Ethanol? Savior or sadist?

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Did ethanol come just in time, too late, or too early. I am of the believe that ethanol came just in time if not a little too late. The price of grains were going to come up to where they are now if not higher eventually whether ethanol came about or not. The simple fact is that stocks of grains have been going down for 30 years now without any real incentive for the farmers to increase supply. Ethanol could very well be a blessing in the long hual. If it were not for ethanol we would not have finally got the incentive to increase production of grains in a big hurry. Sure it would have kept prices lower for a few more years but then the price rally would have been too little too late to really help feed all the people in the world. Ethanol awoke the speculators and got them to start plugging in numbers of supple and demand for our grains. All the people of the world were getting so used to stealing our grain for so long if it would have happened a couple more years with rising energy prices the inputs would have gotten very hard to overcome and farmers would have been in times worse than the 80's. Ethanol gave farmers hope and the incentive to jump up and increase production to the best of there abilities. It also is helping to reduce our dependance on other countries for our oil and helping to reduce our trade deficite. I think our government along with other nations were to pre-occupied with build up other nations in the world they forgot about our own economy and our own backbone. That is rural america. For every dollar a farmer makes it goes through our economy 7 times. It seems pretty easy to rebuild and create more wealth for our nation by improving farmers bottom lines. I am sure some people will think i am nuts but others will completely relate. Farming has been so much like holding a basketball under water for so long. Then, all of a sudden you can't hold it anymore and it pops right back up and out of the water. That is what is finally starting to unfold now. Farmers are getting above water. Grains are now more of a global player now more than ever. There are many countries that have been sucking off the US teet for so long now without running out of milk. They always had there steady supply. Now there is more and more mouths to feed and there is not enough milk to go around anymore. We are truly starting one of the greatest bull markets in commodities that this world has ever seen. Usually in the past bull markets have been started by a shortfall of supply, whether it is weather or economic signals to slow production. This bull is of a new breed. One that can be sustained and is much hard to tame. It is a bull market let by demand. Demand for all grains and commodities from many nations and billions of people's wants. The big question will be whether they can get what they want. Or if they can get what they want and for what price. To lower grain prices now would ultimaly be the worst possible outcome for mankind. It would be signaling the producers of the world to cut supple again. It would be like alzado says. Biggest buy and hoard signal ever made. To lower prices now would mean to ten times prices in a few years when there is NO supply. IF the government or whoever tries to intervein now and lower food inflation would be the worst possible thing for all humans no matter what ethnic background. Hopefully this stirs up some good responses and opinions. Thanks
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Gmart:
I wanted to wait until I had thought out an answer to your post. I don't think ethanol is a savior or a sadist but rather just another use for our corn crop. Part of me as a farmer has a problem burning grain if you consider all of the work and energy it takes to get that corn crop. If you have never planted corn with a two row planter or shucked corn by hand you have no idea what I am talking about. It was not so long ago that shelling corn instead of picking it was a great improvement. The larger and larger head size was nothing short of awesome, but it depended on great amounts of mechanized power and cheap fuel. Was not so long ago that the John Deere 720/730 was the most powerful and fuel efficient tractor of its size. Today $4.00+ for diesel is making us rethink some of these choices.
The other part of me says that we had way too cheap of crops for way too long a time. Too many cussed us with their mouths full and did not realize the benefit they were getting. Lets be honest with each other if someone is willing to pay $6.00+ for corn we will sell it to them and they can do with it what they will. In the end those who have the real commodities will win the day and when it comes to food many nations and peoples will play for keeps. The only problem is we may not like at all what the world will look like ten years from now.
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NwIllfarmer
"Part of me as a farmer has a problem burning grain if you consider all of the work and energy it takes to get that corn crop. "
I'm not negating your statement, however, I'm still awaiting for some astute individual to give me a composition of how many units of energy it takes to extract , transport, refine oil and transport the end products in retrospect to ethanol.
And what is the pollution factors and the sovereign risks involved in doing so?
Let me put it another way, if high oil prices are cutting into every staple , every necessity, every non durable and durable good that gets manufactured with it, and its the Saudis and Venezelans that are the main culprits of doing so, and it is the main catalyst as to why we have inflation, then why is it so preposterous that NA. not look after themselves and burn something of which they always seemingly have a glut of,corn, regardless of what ramifications it has in other parts of the globe?
It seems this new paradigm has everyone looking out for itself and yes its causing much more civil strife around the globe, but has this not happened before?
Is there really much more starvation going on in this world when there's 100 more Chinese emerging from eating above the proverty line now in retrospect to just one other starving in some other country?
Just me thinking out loud .............
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There is one reason why the price of food is high and that is a lack of energy. I don't blame the middle east, I blame nature. The supply of oil is running out. Without cheap energy you can not have cheap food. Without energy you can not have food. The price of food can not go down with high priced energy. No one will produce it. You can not produce a product under the cost of production for an extended period of time. We need energy sources, and we will develop new energy sources, but it will take time. In the mean time, the price of food will remain high, ethanol or no ethanol.
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Tom 56 and R3020:
I agree with both of you completely. Tom56 that is why I "hate" to see it burned for those of us who grow a crop know just how much work it really is. I have no idea how much fossil fuel we use finding, refining, and delivering oil, but I am sure it is a great deal. But it was so much less labor to use it rather than to grow our own. The day will come, perhaps we are on the threshold now, that it will take so much energy to produce a crop that it is more valuable to consume it as a food crop, or use it as animal feed to produce food for ourselves than to merely burn it to get from point a to point b just for fun. When it becomes more expensive to buy fossil fuel to harvest a crop than the crop is worth then the crop must become more valuable than the fuel.
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sadist, no doubt about it. the self perpetuating corn check offs purchased the alcohol mandates from government elected to sustain the production of corn farm program. It a true example of governments central planners trying to dictate production over supply demand, as the world is criticle short of grains for direct human consumption, but the US government directs resources to the production of field corn, as a political reward, not a supply demand issue.
the US needed to curtail its energy consumption, not find ways to maintain, that was the real issue.
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I think we have to do what is best for America and for those of us who are farmers. I think, that the ethanol controversy has spearheaded the recognition that America has to resolve its energy problems. Like you have said, our problem has always been surplus corn, it now appears that the surplus problem has been eliminated. We (farmers) have been starving for years because we have almost produced ourselves out of business with $2.00 corn.
Too me it does not matter that we burn corn, wheat, soybeans as long as we get paid for raising it. The money has always been made by the commercial grain companies, but they had the customers who would purchase the grain. For the first time in my memory, the producer has the ability to sell direct to the ethanol plant or big pigs and eliminate the commercials or the local elevator, and now the world wants what we raise also.
The grain we are burning is America's grain, we are not importing it to fuel our plants. Fortunately on this site we have a diversity of views, but for my two cents worth, I do not think we are responsible for world hunger, it has always been there, in the 1950's grain was dumped at sea by USDA to support grain prices. We are blessed with farmers who always over produce to our own detriment, until now.
No one is going to ship Iowa Corn anywhere in the world for free, the transportation cost of the product probably exceeds the cost of the grain purchased. There has never been a great system of distribution to these 33 rioting or starving countries and they have always been on the verge of starvation or political insurrection.
The big difference and why this has moved to the front burner, is that those relatively rich countries population (America included) are starting to scream, because they have been conditioned to eat cheap, and complain about government subsidies to farmers.
I think that these events are bringing to the surface, that those subsidies paid to farmers were what had kept grain prices low, so American's and the world could eat cheap.
The government was never subsidizing the farmer they were subsidizing the general population. Ethanol was the key factor in absorbing surplus corn, and was the one technology that provided profitable corn production.
Believe me if the people who eat high on the hog were not complaining, no one would even care about those countries and their populations who are starving, starving nations have never been important, it only matters that we are not starving. It is amazing that everyone in this country and other countries believe it is America's obligation to kill its farmers by doing something that will cheapen grain prices for the world and the nation.
Have a great day. John
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Thats all real nice faust, but the reality is, corn production is very dependent on imports to maintain. Fertilizers, repairs, chemicals, machines, and labor all have to come from outside the US to keep up the production level. Might as well import oil, and cut out the sillyness, nothing is gained under this system, when its realized, corn makes alcohol, which is an energy source that fails to do real work.
Its a huge practice in futility, nothing is really gained raising corn to make alcohol, resources are being depleted and misdirected, that are needed to maintain production of real food sources.
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quote:
Originally posted by alzado

sadist, no doubt about it. the self perpetuating corn check offs purchased the alcohol mandates from government elected to sustain the production of corn farm program. It a true example of governments central planners trying to dictate production over supply demand, as the world is criticle short of grains for direct human consumption, but the US government directs resources to the production of field corn, as a political reward, not a supply demand issue.
the US needed to curtail its energy consumption, not find ways to maintain, that was the real issue.

Watched a show on PBS about Iowa corn last night.I hadn't realized that there is nothing an Iowa farmer raises that he can eat with out being processed.And what corn produces is fat--in cattle--and sugar--in various foods,drinks.None of which is good for human nutrition.Now I understand where Alzado gets his views.But I would sure hate to give up hamburgers and pop.They interviewed Earl Butz and he takes credit for cheap food.
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The fact of the matter is the world is talking about your and my life of raising food as if we are part of the commodity with no choice in the matter and it is not far from the truth. Which is why I believe this Republic form of government is actually nothing more than a machine run by the whims of terrorists who want free food money so they can make more bombs to keep the hungry, hungry to get more free food money.
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SIllinoisfarmer: I can understand your concerns. Not many people are familiar with picking corn. lol. But, I want you to think about something. In the good old days of pulling a header barge (wagon with one high side to pitch against) with horses through a corn field, how many acres were set aside to grow oats to feed those horses??? Horses were, and are, not cheap. lol. I'm too lazy to research it, but I seem to recall that in the horse days that 36mil acres were devoted to oats to feed that horse power. lol. Best.
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Horses do not live on oats alone, when they were working hard they also got 6 ears of corn.
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48:
I can relate to where you are coming from as well! We always called it a "bang board" here in Illinois as the ears where always being throed against it and then they would fall into the wagon. Yes, there were many acres tied up in real horsepower vs fuel powered horses. I would even argue that is why food became so cheap for so long as all of these acres could now be used for production. However, it was more than just bucolic it was functional. Land that was marginal was used as pasture land not only not for the horses, cattle, and sheep and it did not wash away. Better land was used for row crops and it was always rotated which built up soil and fertility and limited some of our weed and insect pressure. Livestock manure was returned to the soil and the cycle was continued over and over. Could we get the production that we now enjoy? No we could not but we also realized just how much work a gallon of fuel could do.
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Ehtanol is not the cause of high corn prices, high energy prices are causing everything to go up. Transportaion of products from point of production to the table is a large part of the final price along with processing and packaging. Corn at $6.00 a bushel is about 11 cents a pound. Doritos sell for about $2.50 a pound, so that makes that bushel of corn cost about $140 a bushel in a plastic bag. I know there are a lot of factors involved in the production or marketing of an item like this, but I`m just trying to make the point that when corn goes up to cost of production plus a profit it doesn`t mean everyone has to starve. A $1 rise in the price of corn means that the cost of that one pound bad of Doritos should only have to go up about 2 cents. The real cause of escelating prices is ENERGY and a government that is in total disarray about ENERGY policy. I`m not blaming either party, just the people who won`t allow anything to happen now in the name of global warming. Until we solve our ENERGY problem, we will only see the rest of our economy suffer from the results of a government that has really done little or nothing about it since the ENERGY crisis 30 years ago. Surely we`ve had time to react by now.
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As I write this crude oil is selling for $115.10/barrel. Assuming crude oil contains 5.8 million BTUs/barrel and corn (15% moisture) contains 390,376 BTU/bushel corn has an energy value of $$7.75/bushel. Wheat has an energy value of $9.11/bushel. And soybeans have an energy value of $10.46/bushel.
As the price odf energy rises the combustible energy value of all feed and food products rise. The world's poor and all other commodity users are now competing aainst using ag commodities for fuel at a much higher price level.
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pretty tough to stay warn if you're hungry. So I'd say food should be worth more than fuel.
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This post is to "expose" a few to the idea that production of crude oil is NOT and has NOT always been a profitable situation. BTW, I just got back awhile ago from my "other" job of pumping oil wells---we are reading articles about the GOOD side of the present oil price, where there is oil production, realizing that once the cream of the crop is eliminated, it, $s , just goes so far around the neighbor hood, town, county, state, etc. As a full time farmer, I do NOT see it as burning of food, especially when I see and know how hard, physically and monatarily it has been and stii is to get a barrel of crude to the surface in many parts of just Kansass. Maybe it is like watching children with livestock, how hard they take it when the "pet" is sold, well, the crop can be seen as a pet, and if it is NOT used for a profit, then z- has us where he wants us, by the short hairs. 48 and others are so right in mentioning the fact that acres were for feed for the horses, when it was just horses for the pulling of the plow. They/we burned it then, we burn it now.
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SIllinoisfarmer: I always enjoy visiting with you. I live in a museum. lol. The harnesses are still hanging up in the barn. They used 4 horses on a wheat header. 1 behind the cleated drive wheel and 3 behind the header. My uncle always felt sorry for the drive horse cuz the cleats threw dirt up in his face. The header was just a sickle with canvas belts that took the wheat to a canvas elevator that elevated the wheat into a wagon with a high side called a header barge. The header barge required 2-4 horses depending on size. 2 guys with pitchforks moved the wheat around in the header barge. When it was full, they made stacks all over the field. Then, they pulled the threshing machine around to the stacks and pitchforked it into the threshing machine. Horse drawn wagons--usually 2--hauled it to bins where it was scoop shoveled into the bin. Then, the stacks were burned, and the wheat was drilled back into the stubble with single disk drills--2 horses--the original no till!!! The 4 bottom mold board plow required 6 horses. You brought that team in at the noon meal and took 6 fresh horses out for the afternoon. That's 12 horses. Plus, you always had 2 back ups for the inevitable injuries and shoulder bruises. That's 14 horses for 373A of wheat back then and 97A of pasture. My uncle increased the size of the farm, and I have about doubled that to 1700A. As you well know from our previous conversations, I am a big believer in growing my own nitrogen with SB in the rotation. The only point that I am trying to make is that it would take a lot of acres out of production to grow the oats, alfalfa, and hay for horses. Good visiting with you. Always a pleasure. Best.
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Alzado,Alzado,Alzado the Great Satan's exports today hit a 25 year high. Your economic theory that the falling dollar really has no value anymore just left the tracks! Must really be choking you up that your favorite Communist Country is starting to get hosed by the Americans. Isn't Economic Warfare fun? It is amazing to me that Alzado Tech, did not teach you about the 'Art of War", Economic War that is. Have a great day. john
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Well crap, just when things are looking up on the farm now we got to pick the lessor of two evils. I pick both because we need both. I need to eat first to stay alive so that I can find heat to stay warm, unless I move to the Equator. People will eat come hell or high water that is for sure. They may not power their machines until technology catches up with the fuel shortage or the high price whichever.
I am not guilty of causing mass starvation. The monopolistic corporations that have left the USA for cheaper labor to produce the ....... junk we seem to need get my blame.
Now the world is crying fowl ball, you can't burn corn we are hungry. The third worlds are third worlds for a reason. Every time we stick our big noses in their affairs we end up getting burned. When will we learn. Hell we're gonna save Africa now.......lets see, Cuba, the Philippines, Korea, ah Vietnam, Israel, Iraq, look at the mess's we made, all for trying to save the world from themselves. For God's sake, let them fend for themselves, we did, and look at the mess we are in. STOP IT, STOP IT, QUIT SCREWING AROUND WITH THE REST OF THE WORLD!!!!!!!!! It's none of our damn business, let them hash it out. We need to get down to work here and figure out how to power this great nation with the sun and water......oil is consuming us not us consuming oil. It's gonna stop you can count on that. We need a savior now and quick. I can't keep filling this diesel pickup with $4.15 fuel if corn goes back down to $2.50. What about the poor people in this country who are struggling NOW to put food on the table. Give me a break we can't take care of our own but we're gonna help the rest of the world first. Well who's gonna be knocking on your door or kicking it it in first, Africa or your neighbors? Come on Congress, you've lived with your head up your a$$ too long. We need to clean house with these vermins. Here's where the Crooks live.
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Smartfarmer- we are all in the same boat, if corn goes to $2, we will all be standing on corners selling pencils. Oil just closed at or near $115. Boone Pickins said Oil could hit $125-$150. Americans are going to be hunkering down, it will now be needs that take priority not wants.
Imports from China et. al, will be declining, then lets see how long the economic boom in the Far East continues, when their warehouse's are full of unsold junk they have been dumping on us here in our country.
It was sunny yesterday, then rain today, I think we will all have a more positive outlook once we get rolling. Have an Iowa Friend who farms in Louisiana also, he almost has his 800 acres of corn planted down there, still has 200 acres of Milo to go, then he will be heading back to Gods Country.
Right now, we are on the winning side in this economy, grain prices have recovered nicely, and now it is getting down to planted acreage. It is going to be a wild summer up here. Have a great day. John
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This morning's Wall Street Journal shows there is mixed messages coming from Bush's cabinet. Maybe the Energy Secretary should talk to the Ag Sec every once in awhile.
Corn-Based Ethanol Tied to Higher Food Costs
By SIOBHAN HUGHES
April 19, 2008; Page A2
Energy Secretary Samuel Bodman said Friday that the growing emphasis on corn-based ethanol has contributed to higher food prices, and he said the nation should begin "moving away gradually" from ethanol made from food such as corn.
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Don`t you just love this countries leaders anymore? They can`t stick with anything and see it through. I will not be surprised if the rats jump off the ethanol thing as fast as they piled on, however I believe that even though our prices would suffer if they start back tracking on the ethanol deal, there is a possibility that the real demand for food world wide might actually make it possible for us to get our money from the market place and not subsidies. Sometimes I think Alzado might be George Soros or one of his lackies. This clown wants to make us responsible for the societies that have been organized much longer than ours and have done little or nothing to improve their own lives let alone the rest of the world.
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