Have you noticed the rapidly rising food and gasoline prices? It seems like the prices go up on a daily or even hourly basis. What's a major cause of this? Corn-produced ethanol is the culprit.
Several years ago, I wrote about the stupidity of using corn to produce ethanol for fuel and predicted that food prices would climb. I said then that we would pay for it either at the pump or the supermarket. Now corn prices have risen from the about $3/bushel it was six years ago, to well over $7/bushel today.
Last week, two articles in "The Gainesville Times" really caught my attention: "Smaller corn surplus from hot summer could boost food prices" (Sept. 13) and "Ethanol exports set record in U.S." (Sept. 15).
Surplus is the quantity of corn on hand at the start of the next crop harvest. The current harvest will lead to a surplus for next year well below the 30-day supply considered healthy.
The USDA says that the surplus could fall from the current 26-day supply to a 19-day supply by next fall. When crop reserves are low, market prices can jump. Unlike other commodities, rising food prices don't cause people to buy less food; they reduce purchases in other areas.
Even though farmers planted the second largest acreage of corn since World War II, the hot summer and lack of rainfall has led to a stunted yield. The reduced yield will drive the price of corn up. More expensive corn drives food prices higher because corn is an ingredient in everything from animal feed to cereal to soft drinks.
Less than a 30-day surplus drove corn prices to $7.99/bushel in June. Global demand for corn, soybeans and wheat has been higher than production for the last 10 years; therefore surpluses vital to a stable food supply have shrunk.
In April of this year, the Agriculture Department reported that "rising demand for corn from ethanol producers is pushing U.S. reserves to the lowest point in 15 years, a trend that could lead to higher food prices."
The demand for corn from ethanol producers rose to 5 billion bushels. That is 40 percent of the nation's total corn crop.
In his article: "Ethanol exports set record in U.S.," the Hall County Extension Agent hyped the record exports of ethanol. Through the first seven months of this year, exports of ethanol have exceeded the exports of 2009 and 2010 combined - 588.5 million gallons.
He noted: "American ethanol producers are the most efficient, cost-effective suppliers of ethanol in the world ... U.S. exports continue to be driven by the fact that corn ethanol is currently the lowest-cost motor fuel source in the world."
When I read that I had to laugh to keep from crying. Ethanol production is subsidized by our tax dollars, and one of the biggest customers is China.
The article is well written and on the surface seems quite reasonable. Corn farmers are making lots of money, but what about the many food producers who are being squeezed by higher corn prices? Chicken producer Sanderson Farms Inc., reported its third straight quarterly loss last month, in part, because of increased feed costs.
I want to reiterate that corn prices affect most products in supermarkets. Corn is used to feed cattle, hogs and chickens that fill the meat case, and it is the main ingredient in cereals. It may be time to do as the Germans did years ago, i.e. outlaw the use of major food grains for making fuel.
With higher food prices and ethanol production being subsidized by the federal government (our tax money), we are paying for it both at the pump and the supermarket. We have been subsidizing alternative fuels long enough. It is time they become economically competitive or drop out of the competition. And it is well past time for us to quit subsidizing China when the balance of trade is so heavily in their favor.
It is time to stop the ethanol hoax and quit mandating its use in American cars. It is not good for the engines of small airplanes, cars, motorcycles or lawn mowers. If you doubt that, ask your mechanic.
The U.S. really does not need to import oil from the Middle East or use ethanol. Google the Bakken Formation and read about the oil reserves located in Montana and the Dakotas.
As the comic strip character Pogo once observed: "We have met the enemy and he is us."
We are our own worst enemy when we allow the federal government under the guise of EPA to control by mandate so much of our lives.
Rep. Amos Amerson can be reached at 689 N. Chestatee Street, Dahlonega, GA 30533; phone (706) 864-6589; e-mail email@example.com. Or contact Gerald Lewy at (706) 344-7788.