Ethanol:
It’s Still About Keeping More Money In America
by: Lynne Finnerty, editor of FB News, a publication of the American Farm Bureau Federation.


There is an e-mail going around -- maybe you’ve seen it -- with pictures of a huge, gilded, palatial complex in the United Arab Emirates. The e-mail claims it is the home of a sheikh, paid for by oil money.
 
According to www.snopes.com, the urban-myth-debunking Web site, the place is actually a luxury hotel in Abu Dhabi. Although the e-mail gets it wrong and the pictures show a hotel, you can still bet that a lot of oil revenues have gone into it. The e-mail concludes with a question: “Amazing what $2.75 a gallon gas can buy, isn’t it?”
 
There is a lot of excitement in the United States about alternatives to oil: biodiesel made from soybeans and ethanol made from corn, grasses, wood chips and stalks. Right now, most ethanol is made from corn.
 
As production of corn-based ethanol has increased, so has criticism such as the claim that we could run out of food or not be able to afford it because U.S. ethanol refineries are using so much corn. A New York Times editorial of Sept. 19, 2007, said the ramp-up in ethanol production was causing food prices to rise and “threatening misery for the poorest countries.”
 
Ah, yes, the poor countries. We’ve been hearing a lot about them from the New York Times. In fact, it was only a year or two ago that the newspaper and others opined that U.S. overproduction of commodities due to farm subsidies was making it impossible for farmers in poor countries to compete with U.S. exports (and was making everyone fat). U.S. farmers are either over-producing or under-producing, but it can’t be both. The good news for farmers everywhere, in poor and rich countries, is that demand for their crops is way up.
 
Of course, ethanol production is one factor that has contributed to an increase in the price of corn. The American Farm Bureau Federation says the U.S. corn price is likely to break the 1996 record of $5.54 per bushel this spring.
 
But ethanol isn’t the only factor in higher crop or food prices. The world’s supply of grains is tight. Last year’s weather problems in Europe and Australia reduced the supply of wheat. A growing middle class in places like China and India is consuming more meat and milk, driving up demand for livestock feed. The growth in ethanol production happened to coincide with these global trends, conveniently for ethanol critics.
 
As demand for corn increases, farmers are heeding market signals and producing more.
No matter how much more corn they grow, farmers can’t grow enough to fuel every vehicle on the road. But that never has been the goal. Farmers can and do grow enough to displace some of our oil imports, which also will help lower fuel prices and improve the environment.
 
It seems no matter what American farmers do, they will always be somebody’s whipping boy. But claiming that they’re taking food out of peoples’ mouths is a new low.
 
Which would you rather support: Middle East palaces, or a homegrown fuel industry that creates jobs and economic renewal in the U.S.? Let’s burn more U.S.-grown, renewable fuel and send fewer American dollars to places like Abu Dhabi.

2/11/08