COMMENTARY: Biofuels Didn’t Cause World Hunger

This ignores other facts First, to say that the food crisis is not being caused by bio-fuels ignores many facts. Yes, other things apply but lets look at this more indepth. First beef, chicken, and pork? The feed for these animals has skyrocketed. Basic economics, these prices get passed onto the consumer. Second, ethanol on another scale has to use oil and other fossil fuels to be made, this shortens supply, raises cost of fuel, which is used to ship the food, which is once again passed onto the consumers. Yes, growth has occurred overseas, and droughts have occured, but this never caused a problem before. Now that the ethanol has used 30% of the corn supply, it makes prices escalate. Once again, this is passed onto the consumer. Corn has been replacing other grains in the fields such as wheat. This is a fact. Thus, wheat supply depletes, prices go higher – passed onto consumer. America ships large amounts of corn overseas. Other countries are also pushing ethanol and using their crops and what is imported to feed and to create bio-fuels. There are more but I think that this solidifies a basis that bio-fuel HAS created a higher demand/shorter supply of corn, etc. These prices roll downhill to the consumer. Anyone that says that this is just not true is working for the agriculture community.
Several countries are questioning whether ethanol is really that beneficial. Are they all wrong? Ethanol is a farce and facts substantiate this. It does nothing except raise cost. Anyone that says oil is too blame better look and see what has to be used to make and transport ethanol. It isn’t other biofuels! Research all the facts! Don’t be fooled by half truths and political agendas!

I agree … with caveats…
mandates for bio-fuels didn’t cause global food crises, but you downplay their effects in this commentary.

And you ignore the effects of subsidies.

Consider:

Last May 2007, Iowa State University’s Center for Agricultural and Rural Development, released a report which estimated that the ethanol mandates have increased the food bill for every American by about $47 due largely to higher grain prices. The Iowa State researchers concluded that due to these higher food prices, American consumers are enduring a “total cost of ethanol of about $14 billion.” And that figure does not include the billions of dollars in federal subsidies for corn growers or the $0.51 per gallon tax credit that goes to the ethanol producers.

On April 7, Thomas Elam, an Indianapolis-based agricultural economist, released the report … estimates that the biofuels mandates passed by Congress will cost the U.S. economy more than $100 billion from 2006 to 2009. And it said that it is “inevitable that these costs will be passed along to consumers.”

from http://www.counterpu…

I hope subsidies will be re-considered in the new farm bill, but realistically, I predict not much will change.

I agree … with caveats…

mandates for bio-fuels didn't cause global food crises, but you downplay their effects in this commentary.

And you ignore the effects of subsidies.

Consider:

Last May 2007, Iowa State University's Center for Agricultural and Rural Development, released a report which estimated that the ethanol mandates have increased the food bill for every American by about $47 due largely to higher grain prices. The Iowa State researchers concluded that due to these higher food prices, American consumers are enduring a “total cost of ethanol of about $14 billion.” And that figure does not include the billions of dollars in federal subsidies for corn growers or the $0.51 per gallon tax credit that goes to the ethanol producers.

On April 7, Thomas Elam, an Indianapolis-based agricultural economist, released the report … estimates that the biofuels mandates passed by Congress will cost the U.S. economy more than $100 billion from 2006 to 2009. And it said that it is “inevitable that these costs will be passed along to consumers.”

from http://www.counterpu…

I hope subsidies will be re-considered in the new farm bill, but realistically, I predict not much will change.

payouts So Dien, this year,

when crop prices are up and many farmers are making good profits -

will their subsidy payments reflect that profit?

Or will they get the same money as in “bad” times?

thanks! good to know

No, ethanol is not subsidized that way Ethanol is not subsidized like corn, soybeans, wheat, rice, cotton, etc. These crops are subsidized by the farm safety net in the commodity title of the farm bill with the various types of payments for farmers.

There are tax credits available for ethanol production. I don't personally consider a tax credit as being the same thing as a subsidy. Ethanol and biodiesel are supported by giving tax credits to the fuel blenders, not with actual subsidies.

Sorry, I know it's tempting to put it all into simple terms like that, but unfortunately there are much more complicated systems at work. You can think whatever you want, but nobody has proven that biofuels are a major factor causing rising food prices.

And I'm not in any way minimizing the role of commodity subsidies. If the commodity subsidies were removed, I think it wouldn't be long before we'd have a disastrous collapse of food production. That's when we'd really be talking about foood shortages and hunger. A wave of mass bankruptcies in the agricultural economy could quickly turn into a crisis on the level of the Great Depression. It's the New Deal era ideology that brought us these policies that have worked well ever since to maintain stable food production in the U.S.

Yes, subsidies are “market distorting” but the unfettered free market has its drawbacks — namely the tendency for boom and bust cycles in the economy. We don't want to have a big bust cycle when it comes to food.

Sorry, I know it’s tempting to put it all into simple terms like that, but unfortunately there are much more complicated systems at work. You can think whatever you want, but nobody has proven that biofuels are a major factor causing rising food prices.

And I’m not in any way minimizing the role of commodity subsidies. If the commodity subsidies were removed, I think it wouldn’t be long before we’d have a disastrous collapse of food production. That’s when we’d really be talking about foood shortages and hunger. A wave of mass bankruptcies in the agricultural economy could quickly turn into a crisis on the level of the Great Depression. It’s the New Deal era ideology that brought us these policies that have worked well ever since to maintain stable food production in the U.S.

Yes, subsidies are “market distorting” but the unfettered free market has its drawbacks — namely the tendency for boom and bust cycles in the economy. We don’t want to have a big bust cycle when it comes to food.

No, ethanol is not subsidized that way Ethanol is not subsidized like corn, soybeans, wheat, rice, cotton, etc. These crops are subsidized by the farm safety net in the commodity title of the farm bill with the various types of payments for farmers.

There are tax credits available for ethanol production. I don’t personally consider a tax credit as being the same thing as a subsidy. Ethanol and biodiesel are supported by giving tax credits to the fuel blenders, not with actual subsidies.

Yes, subsidies are generally based on prices There are several types of subsidy payments. Counter-cyclical payments and loan deficiency payments, for example, won’t go to farmers now that prices are up. The federal government will save a ton of money in the subsidy system now that prices are up.

But, there is a section called “direct payments” which go out regardless of market prices. Direct payments are something that reformers, including Sen. Harkin, have been trying to eliminate this year in the new farm bill.