Corn based ethanol scheme facing increasing public and Senate scrutny
edited: for grammar & clarification 5/29/08 2;09pm
Back in 2005 Senators thought they had come up on a grand scheme to not only help the nations corn crop farmers but more so themselves. By mandating corn based ethanol they believed they had come up with a way to solve our nations thirst for foreign oil and make the voters think they had really accomplished something. For all intents and purposes a win-win solution.
Now barely two years later we are seeing the fallout from that legislation that was apparently not very well thought out. A plan that was only looked at from by all accounts only one side, the side that would enrichen the Senators rich business campaign partners and themselves in their quest for campaign contributions to fatten their campaign war chests. It now certainly appears that not much, if any consideration was given to what effect removing so much raw corn from the nations, arguably the most precious basic food commodity from the national food supply chain leading to recent skyrocketing food prices.
Now with the roar becoming an ever increasing and ear bruising crescendo from the voters as they struggle harder and harder to put food on their tables for their families and are now clamoring for some political hide that the Senators are now looking at possible scrapping or at scaling back drastically the poorly planned and misguided corn based ethanol policy that has brought much of their new contemptuous scorn upon themselves and their once misguided business farm campaign donor partners.
Now barely two years later the corn based ethanol subsidy proponents in the Senate are being forced to face the growing fallout from their shortsighted scheme that now wreaks and smells like a monstrous farm pork-laden subsidy program that appears to benefit only the multi-millionaire farmer campaign contributing constituents and puts the nations food supply at great peril. This also is bringing out the ethanol subsidy benefactors clamoring to malign and marginalize just about anyone who dares to speak out against their multi-million and probably soon to be billion dollar subsidized milk cow.
These Senators apparently chose to either ignore or even to consider what many opponents of the one sided corn based ethanol program they rammed through were trying so hard to tell them about the shortcomings and related problems with their plan and opposition is now quickly gaining momentum all across the nation and across the world, at last as food prices steadily out paces inflation and consumers shrinking pocketbooks. The deserved backlash is growing daily and those Senators are growing very nervous as well as they should. To help put this into perspective please read on.
Senators begin to ponder an ethanol exit plan
As food-versus-fuel debate gets louder, politicians start to squirm
May 28, 2008.NEW YORK (MarketWatch) -- Think back to 2005 and the energy policy debates in Congress. Democrats and Republicans both claimed the slogan of energy independence as the mantra for a national energy policy..Energy independence quickly became synonymous with homegrown biofuels, specifically corn-based ethanol. The vote was easy: Iowa farmers versus Saudi oil ministers. Congress mandated that 7.5 billion gallons of ethanol to be blended into the nation's fuel stocks by 2012. Last year, Congress increased the mandate to 15 billion gallons by 2015..Fast forward less than one year later. Proponents and opponents of ethanol are waging a rough and rowdy war in Washington over whether biofuel has a future..Ethanol has always had opponents: anti-subsidy, fiscal conservatives; oil industry executives fearful of competition at the pump; wary environmentalists uncertain about the air and water implications of turning food into fuel..Today, however, ethanol opponents are getting louder. And Washington policymakers who overwhelmingly voted to boost the biofuel to national savior two years ago are listening more carefully to the case against biofuels.."The volume on the food-versus-fuel debate is getting louder by the day," said Bill Wicker, spokesman for the majority staff of the Senate Energy and Natural Resources Committee..Recently, the Grocery Manufacturers Association, representing more than 300 food and beverage companies, joined the ethanol backlash. GMA's members include Nestle, Sara Lee - all companies facing higher fuel bills to run their manufacturing plants and higher costs for the raw materials used to make their products. The group thinks ethanol is the culprit in rising prices for meat, milk, and eggs and sees a rollback of the ethanol mandate as salve for family food budgets..The group wants to "amplify" the links between the ethanol mandate and rising food prices as often as possible and use the media's heightened focus on these issues to pressure Washington to turn back the clock on ethanol, according to a memo written by the association..The industry see stories of global food shortages and price spikes creating a perfect window of opportunity to "change perceptions about the benefits of bio-fuels and the mandate and, ultimately, to build a groundswell in support of freezing or reversing some provisions" funding ethanol production from grain..Iowa Senator Charles Grassley, a firm supporter of ethanol subsidies, got a hold of the group's memo and published it online last week. Grassley called the group's campaign a "misinformation campaign" and railed against the "scapegoating of ethanol."."The Grocery Manufacturers Association has an obvious self-interest in launching this campaign. They need to blame someone for high grocery bills, and they've aimed their fire, I think, at a false target," Grassley said at a Thursday press conference..A political price to pay?.To unseat support for ethanol the food and beverage industry believes it has to convert progressive Democrats, pro-business Democrats, and Republicans and Democrats from non-farm states who supported the ethanol mandate. "Environmental, hunger, food aid, poverty, development, senior, children, business, nutrition, farm, consumer and labor groups" are all natural allies in the fight, according to the memo drafted by the group..The Glover Park Group, a Washington lobbying agency, drafted a strategy proposal for the Grocery Manufacturers Association for taking on ethanol. In the memo, the lobbying group said "we must demonstrate to policy makers at the state and federal level that there is a political price to allowing ethanol policy to drive up the cost of food.".That price is constituent ire stemming from pocketbook and kitchen table issues like food and gasoline prices. The lobbying group suggested that the food companies take their campaign to "average voters."."Average voters understand perfectly well what increased food prices mean and with the right messaging are fully capable of drawing the connection to corn-based ethanol," the lobbying group said..A broad Democratic offensive against ethanol would certainly be threatening to the federal mandate for ethanol production and some pressure is already landing on lawmakers. Yet Congress -- and Democrats who have made curbing foreign imports of oil a top national priority -- hardly seem prepared to turn their back on domestically grown biofuels just yet.."The issue is complicated, and Chairman [Jeff] Bingaman thinks that it's wise for folks to catch their breath and get better educated on the complexities before charging ahead with changes," Wicker said, referring to the the chairman of the Senate Energy and Natural Resources Committee. Bingaman sent a letter to Energy Secretary Samuel Bodman and Agriculture Secretary Ed Schafer this month asking them for more information on the connection between crops and food prices..All of this has pro-ethanol groups waging a vigorouos defense of their industry. But ethanol is certainly not on the ropes.."For reasons both political and strategic we think Congress is unlikely to dismantle anytime soon the renewable fuels standard," according to a new report from the Stanford Group Company..The ethanol industry warns that if lawmakers undo the ethanol mandate they'll have a lot of explaining to do to consumers when grocery bills don't drop significantly. It contends there are only small amounts of corn in grocery store products, saying the impact is measured in cents not dollars. With crude oil prices now above $130 a barrel, the food and beverage companies are still going to face dramatically higher energy prices that will continue to be passed along to consumers, they argue..States stake out biofuels positions.That's what makes the states the real battleground in the ethanol fight, something anti-ethanol groups realize.."[A]s long as state and federal decision makers and their staffs can comfort themselves with the thought that current ethanol policy makes sense on the merits, it will be difficult to get them to take up the fight," the Glover Park strategy memo said..In the absence of a Washington about-face, Texas is prepared to be a test case in the ethanol war. Texas Governor Rick Perry, a Republican, asked EPA last month to curtail the amount of ethanol from grain that must be blended into gasoline supplies by half. This month EPA announced that it is accepting comments on the request..Texas has to prove that the renewable fuel standard would "severely harm the economy or environment of a state, region, or the entire country, or if EPA determines that there is inadequate domestic supply of renewable fuel." EPA has 90 days to decide if it will grant a state waiver..Sen. Kay Bailey Hutchison recently introduced a bill, S. 3031, that would freeze federal ethanol production mandates at 2008 levels. Ten other Republican senators, including Republican presidential nominee John McCain, R-Ariz., signed on as co-sponsors of the legislation.Needless-to-say the biofuels debate isn't going away anytime soon
I would only add that wayward Congress members have been adequately warned and that November could be a real problem for those who put corporate interests ahead of their voting constituents’ interests. Greedy corporations cannot cast a single ballot at the ballot box but they can only try to buy elected politicians who must stand for election every 2 or 6 years and their constituents are paying closer attention like they haven't in many years now. So be warned Senator "Half-measure" Hutchinson and Senator "Gotta watch closely" Cornyn!
Buffett sees "long, deep" U.S. recession
Warren Buffet, a U.S. investor and purportedly the worlds richest man is predicting that the current recession he believes that America is in will last much longer and run much deeper than many people currently believe.
Buffet asserts that America is
"already in recession" and added: "Perhaps not in the sense that economists would define it" with two consecutive quarters of negative growth.
Buffet went on to say;
"But the people are already feeling the effects," said Buffett, the world's richest man. "It will be deeper and last longer than many think."
While I do not necessarily think his ability to read the crystal ball as an analytical economic forecaster is infallible I do value his opinion on the subject as do millions of others around the globe. He has managed to amass a rather sizeable fortune and he must know something about economic indicators and markets to keep from losing his amassed fortune. I’d suggest that you go and read for yourself the article. It is based upon an interview published in German magazine Der Spiegel on Saturday.
Perry having second thoughts on ethanol
Seems that Texas Governor Rick ‘Goodhair’ Perry is starting to sense the growing public and worldwide angry backlash against using Americas corn, a very basic food commodity, for making ethanol fuel for cars and SUV’s instead of using the corn for what God put it on earth for, for feeding hungry people here and also reducing the amount of corn for export to other nations who are starting to realize increasing shortages in their food and feed supply.
By some estimates the amount of corn being used to make ethanol has diverted about 22% or more from the annual corn crop yield and that has led to increased costs for just about every food product derived from corn as well as greatly driven up the cost of feed for our nations livestock thus driving many cattle, hog, poultry and other animal producers who rely on corn in their feed supply either out of business or into near bankruptcy in many corners of the nation. Ranchers are finding it extremely difficult if not impossible to keep their doors open due to the extreme high cost of animal feed. Predictions are now that pork and chicken will be the next items in very short supply as a result.
This has naturally caused many Americans much financial pain at the grocery store checkout as well as this corn diversion has lead to skyrocketing wholesale food costs which are quickly passed on to you and me almost daily now if not weekly. There naturally are other things going on in the economy that are helping to raise those costs such as oil and gas, labor and greedy speculators but the diversion of corn is one of the leading contributors.
Perry's ethanol resistance catches on in U.S. Senate
AP - WASHINGTON — Following the lead of Texas Gov. Rick Perry, Senate Republicans today asked environmental regulators to use their power to halt the country's ethanol output expansion plans amid rising food prices.
Twenty-two Republican senators, including presidential candidate Sen. John McCain of Arizona, sent a letter to the Environmental Protection Agency suggesting it waive, or restructure, rules that require a five-fold increase in ethanol production over the next 15 years.
Congress passed a law last year mandating a ramp-up to 15 billion gallon of corn ethanol by 2015 and 36 billion by 2022. But McCain and other Republicans said those rules should be waived to put more corn back into the food supply for livestock, and to encourage farmers to plant other crops.
"This subsidized (ethanol) program — paid for by taxpayer dollars — has contributed to pain at the cash register, at the dining room table, and a devastating food crisis throughout the world," said McCain, in a statement.
Despite tough rhetoric from lawmakers, analysts say Congress is unlikely to roll back such a popular program during an election year.
It is only "popular" to those corporate interests like ADM and others who benefit by millions and billions of dollars in Federal subsidies in this major scam. If this ethanol program was so hot and so good for America why isn't private corporations doing this with their own dollars? That should be the yard stick with which to measure this boondoggle.
Friedman, Billings, Ramsey & Co. analyst Kevin Book argued in a recent note to clients that Congress will not "turn on the corn belt" because of the significant number of votes held by ethanol-producing states. Ethanol subsidies could face greater risks, however, in 2009 and going forward, according to Book.
Last month, Perry made waves when he asked federal regulators to relax rules requiring use of corn-based ethanol in the nation's fuel supply, arguing the mandate is driving up world food prices and harming the Texas economy.
In an April 25 letter to the EPA, Perry asked the Bush administration to waive 50 percent of the federal mandate for production of ethanol derived from grain.
Federal law requires that the nation use 9 billion gallons of renewable fuels this year and 11 billion gallons in 2009.
Ethanol is blended into more than half the gasoline sold in the United States, including in Houston and other cities struggling with the worst air-quality problems.
Farmers have responded to government ethanol incentives by planting the largest crop of corn in 60 years, leaving fewer acres for soybeans, oats and other agricultural staples.
Tighter crop supplies means higher production costs for food processors of all types. In one recent example Pilgrim's Pride Corp., the nation's largest chicken producer, said costs rose $200 million in the quarter on higher corn and soybean feed.
And Americans are paying those higher costs at the grocery store, where egg prices have jumped 40 percent in the last year and flour prices have risen 50 percent since January, raising the price of bread and other baked goods.
The EPA has the power to waive or restructure the requirements if they cause unintended harm to consumers or the environment.
"We don't think it's the right move to make," said Liz Friedlander, a spokeswoman for the National Farmers Union.
The group said ethanol production has helped lower fuel prices by reducing demand for gasoline.
It has? You got to be kidding me if you think Americans are so gullible as to swallow that load of pig swill.
Farmers and ethanol producers have defended corn-based production of the alternative fuel, saying its impact on the rising food prices has been relatively small. Instead, they blame food price inflation on higher fuel prices, poor weather conditions and dwindling stockpiles of wheat and other crops.
If you really believe that Mr and Mrs corporate corn farmer then tell me, if Congress took away all your Federal subsidies would you still be parroting your corporate party line? Heh heh, I didn't think so and neither does the American public.
While nearly all experts agree increased biofuel production by companies such as Archer Daniels Midland Co. and Pacific Ethanol Inc. has contributed to the run-up in food prices, there is little consensus on the scope of its role.
The ethanol industry says ethanol and other biofuels account for just 4 percent of the price surge, while the Department of Agriculture says the figure is closer to 20 percent.
Last week a group of international scientists recommended halting use of crops for biofuel, saying it would cut corn prices 20 percent.
OBTW. Most of the Senators that signed this petition are most of the same ones who originally enthusiastically passed this legislation but being an election year they have to appear as if they're really concerned for you and me.
Americans hoard food
This piece at TheWashingtonTimes certainly caught my attention. It caused me to think, ‘since when did Americans start hoarding food?’ And then it occurred to me, ‘why would Americans be hoarding food? In this day and age?!’ I know that food and gas has been on the increase over the past few years and it certainly has been making even larger increases at the pump and the checkout stand in recent months yet I wasn’t all that aware that we as Americans had been hoarding food, anyway not since the ‘Great Depression’ of my parents era.
But after reading on down in the article one soon becomes aware that what some rather wise and astute Americans, myself included have actually been doing is starting to read the tea-leaves and starting to buy and store extra foodstuffs and other related items we need in our daily lives otherwise known as ‘laying in extra vittles’. Okay okay, some might call it ‘stockpiling’ and maybe some might try to even stretch that to ’hoarding’. I wouldn’t quite go that far, personally.
Americans hoard food as industry seeks regs …. some Americans are stocking up on staples such as rice, flour and oil in anticipation of high prices and shortages spreading from overseas.
In all seriousness our basic food commodities supply have lately been showing signs of worsening with no real relief in sight for at least a couple of years or more according to some economists familiar with the world food supply numbers. Many world economists have been predicting that food and fuel will rise at least anywhere from 15% to 48% a year for at least the next couple of years. Even after that the prices will continue to rise but supposedly at a slower rate if some so called experts are right. Right now there are reports that these prices have already risen around 37% since just 2002-03. That’s about 6% - 8% per year. Now some are saying to expect double digit percentage increases each year of the next year or so.
With that being said I can certainly understand why some Americans are feeling the need to cover their families backsides just in case these dire predictions are only just half-right and there’s no way of knowing whether those numbers may actually be closer to 100% correct or anywhere in between. And with news items like this one that appeared in the WSJ recently, 'Load Up the Pantry' people have the right to be concerned in times like these.
In any event some people and I count myself in that group are just being careful and socking away certain non-perishable foodstuffs that will be needed no matter what happens and that these same foodstuffs will only continue to rise in price and keep rising for the foreseeable future especially with the continued weakening and dumping of the of the U.S. dollar worldwide and the continued meteoric rise in oil and gas with no end in sight which has a direct and devestating bearing on food prices at every level in our economy and the worlds economy as well because what happens in world markets elsewhere have at least an indirect domino-like impact on American consumers.
I call it an investment hedge against out of control worldwide basic foodstuffs supply and growing inflation. Never mind what the government tries to sell you and me we have some serious inflation woes staring us in the face with possible shortages in our food supply chain in coming months. The government does not include things like food, gasoline and oil and many other daily necessary commodities in the idea for figuring the inflation rate index but as a practical matter and as a consumer I do consider them when figuring the real world inflation numbers and how and where to spend my limited supply of money. - More later -
