Thursday, September 27, 2007

NCGA CEO: Pro or Con, Let’s Have a Real Discussion About Biofuels

The CEO of the National Corn Growers Association has an essay that is worth reading regarding the impact of corn-based ethanol.

Pro or Con, Let’s Have a Real Discussion About Biofuels

By Rick Tolman
Chief Executive Officer, National Corn Growers Association

Yet another so-called “study” about the impact of corn-based ethanol on the nation’s food supply has been issued. Like the others, its authors choose facts that support their opinion, and disregard everything else.

Once again we’re told ethanol has little impact on the nation’s dependence on foreign oil and is driving up food prices.

“Impact,” we guess, is a relative term. Ethanol is replacing 200 million barrels of imported oil per year. With the price of oil above $80 per barrel, ethanol’s impact on oil imports alone is more than $16 billion dollars.

Ethanol critics are fond of raising the alarm that using ethanol will require x amount of land to produce x amount of corn – staggering numbers that suggest our environment will collapse under the strain. The truth is no serious supporter of ethanol has ever suggested that all our energy needs could be supplied by corn-based ethanol. The NCGA believes — and has all along — that a rational pathway of ethanol growth exists. One in which corn growers can supply about 5 billion bushels of corn per year from a 15-billion bushel crop for ethanol by 2015. According to the Renewable Fuels Association, that would be enough to blend 10 percent ethanol into every gallon of gasoline sold in the United States. Additional ethanol will come from increased production efficiency and other stocks, such as cellulose, as those technologies come on line.

We’d also note that with this year’s corn harvest estimated at about 13.3 billion bushels, even if 5 billion bushels went exclusively to ethanol production, it would still leave more than enough for all domestic uses of corn.

Economic studies don’t bear out the repeated drivel that corn prices are driving up food prices. In fact, economists are reporting the impact of higher corn prices is minimal on the price of food, and real-world experience bears that out. No one blamed the cost of corn in 2003 when the average price for USDA Choice beef hit $4.32 a pound while corn was selling for $2.32 per bushel. Or in 2005, when corn sold for $2 a bushel while beef prices reached $4.25 a pound.

Just last week ConAgra Foods told stockholders the company’s input costs were $70 million higher than last year. But the profit for its Food and Ingredients segment was up 15 percent. And the company was able to buy back $88 million worth of stock during the same period.

We suspect the end of the era of cheap corn is really the heart of the issue. What the anti-ethanol camp won’t tell you is that corn prices have been artificially low for a decade. In fact, cheap corn allowed the food industry to boast that they were holding prices down while simultaneously posting record profits.

Instead of arguing over half-truths and suspect data, we suggest opponents of ethanol ask the REAL hard questions:

  • How much are we willing to depend on imported oil for our energy needs, and at what cost?
  • Who should decide this nation’s alternative fuels policy? The government? The energy industry? The marketplace?
  • How can we best deal with the end of 10 years of artificially cheap corn prices?
  • How can we help advance the opportunities to produce ethanol from other sources?

The National Corn Growers Association is ready for everyone – for or against – to get serious about ethanol.

Source: National Corn Growers Association

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