Friday, March 21, 2008

Baking Up Bad Ideas

baker bread what Band of BakersThe American Bakers Association recently led a march on DC to complain to Congress to limit support for renewable fuels. Among their demands (pdf), they want Congress to repeal the existing tariff on imported ethanol and to waive the ethanol production limits.

We think these are really bad, half-baked ideas.

The bakers have jumped on the anti-ethanol bandwagon as a scapegoat for their woes. In reality, the wheat issue has many factors and has been long coming. Increased world-wide demand, a major drought in Australia, higher energy and marketing costs are the most immediate causes for higher wheat and retail food prices. And many have noted that the bakers haven't embraced modern technology to increase yields as other crops have done.

But what about all of those wheat acres taken away to grow corn for ethanol?

If you were to believe the bakers, that is what you'd think. In an interview with a MN television station, one of the marching "Band of Bakers", Lynn Schurman, president-elect of the Retail Bakers of America, made this same very, unfounded claim:
"Right now less acreage is going into wheat because more people are growing corn and providing corn for the ethanol market," she says.
But the facts are more clear. The 2007 wheat plantings AND harvested bushels were up. So exactly what acres are they talking about?

Wheat Planted Acres

2007 - 60,433,000 acres
2006 - 57,344,000 acres
2005 - 57,229,000 acres

Wheat Harvested

2007 - 2,104,690 (1,000 bushels)
2006 - 1,812,036 (1,000 bushels)
2005 - 2,066,722 (1,000 bushels)

The tariff on imported ethanol limits some but not all imported ethanol. Before the tariff is eliminated, the existing import limits should be met. Of course, the oil companies would love to have the American renewable fuel industry scraping by for them to pick up the pieces.

And limiting the renewable fuel standard, is really Big Oil's prize. With oil and gasoline prices up, less ethanol means more profits.

Source: USDA

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