| |
|
03/20/10
|
|||||||||||||||
|
|
April
28, 2008 Supposedly a conservative, Hutchinson joins the food-fearmongers and thus betrays her statist, politico, anti-freedom credentials in this article. Although I certainly agree with her call to end government mandates for ethanol, and subsidies as well, her actions do not go far enough and she justifies dozens if not hundreds of new or increased government intervention into the free market for the supposed sake of the environment, the poor, Third World nations, and all kinds of other do-gooder causes and actions. She is far from alone, of course. Virtually all liberal congress-critturs and many conservative and middle-of-the-road ones are with her. Indeed, her words are virtually the same as the left-wing or outright dictatorial cabal of Latin America: Cuba, Venezuela, Bolivia, and the like. Sadly, too many who claim to be libertarian ALSO have joined in this fad. It is clear in her piece that she has either bought off on the grand disinformation campaign being waged against alternative fuels - or she is just another part of the cabal spreading the bogus claims. Simply put, Hutchinson and hundreds of others are claiming that the “global food crisis” is mostly the fault of biofuels. This latest crisis, according to its advocates, is a combination of several things: Doubling or tripling of food prices for basic commodities, mostly grains like wheat, corn, and rice, in the last two years. Worldwide reserve stocks being at a 30-year (“historic”) low worldwide. This “crisis” is demonstrated to exist by the following: Food riots in recent weeks or months in places such as Egypt, Mexico, and Haiti Claims by various organizations that as many as 500 million people worldwide do not have “food security.” “Food security” has many definitions, but the simplest is “When people do not need to live with hunger or fear starvation.” (Medical Dictionary) Evidence that food prices are continuing to rise, worldwide. Screams of outrage from all directions saying there is a food crisis. To those of us who grew up in the 60s and 70s, and for that matter, several decades before that, “food security” was unheard of: the only part of the world that really had “food security” in the World War Two era, in fact, was North America, and maybe some other parts of the British Empire and Latin America: the rest of the world lived on the brink of starvation. Indeed, the Western Hemisphere was the only reason much of Asia and Europe and Africa did NOT see more starvation and hunger than they did between 1930 (the beginning of large-scale fighting in China) and 1950 (when recovery from WW2 was finally well underway). To those of us who lived in the inflation-ridden 1970s after the oil shocks of 1973-74, rising food prices were a fact of life. We never again have seen the days of 25-cent gallons of milk (or gasoline), 20-cent loaves of bread, or 50-cent ground meat; much less five- or ten-cent sodas, twenty-five cent hamburgers, and fifteen-cent milkshakes. And even in the 70s and 80s there were mass famines in large parts of Africa and South Asia in which millions died. But we’ve all been spoiled by the worldwide prosperity of the 1980s, 1990s, and early 2000s. What has caused this new inflation in food prices, and the drawdown of world stocks of food? The fearmongers are willing to point the finger at many things, but two especially have jumped out. One is the old bogeyman of global warming (politically correctly now called “climate change.”). The other is the evil of biofuels (which until a few short months ago were the darlings of the environist, sky-is-falling crowd). Let us mostly address that second claimed cause in this article. Biofuels (that is, fuel made from recently living biological materials), especially ethanol, and very especially ethanol from corn, are evil for several key reasons: Taking food from the hungry by diverting the food to energy production Taking food from the hungry by raising prices for the food to levels that the hungry can’t afford Taking more energy to produce than they provide Contributing to global warming Giving a false impression that peak oil can be overcome through technology Giving a false idea that we are NOT at the limits of advanced civilization (and therefore do not need to cut back expectations) As a result, the fear-mongers say, biofuels must be banned, or at least severely restricted to prevent these evils. First notice how this attack on biofuels is of a like nature to such "politically correct" fads as: - Preventing global warming - Responding to “peak oil” (the idea that we are going to start producing less and less oil worldwide) - Providing ever more public school funding and government centralization and micromanagement (and at the same time, cracking down on homeschooling and private schooling) What do all these things have in common? They are all "crises" that "demand" more government control and intervention. They are excuses for attacking capitalism, free enterprise. They are also usually an excuse for attacking the United States as the cause of all evil in the world. And they are an excuse for raising taxes, either to fund the “fixes” or to prevent the evil things from happening. I think my readers know me well enough to know that I am NOT advocating government subsidies or mandates of anything. Sen. Hutchinson’s call for ending of such things does not bother me. It is HOW she is doing it, and the sidebar issues, that bothers me. She may not be liberal herself (though she IS a statist), but she facilitates the liberal-authoritarians by how she present this. It is not mere coincidence that the “food crisis” resembles and references the “global warming crisis” (now “climate change”) so closely and so much: it serves the same purposes and is a good successor to the increasingly-challenged climate change bogeyman Like global warming, the biofuel-food crisis is built on a house of lies. Hutchinson’s article, like dozens I’ve read in recent months, parrots many of the same lies that have been told for years about ethanol, and a few new ones. Let us look at the worst, quickly: She claims 25% of last year's corn crop went to biofuels. Funny, USDA 2007 data says 17%. She says it will be 30-35% in 2008: USDA forecasts are for 23% in 2014. And it is almost physically impossible for the plants to come on line quickly enough to increase production at the rate claimed. She claims that farmers are planting corn in place of other crops (she mentions soybeans and wheat). Funny, US wheat acreage was UP in 2007, from 13.7 million hectares in 2006 to 18.5 million in 2007 and to 19.2 million in 2008! So much for switching! And corn production dipped slightly in 2007. In 2004-2005, the US produced 11,807 million bushels, in 2005-2006, 11,114, and in 2006-2007 (est), 10,535 million bushels on 76.3 million acres. (This is a 5% drop from ’06 to ’07.) However, we should note that this is a significant increase from 1993 when it was only 6,336 million. (US Population in 1993 was 259 million, it is 300 million in 2008; a 16% increase, while corn production has increased by 66%!) She claims that the congressional mandate of 36 billion gallons of biofuels in 2022 (that includes ethanol from sources other than corn and biodiesel [from soybeans and other kinds of beans and other plants], but let's pretend that it is ALL corn-ethanol) is not possible to achieve without taking ALL corn out of the mouths of babies and horses. Funny, I can’t seem to come up with that number. Work through it with me. A bushel of corn (56 pounds) produces 2.7 gallons of ethanol (or better: new facilities are getting better and better at it). In 1986-1995, the US averaged 115 bushels per acre, in 1996-2005 it averaged 138 bushels. (We should note that the theoretical maximum yield of corn is 384 bushels per acre, and that until 1940, corn yields were about 30 bushels/acre.) That means that a billion gallons of ethanol requires 2.7 million acres of corn. Sounds like a lot, but let's see: If we assume an average of 600 usable out of 640 total acres for cropland in a section (1 square mile) of land, that amounts to about 4473 square miles, or a piece of land 48 x 93 miles. (Iowa has 56, 276 square miles, so theoretically Iowa alone could produce more than 12 BILLION gallons of ethanol from its corn fields. Of course, that is unlikely. But if we only take 1/2 of Iowa, 1/3 of Illinois, 1/3 of Nebraska, 1/3 of Kansas, and 1/5 each of South Dakota, Minnesota, Indiana, Missouri, Ohio, and Oklahoma ; we have 37 billion gallons of ethanol. And we still have room, just in those states, for 11,200 million bushels of corn NOT used for ethanol: more than our total 2006-07 production. She claims that “nearly all our domestic corn and grain supply” would be needed to meet this 36 billion gallon biofuel supply. Funny, the numbers still don’t add up. An acre of corn (138 bushels per acre, 2.7 gallons ethanol per bushel) makes 372.6 gallons of ethanol, so the 76.3 million acres of corn we had in 2007 will produce 28.4 billion gallons of ethanol, if it were ALL converted to fuel. If we took the 45.7 million acres of wheat we had in 2007 and converted EVERY bit of it to corn production, but at only 80% the yield of corn, we would be producing 5.05 billion bushels of corn, enough to produce 13. 6 billion gallons of biofuels, for a 42 billion gallon total: well over the 36 billion needed. So again, her numbers lie. (And this doesn’t count rice, soybeans, oats, barley, and all the other grains we produce in the US.) And IF yields remain the same. And IF corn stover (the stuff usually left in the field after harvest for ethanol but part of silage when used directly for animal feed) is not used: an acre of corn stover will make another 180 gallons of ethanol using current techniques (or 552.6 gal/acre, or 42 billion barrels withOUT converting any wheatland to corn), and still provide more animal feed. I probably do not need to go on: her article and most others are completely disproved already. But let’s look at some more to nail the lid on the coffin shut. She claims that grain reserves have been steadily dropping worldwide for years. Actually, this is true. But it is NOT a new phenomenon tied to ethanol. Rather, it can be tied directly to the droughts and some diseases suffered in various parts of the world, and also directly to government intervention. Government policies, especially taxation, make storage of commodities very expensive. The cost of storage is very high, in large part due to increases in construction and operating costs caused by inflation and taxes. And the very grain itself is taxed as inventory in much of the world. Finally, for decades, governments (not just the US) have been PAYING farmers NOT to produce. This, coupled with insanely low prices for crops, as compared to inflation, have led people to store less grains. She claims that corn used to make fuel is therefore not available for animal feed to make meat: cows, pigs, chickens. This is only partially true. In making 2.7 gallons of ethanol (about 22 pounds (39%)), distilling also makes 17.4 pounds of dried distiller's grain with solubles (animal feed): that is 31% by weight of the original corn. (Corn averages about 15-20% water; the remaining 10-15% is CO2 and oxygen.) After corn is used to make ethanol, then, much of it then STILL gets eaten by livestock. This false dichotomy of fuel or feed - a lie by the people opposing ethanol production – has been claimed (generally without any challenge in the mainstream press) for more than 20 years. She claims that ethanol and other biofuels lead to more global warming and deforestation - bugaboos that have been winning converts for liberalism and statism for decades now. Although some “authorities” claim that ethanol production has some increase in greenhouse gases (mostly the carbon dioxide mentioned above), recent studies actually indicate a potential decrease in “greenhouse gases” of up to 30% when ethanol replaces gasoline on a per-BTU basis. (And this assumes that global warming is indeed a human-caused phenomenon or even exists!) And there is NO indication that there is any connection on a worldwide scale to deforestation (Paul Bunyan clear-cut Kansas several centuries ago, and there are more trees in Iowa now than there were in 1808! <grin>) or ANY connection to global warming. The US does NOT import corn (or anything else) to make biofuels: nor does Europe. Brazil is the only major biofuel producer outside the US: they use sugar cane and there is some clearing of forests in the Amazon Basin for more cropland: a process that has been going on for 400 years. But there is no worldwide deforestation caused by ethanol production. She cites the "International Food Policy Research Institute" as the source of the estimate that "1/4 to 1/3" of grain price increase is due to use for ethanol production. I know very little about the IFPRI but a very quick review of their website and articles by and about them indicate that they are a typical liberal, globalist, inside-the-Beltway organization that advocates more government control of agriculture and food production and distribution, advocates massive intervention to combat global warming, raises alarms about biogenetic engineering, and all the other liberal do-gooder causes. But even if they are right, the impact of drought in Australia, the rise in oil prices, the trashing of the dollar, and other factors still account for 2/3-3/4 of the price. And the IFPRI itself admits that prices for grains are STILL below peaks from the mid-1970s!!! BUT: o Fuel prices have nearly tripled in the same three years that grain prices have gone up by 240%. o The dollar has dropped in value, even against other fiat currencies, by nearly 40% in the last three years. o Drought and other factors have caused significant drops in exports of corn and other grains from Canada, the EU, Argentina, the Black Sea (Russia/Ukraine/Belarus) and Australia. The US has seen some drought, but our technology of irrigation and other innovations has kept our production fairly high and usually increasing. The US, with only 300 million of 6.8 billion world population, produces 40-45 percent of the world’s corn, and provides 70% of the exports to the rest of the world. That percentage is increasing. o Demand for corn and other grains is increasing. This is due to several factors: more population (across the world), higher standards of living leading to increased meat consumption and therefore more corn required (such as China and India), and especially governments (North Korea, “Iraq,” Haiti, Egypt, and Zimbabwe all come to mind) that actually destroy local farm production or run distribution schemes that fail to protect and distribute food supplies efficiently: current “famines” in much of Africa are directly attributable to wars and occupations and social engineering: they are human-caused and not weather-created. o Depending on the model used, any two of these factors are more than enough to account for the full price increase. The panic also forgets a basic economic law: price spurs supply. Higher prices will quickly work to increase supplies available: farmers will grow more acres of corn, to take advantage of high prices. More supplies will ultimately cause prices to fall. That said, what ARE the causes of high food prices in 2008? 1. The trashing of the dollar: from $250/ounce of gold in 1990 or so to $900 today? Or compare to pre-1974, when gold was $35/ounce. We have devalued the dollar to about 3% of its value 30 years ago. Even against other fiat currencies such as the Euro and Pound and Yuan, the value of the dollar has dropped 40% or more in the past several years. The amazing thing is that corn isn't selling for 5 times what it is, and not that it has only gone up by ! 2. Growing world population, especially in China and coupled with a growing demand for meat in China, India, and other places, as touched on above. This wouldn't be a problem if not for government policies which encourage paving over of millions of acres of farmland each year and keep other acres out of production AND limit pesticides which would keep harvests from being eaten as much by pests. Similar problem to DDT and diseases like malaria in the Third World. 3. Explosion in fuel prices, especially diesel fuel. While grain-elevator prices have NEVER had anything to do with the cost of production, so that farmers' fuel costs are not contributing to this price increase, the cost of shipping worldwide is very much dependent on the cost of fuel, and that has exploded. Ocean shipping rates for grain climbed by 45-50% in just two years, due in large part to fuel costs. 4. Speculators: it is the futures market that drives the prices, and as with oil and steel and concrete, the speculators are in the cat's seat and driving prices up to ridiculous heights. This MAY be a bubble, as with oil. In fact, the two are connected: ethanol is in much greater demand because of the high price of oil and the speculators are grabbing up futures contracts expecting the demand (and therefore the price to climb higher 5. Panic: Panic sells news which sells advertising. As with oil prices, where a scheduled three-day shutdown of a small pipeline in the middle of Scotland or a fire at a small refinery in Odessa can trigger a 5-10% rise in the price of oil overnight, the same thing can happen in ANY commodity. And panic gets votes! 6. Shortsightedness: For the most part it is government regulatory and taxation policy that has driven reserve stocks of corn and other grains to such lows. These same policies have driven other costs up, as well, and created a corporate climate that demands short-term profits and inhibits long-term planning and investment, while encouraging the growth of mega-multi-national firms that dominate and can manipulate the markets (usually in partnership with governments) 7. Crippling of the free market. All these things reduce the freedom of the market, and reduce its ability to regulate the supply and demand balance. What is the solution? Restore the dollar. Eliminate reserve banking and replace fiat-money with a commodity-based currency. Gold was used for approximately 3900 years; only in the last 60+ years have we abandoned it almost worldwide. Liberate the rest of the world! Ending Communism in China, Cuba, Vietnam, and North Korea, ending autocratic rule in most of Africa and parts of Latin America and South Asia and the ‘Stans and Ummah, and ending socialism in India, Europe, the Commonwealth and the United States will allow the free market to recover and will provide for an explosion of creativity and investment and development. This will also greatly reduce population growth, as the US and Europe and the Pacific Rim have demonstrated. Export technology, not just grain, from the US to the Third World. Irrigation, genetically-engineered grains, pest control technology, processing and preservation and transportation technology all will allow other countries’ farmer to feed those countries. There is no reason whatsoever that even a small nation like Haiti or Ghana should not be, not just self-sufficient on basic foodstuffs, but exporting agricultural products to the world. Eliminate taxes, regulations, and bureaucratic barriers to improved technology, production and distribution systems for foodstuffs AND energy resources, including oil, gas, coal, solar, wind, tidal, and bio-sources. This will cause increases in production of all of these, improved reserve storage capacities and functions, and therefore drive prices down as dictated by the free market, NOT politicians and bureaucrats. Remove government prohibitions and barriers to new oil field development (like the oil shale in Colorado, Utah, and Wyoming, offshore drilling, ANWR, the Bakken Play in ND and MT, etc.) and nuclear power and refineries and uranium mining. Eliminate laws and regulations (including government mandates for fuels, technology, “conservation reserve,” farm subsidies, etc.) and tax-and-spend structures which create phony systems that can be used by speculators and panic-buyers and –sellers to scam profits, revenues, and control of commodities and companies, and that suck up capital and fuel inflation. Improve communications and transportation: the circulatory and nerve systems of the free market. These items together make up the repair and rehabilitation of a free market, and a truly global free market – not an artificial, government-run “free trade” system, but a market worldwide in which goods and services flow based on market demands and adapt automatically to changes in weather, climate, population, needs, and technology. Hutchinson (and some of the others) may be well-intentioned, but the effects of her actions would be to make matters FAR worse. Isn't it time to go back to free markets? The free market has demonstrated its ability for millennia to end hunger, reduce and even end riots, supply energy and transportation and every other good and service known to man. We DO have a choice: freedom or slavery. And we can take that choice, even now.
Nathan Barton is writing this from a wonderful place in the West, which might be in the Black Hills of South Dakota or Wyoming, or might be in one of the Four Corners States. Exactly where it is, the breezes blow with the scent of liberty, and the sound of the pines or the pinions is the sound of freedom. For thousands of years, people have fought and died for the liberty that Americans in the great spaces of the West enjoy, and he writes these commentaries in the hopes that continued generations will be able to do so, until the end of Time. Visit the blog: The Gospel Sower |
Gun-Free and Proud: a new tactic for a new generation Palestinian Suicide Bomber - Fact or Myth? The First Great Railroad Fight of the 21st Century Counting Our Blessings On Liberty Day More Victims Disarmed By OSHA Regulation "Islamist Terrorism" and the US Role: a response to Ivan Eland Science and Economics Vs Green (And Other) Nonsense Bogus Cell Phone Fire Warning Email Armed and Ready To Defend - The Greater Love The Inherent Contradiction of Government Complete Archives for Nathan Barton
| |||||||||||||
 |
|
|
|||||||||||||
|
|
