maybe some sanity

[jensend]

http://www.theglobeandmail.com/servlet/story/RTGAM.20080512.wethanol12/BNStory/National/home

then read the comments that have been posted in response to the article:

http://www.theglobeandmail.com/servlet/story/RTGAM.20080512.wethanol12/BNStory/National/home

ethanol is just another dumb idea that coud make someone like adm a lot of money

[Jay-mo]

Alot of flip-flopping happening in this whole ethanol topic. A couple years ago the enviros where screaming, chanting and banging their bongos that we need ethanol to "save the environment". Now ethanol is in the pocket of "big oil"? Give me a break.
I keep harping on it but it needs to be repeated.
When corn is used for ethanol the by-product DDG, which makes up one third of the bulk corn contains 3 times the protein and goes right back into the food chain as cattle feed.
Ethanol has next to nothing to do with food prices.
If anything it is providing a cheap nutricious feed stock for feed-lots across the midwest helping to somewhat dampen the effect of high feed prices.

[Fransisco]

I have said it before and I'll say it again the reason why the lefties are now abandoning the bio fuels ship, that they created with the help of the Al Gore's and David Suzuki's of the world, is that they can't stand the thought of an ADM making money from their idea.

[Fransisco]

And saying ethanol has nothing to do with food prices is just as wrong as saying it has everything to do with them. It is a factor.

There are a lot of livestock producers going out of business these days and a lot more will in the coming months before this is all over and done with. The prices they are getting for their animals are relatively normal, it's the price of feed that's killing them don't pretend that its not.

With one third of all the corn in the US going towards ethanol production its not just a factor its a big one.

[Fransisco]

<blockquote>"CHICAGO, May 9 (Reuters) - U.S. government data on Friday showed there is sufficient corn for the United States to supply itself with food and ethanol through next year, but <b>the outlook hinges on cuts in exports and less of the grain being used as feed</b>." </blockquote>

Less exports means less food for the world, less feed means less animals.

I wouldn't have a problem with this if it were market based. It's not, right now the US government is trying to do an end run around the market.

[jensend]

to me the biggest thing is that this is a negative idea both in terms of energy and economics. i just mentioned adm because it is the biggest ethanol producer in the usa and makes their vertical integration of the value chain more complete. i still think in terms of energy use it would be more efficient to burn the grain to heat your home, hottub or shop than to transport, process the grain and haul out ethanol and byproducts.

[charliep]

There are other factors than straight feedgrain supplies in both ethanol in the price of grain and problems in the livestock industry.

Correction in the value of the US dollar relative to most other currencies has impacted competitiveness. A sixty cent looie would do a lot to make our livestock industry competitive.

You also have to look at the meat consumption/trade side. There is a shortage of pork in China/impact on food inflation but the issue of Paylean/Ractopamine is preventing North American access to this market.

http://www.omafra.gov.on.ca/english/livestock/swine/news/novdec07a2.htm

Only other comment is to watch the second and third generation ethanol technologies as well as improvements in first generation (traditional distilling). Improvements in ethanol efficiency and including the cost of shipping grain around the world will change how the world views this technology.

[Fransisco]

And left on its own the market would decide whether or not it makes more sense to heat your hot tube this way or run your car.

[Fransisco]

You're right the paylean/China issue is a non tariff trade barrier. But it looks like they might just be changing there minds about that.

I'm not so sure about the dollar argument though.

Pork exports out of the US are on fire right now (every one in four pigs) and the low US greenback has a lot to do with that. Reverse the dollar trend and you could very easily reverse the export trend as well. Any currency gain we might see would quickly be lost in an oversupplied North American market.

[charliep]

More referring to the Canadian situation on the dollar. You will may correct me but about 50 % of Canada's pigs (live and meat) are exported (if I remember right). The impact of the loonie has been to make our pig/pork prices lower.

[Fransisco]

This is true and most of our exports go to the US but one has to look at it in the whole North American context.

And if our dollar were to depreciate against the US one I don't think ours would do so in isolation. I think we would see everybody else's dollar doing the same thing. Meat would then become more expensive and they would likely buy less.

If our dollar could somehow drop in comparison to the US without the rest of the world experiencing the same thing we'd be in business. But I don't think that's realistic.

[charliep]

Agree.

To the original posting. I note the original posting was mostly a political one.

Perhaps the politians and others are missing all the investment in biofuel research and where the world is going (not where we are today). If $125/barrel oil is long term reality, what consumer behavior/business changes will occur? In a world of $100/tonne plus/minus ocean freight rates, will the major exporters of grain operate in exactly the same way? Will high crop prices around the world (not just North America and Europe) stimulate production (all farmers regardless of how small/big react to profit)? Maybe encouraging food self sufficiency in countries is a good thing for world food security?

[charliep]

some quotes I found elsewhere some quite interesting!

Critics are ‘flat out wrong’
U.S. Secretary of Agriculture Ed Schafer:
Secretary Schafer said only about 25 percent of the corn crop goes to make ethanol and that the forces driving rising prices in corn and other commodities has more to do with energy costs, increased consumption around the world and weather-related production problems.
Critics who blame high food prices on US policies they claim encourage corn to be diverted from food and livestock feed to alternative fuels are "flat out wrong," said Schafer.


Emphasis needs to be on oil-exporting nations
Thai Prime Minister Samak Sundaravej:
Prime Minister Samak “lashed out at the World Bank and the United Nations for criticising biofuel producing nations for soaring food prices while sparing oil exporters.”
“Let me ask the World Bank whether they used to ask oil exporting countries before pointing their fingers and blaming us that we have to use rice fields to grow biofuel crops,” Samak told reporters.
“They have unreasonably continued to inflate oil prices even though the oil supply is not running out yet,” he added.


Livestock gobbling up grain supply
German Environment Minister Sigmar Gabriel:
Gabriel downplayed their role in raising food prices, saying demand for animal feed was more relevant.
"There are other factors crucial for rising food prices.
"The big competition is not between the use of biomass for energy and food but between feed and food," he said.
Ethanol not the primary reason for higher food prices


Brent Searle, Special Assistant to the Director of the Oregon Department of Agriculture:
Whatever else one may criticize about corn ethanol, or biofuels in general, they are not the primary cause of recent food price increases.
Consider the fact that growers planted 24 percent more corn in 2007, which more than supplied all the corn that went into ethanol for the year.
One could, therefore, totally remove corn ethanol from the equation and most of the present food price issues still would be present because there are many more factors at play with food prices here and abroad.


Biofuel debate shows ‘gross misunderstanding’ about food markets
Potash Corp. CEO Bill Doyle (Potash is the world’s largest fertilizer company):
“I think that ethanol is the most popular whipping boy in the agricultural world at the moment,” Doyle told analysts on a conference call on Thursday.
Doyle, who has talked about declining world grain stocks for years, noted 95 percent of the world's grain crop this year will be used for food.
“So to say that biofuels are the culprit clearly underestimates the demand and really shows a gross misunderstanding of the world food situation,” Doyle said.

Erik

[mcfarms]

Ethanol's just a easy whipping post.




Understanding World Food-Fuel Crisis
Published: May. 12, 2008

Source: Peter Goldsmith (217) 244-1706




URBANA - Symptoms of the food-versus-fuel crisis are appearing regularly in the news but the underlying causes--and long-term implications--are poorly understood, said a University of Illinois agricultural economics professor.

"An important component of the food-versus-fuel debate that is not well understood is how increases in wealth for Asian consumers are dramatically affecting the markets for commodities worldwide," said Peter Goldsmith, director of the National Soybean Research Laboratory and an associate professor in the U of I's Department of Agricultural and Consumer Economics.

To help fill that knowledge gap, Goldsmith, Tad Masuda, a postdoctoral researcher, and Barbara Mirel of the University of Michigan have built a 3-D computer model that visually conveys the interrelationship and impacts of income changes around the world on consumption, production, and markets.

"Global Food in 3-D--Version 2" is a Web-based program that will be accessible on a trial basis worldwide to analysts and other interested parties by June.

"It will put the story of food demand at everyone's fingertips," Goldsmith said.

The program deploys three interactive features on the screen--a sidewall, a back wall, and a floor.

On the "side wall," users can graphically display consumption and production data for 15 protein commodities. These can be displayed by country, region, or for the world.

"In the global food system, the production and consumption of commodities are increasingly separate," Goldsmith said. "For example, poultry and pork trade has increased 14 percent to 16 percent per year since 2000, respectively. Brazil is now the largest exporter with Russia and China being the leading importers. The shift in the loci of world poultry and pork production will have larger impacts on underlying feed markets and grain flows."

The "back wall" features country-specific information such as consumption per capita, income elasticities, and population metrics. These data help to demonstrate how income affects consumption.

"The relationship is simple--if I get $1 more in income, I'll not only eat more. If I get significantly more income, I'll eat even more but will shift my consumption to different types of food," he said. "We have that data for every country in the world going back to 1961 and projecting up to 2030."



As a component of the food-versus-fuel debate, there is an economic principle known as "elasticity." Simply defined, this means as incomes move up, food consumption and expenditures change. This is why small increases in income in heavily populated nations like India and China can have major impacts on commodity markets, especially those tied to protein.

"The visualization provided by this program helps one understand this relationship. It provides a vivid demonstration of how the complex system involving income growth, population changes, and food consumption functions," he said.

The "floor" of the model is a map of the world which dynamically reflects changing consumption or production patterns and elasticities over time.

As meat and poultry consumption rises in Asia with increased incomes, a greater demand is triggered for corn and soybeans to feed beef, pork, and poultry. Holding all factors constant, projections indicate that 120 million metric tons more of pork and poultry will be needed by 2030. This means 110 million metric tons more of soybean meal, 140 million metric tons of soybeans, and 62 million hectares of land to grow these additional crops.

"Not only can we not add land fast enough to meet this rapid rise in demand, but it would place a significant burden on our natural resources," he said. "So how do you produce more soybeans?

"I think the answer lies in more research and technical change. Improvements in yield, technologies to reduce input use, and increases in livestock feed efficiency will be critical to meeting future demand while improving the productivity of agricultural inputs and reducing the load on environmental resources."

The Global Food in 3-D model can be used to demonstrate and understand how demand has changed for commodities and where production has been and is going. Poultry, for example, was a commodity largely consumed during the 1960s in the Caribbean, North America, and Europe. By 2007, new countries in other areas of the world were becoming major consumers and a radically different pattern emerged.

"In terms of consumption, poultry was until the 1990s largely a U.S. business," said Goldsmith. "After that, Brazil and China have become major players. China now consumes more poultry than the United States and is projected to consume 40 percent more poultry than the United States by 2030. Where will the grain to feed this poultry come from? This demand is placing a tremendous stress on crop production even without using crops for fuel."

The model allows users to make comparisons. What are the effects on markets when incomes are rising in Asia and what are the implications for the future?

"We also know that as incomes rise, consumers change their food choices. They go first from rice to meat and then in some countries move to high-end seafood," he said. "Other commodities stay basically flat in some countries. In the United States, for example, dairy consumption doesn't seem to change while the big opportunities for dairy appear to be in South America. But each country, at each point in time, for each foodstuff can be unique and makes generalizations risky. Hence, we felt there was a need for a software tool that employed visualization to help simplify a complex situation."

Asia can't produce the food needed to feed its population, Goldsmith added. "That food will have to come from the western hemisphere. China, once the home of the soybean, is now the world's largest importer of soybeans."

All of these complex and interrelated developments become clearer when moving across the screen with its tables and maps.

Goldsmith noted that the original idea for the model was developed earlier this decade by Steven Sonka, a former director of NSRL and retired professor of agricultural economics, and his then-doctoral student Donna Fisher. They studied how visualization helped managers make better decisions when dealing with complex problems in the future. The Illinois Soybean Association and the Soybean Disease and Biotechnology Center provided support for development of the software.

-30-

[boarderbloke]

so much discussion you hear on the radio leaves the impression(particularly to those not in agriculture), that when corn or grains are used to make ethanol, all that is left at the end of the process is ethanol! and somehow the grain used has either evaporated or has been pushed into a great big pit and buried! it is never talked about, that the mash is fed to livestock, actually displacing corn grain which would have been fed to the livestock otherwise! in reality, making ethanol from grain allows two uses(dynamically different), from a ag resource, produced by farmers.