US Farmer’s Incomes Now Tied More to Ethanol Than Food, Economist Says
by Matthew McDermott, New York, NY on 11.21.08
photo: Mike Slichenmyer
Not to belabor the point, but of all sources of renewable energy taking a beating in the current economic storm, biofuels seem to be getting hit full force. Recently the world’s largest ethanol producer, Verasun, filed for bankruptcy and predictions have it that as many as 40 more plants could be shuttered within the next few months.
What this means for farmer’s incomes, according to economist Scott Irwin of the University of Illinois, is that because many incomes (at least in the midwest) are now tied more to ethanol than food, they will be tied to swings in energy prices more than ever. Here’s how Irwin describes it:
Economic Swings Now Hit Farmers Faster Than Before
We’re just experiencing the full brunt of this new source of volatility. When food prices were the main trigger, recessionary impacts were much less direct and much more gradual. Now, there’s this new connection through energy costs that immediately gets translated to agriculture.
Corn Prices Still Likely to be Higher Than Average Though
But, Irwin says, that despite this volatility corn prices are still likely to be higher than the $2.42 per bushel average seen between 1973 and 2006:
“Over the next couple of years, with normal weather around the world, I think we’ll see corn prices ranging between $3.50 and $4 a bushel, closer to the low end with good weather and the high end with bad. But with a weather disaster, prices could easily spike to $5 or $6 again.
More from Irwin on corn/ethanol prices: Science Daily
Corn Ethanol
40 Corn Ethanol Plants Could File For Bankruptcy by Early 2009
$5 Billion in Corn Ethanol Subsidies Should be Eliminated, Food Before Fuel Urges
World’s Largest Ethanol Producer, Verasun Energy Corp, Files for Bankruptcy
Thirsty for more? Check out these related articles:
- Corn Ethanol Is Stupid: 13 Year Old Weighs In On Renewable Energy
- Creating New Jobs By Investing In Renewable Energy And Energy Efficiency
- Big Food’s War on Biofuels
- How to Find Green Energy Anywhere
Girl Scouts Perform Energy Audits, Prove Their Future Value
|
Eco-Tools Makeup Brushes for Your Eco-Friendly Makeup
|
Corn-based fuel is a bad idea in the first place. No offense to the farmers who grow the corn supplying the fuel, but the farmers need to downsize and localize their farms if they are to survive in our volatile global economy, where corporation after corporation is facing the worst.
Frankly, this just seems like one more story of one more industry faltering because it's a house of cards held together by subsidies and tax breaks.
btw, Verasun filed Chapter 11 to handle short-term obligations. They've obtained interim financing - this hasn't interrupted their daily operations.
The term "corn" is almost amusing these days, until you remember reports like the one about Madagascar reported earlier.
I'll stop now -- I'm just adding to the general buzzkill news these days - must go work on list of things to be thankful for...
Yeah, the fact that an industry supported by subsidies - and not popular consumer demand - is collapsing isn't surprising.
Ethanol ain't a great idea, and it's caused food prices to go up. Foolish idea. Happy to see them go.
find other eco-friendly means of fuel... and build more food farms...