[AGL] Who'd a thought it?

[Gerry]

US government subsidized corn is the bane of world agriculture, so cheap
that indigenous farmers by the millions have given up trying to compete and
headed to town. NAFTA made it exportable to Mexico, nominally a large
producer of corn. But the US corn was so cheap it drove hundreds of
thousands (at least--trying not to exaggerate) of growers off the farms (and
across the border). All this was in the days of huge corn surpluses when the
price per bushel was miniscule and there seemed to be no limit to the
supply.

Leave it up to the government to change the course. No one ever thought that
the price of corn would rise precipitously. Huh? Yes, alas, the great
Ethanol Boondoggle has driven up the price of corn to what threatens to be
all time highs. By lavishing billions on the builders of ethanol production
plants the government (Bush and Repug congress with full complicity from
corn state Demos like Barack Obama) they have created a corn shortage. The
whole world strung out on American corn, and the supply drying up.

Read last week that the price of tortillas in Mexico has risen alarmingly.
Now, totally dependent on US imported corn they are way up the creek without
a paddle. How to get those farmers to come home and plant? Well, if they
can, at current prices maybe we can start importing corn from Mexico, to
make ethanol...

Here's a good story on the subject.
G




> ETHANOL THREATENS FOOD AID

> By Philip Brasher

> Des Moines Register

> January 14, 2007

>

> America's appetite for fuel ethanol could take food away from some of

> the world's poorest people.

>

> The price of corn and other crops is soaring because of the demand

> for grain to make ethanol, a gasoline additive, and that means that

> the government's budget won't buy as much food as it used to. The

> price of corn alone, a key food in Africa, has more than doubled in

> the past year.

>

> The pinch is already being felt.

>

> Catholic Relief Services, one of several organizations that

> distribute U.S.-donated food in Africa and Latin America, expects to

> deliver 161,000 tons this year, down from 200,000 tons last year.

>

> "In the long run, it means that we are fueling our cars with food

> that people might have eaten. There are important trade-offs," said

> Lisa Kuennen-Asfaw, director of public resources for the

> Baltimore-based group.

>

> The biggest global distributor of food aid, the World Food Program of

> the United Nations, also is being squeezed by the demand for crops to

> make biofuels. The price the program paid for Argentine soybean oil

> was up 37% last year. The cost of Malaysian palm oil rose 33%.

>

> Congress could increase funding for food aid to make up for the

> higher commodity prices. But if history is a guide, that likely won't

> happen.

>

> Americans, and especially American farmers, take pride in feeding the

> world's hungry, but the truth is that the government's food-aid

> programs historically have at least as much to do with helping U.S.

> agribusiness interests as helping the poor.

>

> The last time there was a similar surge in commodity prices --- in

> the mid-1990s --- government food purchases fell sharply but

> rebounded when global commodity prices collapsed a few years later.

>

> Purchases fell more than 40% from 1994 to 1996, but shot from 3.5

> million to 10 million tons from 1998 to 1999. Since then, the volume

> of food has varied from year to year, but the overall budget has been

> relatively flat, and that worries aid organizations.

>

> "When commodity prices go up, food assistance will necessarily tend

> to go down because food aid has to be bought," said Gawain Kripke of

> Oxfam America, a development group.

>

> Look for farm-state lawmakers to argue that the rise in commodity

> prices isn't such a bad thing for poor countries.

>

> After all, critics of U.S. food aid programs have long argued that

> the donations can sometimes drive down the prices paid to local

> farmers in regions where the commodities are distributed.

>

> "One of the things that could happen is that with prices going up

> overall that could encourage agriculture in these countries," said

> Rep. Collin Peterson, the Minnesota Democrat who now chairs the House

> Agriculture Committee.

>

> That's true, but the higher commodity prices won't be much help in

> the poorest countries, where farmers often can grow only enough food

> to feed themselves and their families, according to aid groups.

>

> Meanwhile, there's little sign that the surge in the ethanol industry

> is letting up. The industry is on track to add six billion gallons of

> production --- more than twice the current capacity --- as existing

> construction is completed over the next year or so.

>

> The Earth Policy Institute, an environmental think tank, recently

> warned that the ethanol industry will be consuming 5.5 billion

> bushels of corn a year, more than half of what was produced

> nationwide in 2006, if the recent pace of construction starts

> continues into this year.

>

> The biofuels boom isn't limited to the United States, either. Europe

> is ramping up production of biodiesel from vegetable oils to reduce

> the use of petroleum and cut greenhouse gas emissions.

>

> "It's very clear that we need to work on environmental and

> conservation issues and other kinds of concerns that affect the

> American public," said Kuennen-Asfaw, referring to the potential

> benefits of alternative energy sources.

>

> "But we also have to think about the direction we're going in for

> poor people around the world."

>