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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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The Biggest Lie ever told
By Beenthere on 10/12/2012 6:29:22 PM , Rating: 2
E85 is the biggest lie ever told. It doesn't reduce emissions because it requires 1.6 times the volume of E85 to travel the same distance as with gasoline. We aren't doing anything to free ourselves from foreign oil or the oil industry Cabal. We are hurting our own country's ability to deliver food so that a few large agriculture behemouths can rake in the profits and government subsidies - that all tax payers are paying for.

Ya gotta love the fleecing of America.

RE: The Biggest Lie ever told
By Etsp on 10/13/2012 11:03:54 AM , Rating: 2
The claim is that it reduces harmful emissions. Volume of the liquid state has no correlation to the volume of harmful emissions caused by it as compared to alternatives! If it requires 1.6 times the volume, but reduces harmful emissions to half that of gas per volume , we still have a reduction of harmful emissions! (I don't know what the actual number is, I'm pointing out a logical fallacy, not a factual one.)

Basically, your argument that
It doesn't reduce emissions because it requires 1.6 times the volume of E85 to travel the same distance as with gasoline.
is complete bunk and a logical fallacy.

I'm not saying that E85 is a good thing, or that it has any redeeming qualities whatsoever, I'm just saying that your argument here is completely flawed.

RE: The Biggest Lie ever told
By freedom4556 on 10/16/2012 6:56:07 PM , Rating: 2
Basically, your argument that
quote : It doesn't reduce emissions because it requires 1.6 times the volume of E85 to travel the same distance as with gasoline.
is complete bunk and a logical fallacy.

But the EPA considers CO2 to be a harmful emission, and quantity of fuel used over a given distance has a direct, linear correlation to the amount of CO2 produced.

RE: The Biggest Lie ever told
By Rukkian on 10/15/2012 10:15:52 AM , Rating: 2
Not sure where you got the 1.6 number. Even though I do not use it, (even though I have a flex-fuel vehicle), it only drops fuel effiency ~20% which does not equate to 1.6, more like 1.2.

I don't personally use it because, even with the subsidies is it very rarely 20% cheaper (usually more like 5-10%), and then I have to go to the gas station more often to fill up. If the price was 25+% lower than standard gas, I would buy it most of the time.

RE: The Biggest Lie ever told
By freedom4556 on 10/16/2012 8:47:29 PM , Rating: 2
Well, according to the EPA numbers ( ) the average loss in efficiency across these four class-leading flex-fuel efficient 2012-13 models is 26% using the combined MPG. So you're more right than he is, but it's still costs you money to use E85. According to the same source, the EPA estimates the average extra cost of using E85 at $400 a year using the sampled vehicles.

(2013 Focus, 2012 Malibu, 2013 Equinox, 2012 Chrysler 300)

"Young lady, in this house we obey the laws of thermodynamics!" -- Homer Simpson

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