have an even playing field to operate on.

RE: Bad idea
By DanNeely on 10/12/2012 4:17:22 PM , Rating: 3
The problem with sugar cane is that the US is a really lousy place to grow it. There's a relatively small amount grown in Florida; but they're only able to stay in business due to import tariffs that have roughly doubled US sugar prices vs the global rate over the last 30 years. Last year this cost US consumers nearly $4bn.

RE: Bad idea
By bah12 on 10/12/2012 5:04:06 PM , Rating: 2
Yep most people don't realize that sugar cane is one of the most tariffed goods we have. Can't have those brown people in the tropics making any money now can we? Another good read.
Sugar sold for 21 cents a pound in the United States when the world sugar price was less than 3 cents a pound. Each 1-cent increase in the price of sugar adds between $250 million and $300 million to consumers' food bills. A Commerce Department study estimated that the sugar program was costing American consumers more than $3 billion a year.

RE: Bad idea
By ClownPuncher on 10/12/2012 7:32:08 PM , Rating: 2
Annex Cuba.

RE: Bad idea
By Lord 666 on 10/12/2012 9:33:19 PM , Rating: 2
Have a feeling that is coming within the next four years anyway.

RE: Bad idea
By nevermore781 on 10/12/2012 4:26:59 PM , Rating: 3
Not sugar cane, sugar beets. You get more ethanol per acre out of sugar beets than you do corn by like almost 70 gallons.

RE: Bad idea
By Mathos on 10/12/2012 5:50:07 PM , Rating: 3
Yeah, but then again sugar beets are also a food crop. I know this because I grew up in Michigan just about 60 miles south of Saginaw. Sugar beets is pretty much where Pioneer Sugar up north makes its consumer grade white sugar and brown sugar from.

It's pretty much, you need to cut out anything that could be a food crop from the ethanol production idea. Otherwise it has a major effect on food prices. Even sugar cane is a food crop, as it's used to make baking sugar and such in many area's.

What we need are either engines that can run on almost any fuel, or recycled oil fuels. Or true hybrid vehicles, with an IC engine for a generator that could run off of any fuel and an electric drive train for propulsion. Do away with the Lithium ION batteries for regular vehicles to keep price down, among other issues like energy density, charge time, and fire hazard. I swear to god if I ever won the lotto, that would be my new work, to convert my own vehicle into a true hybrid system. It's an old 1997 S-10 Blazer 4x4.

A lot of people don't realize something, Race cars don't run on Ethanol. They run on Methanol (methyl alcohol), which is basically distilled from wood or plant cellulose. Ethanol is sugar, or Grain alcohol. The difference being, you can drink Ethanol if it hasn't been denatured, by mixing it with Methanol or gasoline, and it's below a certain proof. For example, White lightning or Everclear are basically 180-190 proof 90-95% grain alcohol. You cannot drink Methanol, as it's a poison.

RE: Bad idea
By boeush on 10/12/2012 8:44:18 PM , Rating: 2
Problem is, methanol has an even lower energy density than ethanol (which already has a much lower energy density than gasoline.)

Ethanol as a fuel is viable, but only if it is made from non-food materials (like for instance, switchgrass or agricultural or wood waste.) Unlike corn ethanol, cellulosic ethanol makes long-term economic and environmental sense:

That's not to say that bioethanol is necessarily the best way toward fuels from biomass (as opposed to, e.g., biodiesel) -- but when most environmentalists support ethanol in fuels they have in mind the type that's not produced from food sources (not even from sugar cane.)

RE: Bad idea
By Mathos on 10/13/2012 1:34:02 AM , Rating: 2
True, but energy density numbers are misleading. Even in that wiki article it mentions that. The biggest advantage with methanol would be the fact it can be made from a lot of things, including synthesizing it from CO2 and hydrogen from Water.

RE: Bad idea
By Odysseus145 on 10/13/2012 4:51:40 PM , Rating: 1
There's also butanol, which has 3 carbons to ethanol's 2. It has an energy density nearly that of gasoline, would require no modification to most gasoline vehicles, and is produced by algae.

RE: Bad idea
By jimhsu on 10/14/2012 5:21:24 PM , Rating: 2
If I recall, I did an investigation into using E.Coli for a novel biobutanol reactor in my synbio class. The conclusion was essentially that while we have everything in place, there were engineering issues left to work out (i.e. survivability of the bacterium under high butanol concentrations). That was in 2009, so improvements have undoubtedly been made since then.

See Atsumi et al Metabolic Engineering 10 (2008) 305–311 for example.

RE: Bad idea
By FishTankX on 10/13/2012 10:17:24 AM , Rating: 3
There's a new engine coming out that runs on anything flammable, and doesn't need a transmission for most vehicles. It's called the cyclone engine.

Has the military on board, and a mediocre thermal efficency of ~25%. Would make a perfect serial hybrid engine. You could run it on coal dust if you had to.

RE: Bad idea
By Mathos on 10/13/2012 12:08:05 PM , Rating: 2
Yeah, but thats still better than the thermal efficiency of a regular ICE, though reading through the faq it's the mark II that equal to a regular gas engine. The mark V is supposedly on par or better than high end diesels. Looks like it'd be good for front wheel direct drive vehicles though. Granted on the mark V 850foot pounds of torque is a lot to through at the wheels without a transmission though.

RE: Bad idea
By Reclaimer77 on 10/13/2012 2:43:40 PM , Rating: 2
The ICE has a lot of room for improvements. I've been keeping an eye on this company and their amazing product. Unfortunately it seems to be run by idiots who are clearly not doing enough to bring this to the forefront. They should be offering aftermarket upgrade kits at the very least to generate buzz.

RE: Bad idea
By Ringold on 10/13/2012 6:28:02 PM , Rating: 1
On the one hand, according to their last press release, looks like they're trying to find someplace to set up some sort of manufacturing.

On the other hand, Google yielded me this:

RE: Bad idea
By Reclaimer77 on 10/13/2012 7:07:31 PM , Rating: 2

RE: Bad idea
By Reclaimer77 on 10/13/2012 7:09:02 PM , Rating: 2
Wait, that's from 1994. Hmmm

RE: Bad idea
By Schadenfroh on 10/12/2012 9:16:23 PM , Rating: 4
I prefer using corn to Make my Mark while Wild Turkey Hunting over at Knob Creek with my pals Jim & Jack.

RE: Bad idea
By bjacobson on 10/12/2012 11:34:05 PM , Rating: 3
to be fair, corn is also a bad source of food.
But teh land could grow other things. That would be.

RE: Bad idea
By Uncle on 10/13/2012 12:56:44 PM , Rating: 5
This article missed out on a major point. Monsanto and the ex employees that are influencing major US departments, if not in control of the departments.
"Public officials' connections to Monsanto"

Former Monsanto employees currently hold positions in US government agencies such as the Food and Drug Administration (FDA), United States Environmental Protection Agency (EPA) and the Supreme Court. These include:

Michael A. Friedman, MD, was Senior Vice President of Research and Development, Medical and Public Policy for Pharmacia, and later served as an FDA deputy commissioner.

Linda J. Fisher was an assistant administrator at the United States Environmental Protection Agency (EPA) before she was a vice president at Monsanto from 1995 to 2000. In 2001, Fisher became the deputy administrator of the EPA.

Michael R. Taylor was an assistant to the Food and Drug Administration (FDA) commissioner before he left to work for a law firm, one client of which was Monsanto. Taylor then became deputy commissioner of the FDA from 1991 to 1994, during which time the FDA approved rBST.[112] Anti-GM activists accused him of conflict of interest but a Federal investigation cleared him. Taylor was later re-appointed to the FDA in August 2009 by President Barack Obama.

United States Supreme Court Justice Clarence Thomas worked as an attorney for Monsanto in the 1970s. Thomas wrote the majority opinion in the 2001 Supreme Court decision J. E. M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc. which found that "newly developed plant breeds are patentable under the general utility patent laws of the United States."

Public officials with indirect connections or who worked for Monsanto after leaving public office include:

Mickey Kantor served on Monsanto's board after serving in government as a trade representative.

William D. Ruckelshaus served as the first head of the Environmental Protection Agency (EPA) in 1970, was subsequently acting Director of the Federal Bureau of Investigation, and then Deputy Attorney General of the United States. From 1983 to 1985, he returned as EPA administrator. After leaving government he joined the Board of Directors of Monsanto; he is currently retired from that board.

Former Secretary of Defense Donald Rumsfeld was chairman and chief executive officer of G. D. Searle & Company, which Monsanto purchased in 1985. Rumsfeld's stock and options in Searle were $12 million USD at the time of the transaction.[

RE: Bad idea
By Ringold on 10/13/12, Rating: 0
RE: Bad idea
By Uncle on 10/13/2012 6:51:44 PM , Rating: 3
"There's not a conflict of interest unless they still hold financial connections to Monsanto. You made no such connection."
Has nothing to do with money up front, but good paying jobs with bonuses and stock options later. This is all about policy making, changing and making new laws and influence peddling.If you can't see past your nose, go back to school

RE: Bad idea
By Dorkyman on 10/13/2012 2:34:41 PM , Rating: 2
Your point being...what?

RE: Bad idea
By Reclaimer77 on 10/13/2012 2:50:18 PM , Rating: 1
*whistles* Okay Fox Moulder, was this before or after FEMA became the Secret Shadow Government?

RE: Bad idea
By Flunk on 10/15/2012 9:53:22 AM , Rating: 2
I've seen numbers as bad as 1:0.8. Corn ethanol never made sense. If they want to subsidize farmers they should just do it and kill this stupidly wasteful program.

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