Article Largely Correct

Implications: Ethanol will cause: Higher meat prices because of greater use of corn for ethanol rather than for feed. Reduced production of other crops like soybeans that also are needed. More monculture with the associated use of greater nitrogen fertilizer (made from natural gas) Increased vulnerability of the U.s. food and fuel supply from a drought or other yield-robbing disaster

Analysis:

The goal to increase energy independence with ethanol is good. However, the huge increase in ethanol production from corn threatens to cause several problems.

First, a huge increase in ethanol production from corn will drive up corn prices even more than it has already. By picking ethanol producers as winners by subsidizing their use of corn the government effectively made all domestic and foreign users of corn “losers” because they now must compete with a subsidized competitor for available corn supplies. Hardest hit will be poultry and swine producers who cannot use as much of the byproducts (distillers grains) in their feeds as can beef producers. It also will impact the prices of foods containing corn as it has done in Mexico with tortillas. Because the U.S. is the largest corn supplier to the world market it also will reduce the supply of corn available to countries around the world, particularly in Asia and Latin America.

The higher corn prices already have resulted in U.S. farmers reducing soybean plantings by 9% to plant more corn. Yet, soybeans are the source of the soyoil needed to feed the biodiesel sector. They also happen to be one of the least subsidized crops in the U.S. rapid expansion of the corn-based ethanol sector threatens to incentivize a lot more soybean production in Brazil on lands now in rainforest. It also incentivizes the destruction of rain forests in Southeast Asia and elsewhere to plant palm oil to make up for the soyoil the U.S. will not be producing. Moreover, world demand for soybeans has grown at almost 3 times the rate of corn over the last 15 years.

By causing U.S. farmers to plant more corn at the expanse of soybeans the ethanol incentives will require a lot more nitrogen fertilizer (made with natural gas) to be applied in the U.S. Soybeans are legumes and fix nitrogen from the air. When corn is planted after soybeans less nitrogen fertilizer is required, but corn planted after corn requires much more nitrogen fertilizer. This goes against the U.S. effort to reduce nitrate flows into streams, rivers and the Gulf of Mexico where it is blamed for the dead zone at the Mississippi River’s mouth. The increase in corn after corn plantings also will increase the potential for diseases and make farmers more dependent on one crop.

Finally, what happens if we greatly increase our dependence on corn-based ethanol and there is a severe drought in the Midwest? And such a drought no doubt will come, maybe even this year. When it comes we will find our gasoline and food prices driven through the roof and countries outside of the U.S. seriously shorted on corn supplies. Do we want to be faced with embargoing corn exports to protect our own food and fuel supplies? I think not.

Before the Congress moves ahead to implement policies that will cause a lot more corn to be used to make ethanol it needs to ask a lot more questions about what the impact will and could be. We already are feeling the consequences of questions not asked.