Volatility of food and energy prices

Corn Facts, Not Corn Flakes!

By Alan Caruba

Monday, August 6, 2007

There's a whole aspect of life in America about which fewer and fewer Americans know anything. It's farming. Some two percent of the population feed the rest of us who have no idea how what they produce gets to our plate. Responsible for everything we eat, agriculture is also an essential element of our nation's economy.

E. Ralph Hostetter, the publisher of American Farm Publications, is one of the most cogent, sensible voices on issues concerning farming today. Recently he wrote about "The impact of biofuels." You might think he would be all for converting corn into ethanol, but Hostetter is not. He sees the insanity of using corn--a crop used in the manufacture of 3,500 commonly used products during their production or processing--in this fashion.

"The American public is told by our government the rate of inflation in 2006 was only 2.2 percent," wrote Hostetter. "However, when price increases in food and energy were factored in, the reality was that actual inflation was 4.8 percent, or an increase of 118 percent what the nation was told."

The volatility of food and energy prices is such that the government's Consumer Price Index conveniently ignores them. That doesn't make the problem go away, but it does mislead the public.

"Today, 60 percent of the American corn crop is fed to U.S. livestock," noted Hostetter. "Therefore, as the price of corn is forced up by the demands of ethanol production and many natural causes such as weather, so is the price of meat, poultry, eggs, milk and more than 3,500 products American use every day."

Among the products affected by the rise in the cost of corn are cake mixes, pizza, beer, whisky, candies, cookies, corn flakes, cosmetics, instant coffee, carbonated beverages, fertilizers, vitamins, tires, toothpaste, paper products, pharmaceuticals such as aspirin and more than 85 different types of antibiotics. And that's just a short list.

Across the board, the price of a bushel of corn was up six percent in 2006 because of federal government mandates for the production and use of ethanol.

"Corn production for the nearly 7 billion gallons of ethanol production at the present time requires about 16 million acres or 20 percent of the total 80-plus million acres presently in corn production," Hostetter noted. In the effort to cash in on the federal ethanol mandates, production facilities cannot be built fast enough. In Iowa, when 55 ethanol plants become fully operational, they will use virtually the entire corn crop of that State!

Proposals in Congress to increase biofuel production "will require nearly 100 million acres of corn, approximately a 25 percent increase above the present 80-plus million acres," said Hostetter, which means that other crops such as soybeans and cotton will not be planted.

At present, the U.S. "supplies 70 percent of world corn exports of some 55 million tons of corn. It is now estimated that ethanol production in 2006 consumed about 50 million tons." Goodbye world corn exports and the money generated for the U.S. economy. Instead that corn will be added to gasoline in the form of ethanol.

It's not like the world is running out of oil for gasoline. There is no rational or scientific reason to reduce the use of gasoline except for the charge that automobile and truck use generates "greenhouse gases", but 95 percent of all greenhouse gases is water vapor!

Environmentalists and the U.S. Congress want to destroy the U.S. economy by diverting corn from feeding the livestock and other food products that we consume and the thousands of other uses for which it is required.

In 1992, Al Gore's book, "Earth in the Balance", was published. It is his screed about the way everyone is participating in the destruction of the Earth. He wrote, "…it ought to be possible to establish a coordinated global program to accomplish the strategic goal of completely eliminating the internal combustion engine over, say a twenty-five year period." Look under the hood of your car. That's an internal combustion engine.

Driving up the cost of corn is pure genius if you want to inflict financial pain on everyone and destroy the nation's economy.