Bloomberg on U.S. ethanol policy: “People literally will starve to death”
February 13th, 2008
New York Mayor Michael Bloomberg got a lot of attention this week for comparing the threat of global warming to terrorism. In the same way Arnold overshadows him, these remarks perhaps overshadowed the Mayor’s equally blunt thoughts on food vs. fuel:
[Rhetorical note to Mike: The word "literally" is overkill in such a blunt sentence. Nobody is going to think you meant people would "figuratively" starve to death.]
Who can stop the corn supremacy?
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February 13th, 2008 at 12:40 pm
I disagree on your rhetorical note. The press and electronic media have so debased language with hyperbole and BS that people who are trying to be serious have a tough time making clear that they are not just doing more of the same.
February 13th, 2008 at 6:34 pm
Bloomberg does not ‘get it’. There has not been a ’successful’ famine in over 200 years, except the artificial one engineering by Stalin, and I just don’t know about earlier.
Its amazing how people can be by on so-called starvation foods when required to do so.
But if all he means is ethanol-from-corn is a bad idea, I agree.
February 14th, 2008 at 1:34 am
I met Mayor Bloomberg many years ago, and I thought he was very sharp, but this argument concerns me, in part because I’m not sure how well he understands agriculture.
Having grown up on a small farm run more-or-less sustainably for 130+ years, I’m not particularly keen on giant agribusiness and massive farm subsidies for specific crops, as they encourage lots of non-optimal behavior [and certainly helped make our small farm become uncompetitive.] If corn weren’t subsidized, we’d perhaps have less CAFO feedlots and less high-fructose corn syrup, and we wouldn’t dump subsidized crops on developing economies, sometimes screwing up their own ag development.
Google: agricultural subsidies
I’m all for efficiency, avoidance of waste. I expect a lot of agricultural fields to have windfarms, I want approprate solar everywhere. I hope we can electrify more trains, and I’m for all-out electrification of everything we can, but reserving judgement about the 100%-electrification of Class 8 trucks [including grain trucks, for example], 400HP combines, grain ships, etc, until I see plausible designs ore replacements.
I certainly think most cars and many kinds of trucks should be EV or PHEV (hopefully PHEV-diesel). I hope we get good enough at EV/PHEV that Los Angeles and CA Central Valley get better air. I’d love to see most crop subsidies go away.
But still, as an old farmboy, it seems like we are telling the average Iowa farmer that their future should be:
“Under no circumstance should Iowa devote any acreage to biofuels. You can grow corn if you sell it for other reasons, or as embedded in meat from CAFO feedlots. You can keep importing gas/diesel to plant & harvest and get grain to elevators, but no matter how expensive that gets, you cannot grow biofuels, even if you can’t run your machinery. Ideally, realize that Corn is Bad, so plant grass mixtures that return the land to prairie and sequester C … and then leave.”
I really think we’d better start offering the US mid-west a better message than “go out of business”. Peak Oil + increased demand says gas/diesel priceswill go up. Unlike a lot of dumb fuel usage by cars, farming is a business, and fuel is a cost, and I don’t think that many farmers buy 2X-bigger tractors just for fun. I conjecture farm machinery (which tends to be mostly diesel) is more “efficient” in some sense than a lot of cars, i.e., it does what it is supposed to do with a minimum of fuel usage. Most farmers don’t take tractors out for joyrides, and in rural areas, longer distances lessen the advantages of EV and PHEV compared to those in suburbs and cities. It is unsurprising that GM likes E85, given that its vehicles sell better in the mid-West than on the coasts.
Anyway, we need positive, attractive incentives to do “the right thing” in place of the seductive incentives to do less-useful things, especially since Mid-West states have a lot of votes in the Senate… i.e., a lot higher percentage than in the House.
Maybe those messages might be (in some combination or others, I’m not *advocating* any of these; I just keep seeing “biofuels are bad”, and it’s hard to find messages as a farmer that I might like):
A) Electrify to the point of needing *zero* fuel for planting, harvesting, and transport. [That would be great. Won't happen soon. Maybe "We'll subsidize this conversion" would help.]
B) Stop growing so much grain, grow vegetables and fruits instead, and emphasize local agriculture. [Relocalizing agriculture seems good, although if it means a lot of trees in the NorthEast get cut down to do it, maybe not.]
[A lot of details omitted to make this practical.]
C) Split up big farms into Amish-sized farms, perhaps with electric tractors. [Old Amish don't use tractors, but some other related groups do.]
D) Split up big farms into a piece for owner to raise vegetables, and rent out the other parts to people to farm who move out from cities.
E) Don’t grow biofuels, but we (rest of US) will subsidize fuel for farming [which is done in some countries, i.e., heavy taxes except for farms and other key uses.]
But, in general, if we want Iowa (in general) and Iowa farmers in particular to do something different, we need not only to stop subsidizing corn, but to give people a direction that’s different from having their 100-year-old farms forced into bankruptcy.
In general, farmers grow whatever they can that nets them money, and of course, subsidies can easily distort that (and have, big-time). If a farmers don”t have fuel to run their machinery, but could grow it cost-competively, telling them not to ISN’T GOING TO WORK. It either needs to be made illegal, or discouraged financially enough that people doing it go out of business. Otherwise, when fossil gets expensive enough, farmers will allocate
Using Iowa as an example:
http://www.ers.usda.gov/StateFacts/IA.htm
88% of IA is farmland; it shows how all that’s split up.
Average acreage is 350 acres, although with a right-skewed distribution, i.e., there are few really huge farms, and a lot of smaller ones.
86.8% of the farms are individual/family/sole proprietors, which typically means that most farms are run by families, maybe with a little help, certainly with a lot of machinery, since nobody farms a few hundred acres of grain with manual labor.
You can compare rural incomes with urban ones (guess which is higher). From 2000 Census:
http://en.wikipedia.org/ wiki/ States_of_the_United_States_by_income
we find that Iowa ranks in the middle on various per capita income metrics: i.e., maybe with Ethanol now, they are getting rich, but in 2000, they weren’t. [Actually, given that fuel and fertilizer prices are going up, I doubt that they are suddnely getting very rich, but I don't have new numbers handy.]
Here’s the view from Iowa:
http://www.iowacorn.org/cornuse/cornuse_3.html
and especially:
http://www.iowacorn.org/ cornuse/ documents/ HowisOurCornCropUsed-0506.pdf
Read the latter carefully, as each paragraph tends to talk about the US totals and then the Iowa part of it.
“The 10 biggest customers for U.S. corn are: Japan, Mexico, Taiwan, South Korea, Egypt,
Colombia, Algeria, Canada, Israel and the Dominican Republic.”
http://en.wikipedia.org/ wiki/ List_of_countries_by_GDP_%28PPP%29_per_capita
==> Little US corn is going to poor countries.
Of course, in the long-term, when petroleum is gone, shipping bulk subsidized grain halfway around the world to (poor) countries just isn’t going to happen any more (and probably, Good Riddance).
An earlier version of the cornuse_3 page summarized the US totals better, which is why I used the 2005-2006 page for consistency:
Feed/Residual 6.1 billion (54.5%)
Exports 2.1 billion (18.8%)
Ethanol (fuel) 1.6 billion (14.3%)
High Fructose Corn Syrup 530 million (4.7%)
Corn Starch 275 million (2.5%)
Corn Sweeteners 225 million (2.0%)
Cereal/Other 190 million (1.7%)
Beverage Alcohol 135 million (1.2%)
(Feed = to animals).
I don’t know mix of sweet corn (i.e., which humans eat as a vegetable directly) versus field corn (which is most of these other uses), although from experience I’d expect the fraction of sweet corn to be very small. I don’t know the breakdown of actual usage of the export corn, although I suspect much of it, likely an increasing percentage, goes to feed animals.
Put another way: corn is subsidized, so likely too much is grown, and that’s why we have CAFO feedlots and why they invented high-fructose corn syrup, i.e., to have more profitable uses for a commodity product. Very little US corn is eaten directly by poor people elsewhere, and much of the corn that goes elsewhere (Field corn, remember) is fed to animals. When people bash use of corn for ethanol, I wish I could be sure they understand what corn is really used for, BECAUSE IT ISN’T FOR FEEDING DIRECTLY TO POOR PEOPLE.
Hence, for sure, higher food prices in general mean problems for poor people, although, in the longer term, with no petroleum, it’s hard to see how the world food market stays as globalized as it is now. Even in rich countries, people will think twice about how much food needs to be shipped all the way across the country, and it will take a lot of electrification of trains to keep any of that post-petroleum [unless algae biodiesel really works out.]
SUMMARY:
1) Developed-world (not just US) ag subsidies are widely (& IMHO justifiably) condemned.
However, increasing costs (in developed countries) may well *improve* agriculture elsewhere, in the medium-term. It will sure waste less oil shipping bulk crops around the world.
2) We need a better, positive message for the mid-West in general, and for the average farmer in particular, to encourage the things that we think need to happen. We have a big emphasis on what to do with cars (but less on farm machinery, big trucks, and train electrification, and 00), we talk lots about improving cities and fixing or lessening suburbs, but we don’t talk much about what, for example, Iowa should look like in 2050 and 2100. We could tell them to plant grass and then quit, but somehow, I don’t think the mid-West Senators are going to agree very easily. If that’s what we really think we need to happen, we have to get serious about figuring out, not just how to get rid of corn subsidies, but how to make it more financially attractive to do “the right things” whatever they are.
We do have a blindsideness problem: 100 years ago, 40% of the population were farmers, now 2% are, and many people wishing to set farm policy may not have the experience to do it very well… and ADM, etc are good lobbiests with their Senators.
February 14th, 2008 at 2:37 am
Is there any part of this hysterical AGW madness that is not metaphor or hyperbole?
Global Warming is like ______. (I guess that’s a simile, actually.)
People who don’t believe in Global Warming are worse than _______.
Global Warming is proved by ______ scientists who have published ____ papers.
Once the Global Warming starts, it could cause ______ which will result in ________ and this will cost _______ million dollars. In fact, our new estimates are that could cause 10 times ______ which will result in 200 more ______ and this will cost _______ billion dollars!
February 14th, 2008 at 8:59 am
Thanks for the thoughtful post, JM!
Not sure what your point is JB. Are you saying the vast majority of the scientific community is hysterical and insane?
February 14th, 2008 at 3:05 pm
John Mashey — That was well done, in the main!
I, however, have no objection to, indeed encourage, growing biomass for bioenergy on set-aside lands, or areas too infertile for producing food (human or fiber) or fiber. Jatropha on semi-desert soils comes to mind.
Nor have I the slightest objection to using sugarcane to produce ethanol. There is a glut of sugar on the world markets. The oversupply ought to be, and is being, turned to more economic uses.
I am, to make it completely clear, absolutely opposed to ethanol-from-corn. Probably the same for biodiesel-from-rapeseed.
February 14th, 2008 at 4:40 pm
David: can you explain the rationale for your position in more detail, and perhaps answer a few questions.
[Note: I'm personally hoping, in order, for:
algae biodiesel
jatropha
switchgrass and/or miscanthus
or variants thereof. Corn, especially was never designed as a fuel plant.
Note that if corn is being grown for fuel, and something like switchgrass has higher yield/cost ratios, they'll switch.]
Still:
a) You say that there is a glut of sugar on the market, and hence it’s better to use sugarcane for fuel. Do you not believe there is or at least has been a general glut of corn on the market, to the extent it’s in an awful lot of the food we eat, probably to our detriment? [Have you read The Omnivore's Dilemma, for example?] Are you really happy with HFCS usage? Does it have anything to do with obesity and diabetes, I wonder?
b) To you propose to outlaw ethanol factories? Or tax ethanol higher than gasoline to eliminate ethanol? [It's pretty hard to just to outlaw corn, given it's a widely-used commodity.]
c) If it’s OK to grow fuel crops on marginal or setaside land, where’s the boundary, and is it illegal for a farmer to plant switchgrass (for example) on land that isn’t quite so marginal? Will someone inspect every farmer’s land and arrest them if switchgrass is found in not-so-marginal land? [After all, there are illegal crops, like marijauna, but it's illegal wherever it's grown, not legal in one part of a field and legal in another.]
d) Should we further mandate what farmers are and are not allowed to grow on their land [there are many non-optimal crops] and where on “their” land?
For example, we haven’t yet managed to outlaw tobacco-growing, have we? Should we? http://www.greenlivingtips.com/ articles/ 190/ 1/ Tobaccos-environmental-impact.html
Says of tobacco-growing:
#
# Nearly 600 million trees of forest are destroyed each year to provide wood to dry tobacco.
# in Tanzania, an estimated 65 pounds of wood is needed to dry a pound of tobacco
# In countries where wood isn’t used, LPG, coal or oil is used for drying
# by 2010, 87 percent of the world’s tobacco will be grown in the developing world.
# A modern cigarette manufacturing machine can use up to 3.7 miles of paper an hour
# Tobacco plants use more nutrients than many other crops, degrading the soil.
# Vast quantities of pesticides, fertilizer and herbicides are used on tobacco crops. Some crops requires over a dozen applications of pesticides during the three-month growing period.
Great stuff tobacco, and *so* useful compared to corn ethanol, and it occupies prime farmland.
====
BUT, farmers should not be allowed to grow fuel crops as they choose, even if they could do so cost-competitively, without subsidies, when petroleum gets too expensive to buy to run their gear??
I think that at least one of the reasons that the farmers are keen on ethanol is that they can grow something whose price tracks petroleum, thus hedging their cost exposure.
Come to think of it, there are lawns, of which we have 21M acres of private lawns. [That's about the acreage devoted to ethanol.] Should we mandate that those lawns be turned into gardens, or planted with something that uses less water and fertilizer than existing lawns? Why not?
Last questions: how much time have you spent on farms, and where, and what sort? [That will help guid my next round of comments.]
Again, none of this is “I love corn ethanol” because I don’t … but I must say that farmers are notoriously independent, and often own guns, and I would not want to be the inspector who comes to tell them what they can grow on each acre
The issue is: if we want to create good overall policies:
a) We have to understand (for example) the woeldview from Ioawa and from an individual Iowa corn famer.
b) We have to have policies and laws that make sense, go in in the right direction, encourage the “Right things”, and work below the “Everyone should be good” level of detail, because the devil is in the details. If we can’t outlaw tobacco growing, the chances of outlawing corn ethanol seem pretty low.
February 15th, 2008 at 6:05 pm
John Mashey — In general my understandings of bioenergy come from following
http://biopact.com/
for over a year now, and more recently also
http://www.icis.com/blogs/biofuels/
As you know, food crops are highly subsidized in the United States, in Europe and maybe elsewhere. Farmers who want their handout have to follow the rules. They can simply strike out on their own, but I know of none (other than illegal mary-jane growers) who do. So the government, through the Food and Farm Bill, largely controls who grows what on which lands. For example, the set-aside payments are so large than no farmer around here has done anything but set aside as much land as he is entitled to. (This may change this spring, given the extraordinary price of wheat.)
In India, it used to be illegal to make ethanol from refined sugar, only the molasses byproduct of the refining could be used for ethanol. This law has recently been changed, largely because of the world-wide sugar glut.
In the United States (less so in Europe) farmers can indeed grow what they want (except industrial or mary-jane hemp), but it costs them significant support if they don’t follow the (rather liberal) rules. And around here, no USDA employee has ever been so much as chased off land, much less shot, not ever.
US farmers are only keen on corn-for-ethanol because the federal govenment heavily subsidizes this activity, despite its very poor EOEI of about 1.05 or so. Without this support, and especially removing the punative import tax on ethanol (from Brazil), even at current diesel, etc., prices few or no farmers would grow it. The federal program is a boondoggle in which taxpayers pay farmers to grow corn-for-ethanol and watch the prices of foor go up as a result. Bad, bad plan.
February 15th, 2008 at 10:50 pm
David: yes, although I’m not sure this gets at the heart of it yet. I’ll go look at biopact.
(a) Farmers grow (corn, wheat…) at least in part due to subsidies.
(b) Elevator operators buy the corn, with the usual jiggling around sa farmers may hold back crops for a while if they think the price well go up. Once the corn is there, the farmer doesn’t say what its usage is.
(c) Various buyers by the corn from (b), and either ship it somewhere else, or process it into (HFCS, etc), or feed it to animals, and ship the meat.
Farmer co-ops may integrate into (b) and maybe (c) to capture more of the value-add; companies like ADM or Cargill integrate from (c) back into (b) and ownership of (a) sometimes, for the same reason.
Anyway, there are some fairly complex value chains, and in a lot of cases, taxpayers aren’t paying the farmers to grow corn for ethanol, they’re paying somebody like ADM… Anyway, to do anything sensible, one really needs to understand the chain, who makes money where, who makes which decisions, etc.
But, I do have to ask: given the *actual* usage of corn, i.e., mostly for meat, but substantially for HFCS and other “foodlike substances”, there is room for argument about the best usage of an acre of corn. Do you *want* to maintain the level of HFCS in the US diet? Do we really need as many CAFOs as we have? There are plenty of reasons not to like corn ethanol, but I need deeper discussions than just “corn ethanol raises the prices of food”, because I think the goodness of the food system driven by corn has room for legitimate debate. When I grew up on a farm, we kept some land as forest, to be cut as firewood, even though we could have grown corn on that land.
Let me try another question:
If at some point, the price of diesel fuel gets high enough that somebody goes out of business, but they could divert enough of their acreage to provide enough biofuel to farm the rest, is that OK, or is that not allowed?
[Or equivalent.]
In any case, I doubt that the current level of corn-growing is sustainable, no matter what. Nitrogen fertilizer prices are rising [natural gas], and a lot of places are going to have water pressure, i.e., maybe not rainfed Iowa, but Ogallala-aquifer-fed areas are going to get more difficult. In the long term, IF there actually going to be US-based ethanol, it won’t be corn, it will be lower-water/fertilizer switchgrass/miscanthus variants grown more for electricity generation, but with some fuel output. We never fertilize our bamboo, and we don’t get a lot of rainfall, and that &$&%^% stuff (planted by fomer owner) still grows like a weed, and the rhizomes are really tough to get rid of.
February 16th, 2008 at 3:00 am
The ethanol subsidies go to the refiner, not the farmer. Would the ethanol industry would collapse without the subsidies?
February 16th, 2008 at 1:20 pm
Paul K — I believe it would. Ethanol-from-corn is too expensive to compete, on its own, with gasoline. Check out the Biopact site.
John Mashey — In this region farmers who used to grow hops (for the regional beer brewers) have switched to growing corn. The microbreweries state that many of them will have to close their doors.
I prefer the principle (which seems quite similar to Biopact’s stance) that land suitable for food ought ONLY to be subsidized to grow food (includes animal feed), or else be registered in a set-aside program. There are planty of other sources of biomass to produce bioenergy. Done properly, there is no need for subsidies, although government sponored research continues to be a good idea. This appears to be the developing EU stance and the Europeans subsidize farmers more than in the US.
March 3rd, 2008 at 3:24 am
David is right, especially about the subsidies. Nobody is contemplating banning the diversion of corn into ethanol, or soybeans into biodiesel. But the whole market is skewed, from field to fuel tank. Subsidies are provided all along the supply chain (who actually benefits at the end of the day, of course, depends on market conditions), and the government has intervened heavily by mandating the use of biofuels and imposing a tariff on ethanol imports.
For an exhaustive discussion of the various subsidies supporting biofuels in the United States, see the two reports (2006 and the 2007 update) done for the Global Subsidies Initiative, which can be downloaded for free here.
John Mashey seems to be concerned about the high price of diesel fuel in Iowa. The price of diesel fuel is high everywhere. (Anybody who uses diesel fuel — independent truckers, homeowners with oil heat, are suffering as well.)
But despite the high prices, esterfying vegetable oils into biodiesel is a value-SUBTRACTING business. That is to say, the value per gallon of the biodiesel is less than the value of the inputs (vegetable oil, methanol and catalyst) that go into making it. The only reason there is any biodiesel industry left operating in the country is because of the generous federal tax credit ($1.00 per gallon), the reductions and exemptions from state fuel taxes that biodiesel enjoys in many states, and the fact that some producers can engage in “splash and dash” — adding 1% gasoline to biodiesel, earning the $1.00 per gallon tax credit, and then shipping the “B99″ mix to Europe, where fuel taxes are far higher than in the United States, and therefore tax-exempt biodiesel commands a higher price.
April 1st, 2008 at 2:11 pm
We found an interesting article about the problems with Ethanol on ConsumerReports.org:
http://blogs.consumerreports.org/cars/2008/03/ethanol-e85.html
“But there are some problems with increasing ethanol blends. Ethanol contains less energy than gasoline, so increasing the amount of ethanol in gasoline will likely result in lower fuel economy. Increasing standard fuel blends from zero to 10 percent ethanol, as is happening today, has little or no impact on fuel economy. In tests, the differences occur within the margin of error, about 0.5 percent. Further increasing ethanol levels to 20 percent reduces fuel economy between 1 and 3 percent, according to testing by the DOE and General Motors. Evaluations are underway to determine if E20 will burn effectively in today’s engines without impacting reliability and longevity, and also assessing potential impact on fuel economy.”
TheSUBWAY.com would like to invite readers to post their own views and ideas in TheSUBWAY.com’s Investor Forum:
http://www.thesubway.com/small-cap-forum
May 28th, 2008 at 8:50 pm
This site says it all… We agree 100% with the mayor.
See: http://CleanAndGreenFuel.com
see the presentation…
Bill