Energy Prices Play Larger Role in Cost of Food than Corn

Energy Prices Play Larger Role in Cost of Food than Corn

A study released today by an independent research group shows that ethanol’s impact on food prices is negligible, particularly when compared with the impact of energy costs.

The study by John Urbanchuk of LECG, LLC shows that a $1 per gallon increase in the price of gasoline results in an increase in food prices that is twice as high as a $1 increase in the price a bushel of corn.

The study also showed that distiller’s grains, a byproduct of ethanol production and a high quality livestock feed, help put downward pressure on food prices as livestock farmers purchase the grains instead of corn.

The full version of the LECG report (PDF) can be viewed at www.ethanolrfa.org.

UPDATE 6/1/2015: Full link to the PDF report has been updated.

READ MORE

• Senator Grassley Takes to the Floor in Support of Biofuels
• The Renewable Fuels Standard, Ethanol and the U.S. Corn Crop
• Ethanol Keeps Gasoline Prices $1.09 Cheaper
• More Corn For Food, Not Ethanol
• That's a Lot of Hamburgers

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Good and Balanced Food and Fuel News!

Profit$: The Green Pork Product!

Smithfield Foods Earnings Rise in Fiscal 4Q
Meat producer Smithfield Foods Inc. said Thursday its fourth-quarter profit rose sharply, as rising pork and beef sales offset the higher cost of grain to feed its hogs.

Profit totaled $37 million, or 33 cents per share, for the quarter ended April 29, compared with $1.1 million, or a penny per share in the same period last year.

Source: YAHOO News

Ethanol is Environmentally Friendly

Ethanol is an environmentally friendly fuel for America. Does YOUR gasoline do that?

The use of ethanol as a fuel additive improves the environment because its high level of oxygen increases the efficiency of the combustion process, resulting in lower emissions and higher air quality.

• The American Lung Association of Metropolitan Chicago credits ethanol-blended, reformulated gasoline with reducing smog-forming emissions by 25% since 1990.
• Ethanol reduces tailpipe carbon monoxide emissions by as much as 30%.
• Ethanol reduces exhaust VOC emissions by 12%.
• Ethanol reduces toxic emissions by 30%.
• Ethanol reduces particulate emissions, especially fine-particulates that pose a health threat to children, senior citizens, and those with respiratory ailments.
• Ethanol is widely used in the federal winter oxygenated fuels program and the reformulated gasoline (RFG) program in cities that exceed public health standards for carbon monoxide and ozone pollution.
• Ethanol reduces carbon dioxide greenhouse gases by over 35% compared to gasoline.
• If all the gasoline in California were blended with ten percent ethanol today, the state would reduce CO2 emissions by 6.4 million tons per year compared to straight gasoline.

Source: Drivingethanol.org

Oh Really? "Corn growers seen limiting cellulosic ethanol"

It's amazing what passes for credible scientific news nowadays. Take for example this article from Scientific American, "Corn growers seen limiting cellulosic ethanol", dated June 12, 2007. [note: the SM article appears dead but Reuters still has it HERE] Now the story originated from that fine news source, Reuters, so perhaps we should be kind to Scientific American. But in any event, you should ask yourself, "What facts and sources did the reporter and editor use to make the sensational claim?" It's certainly not in this article. Instead it's the "opinion" of one professor. News indeed!

"It's hard to imagine growers have spent 25 years nurturing members of Congress to support tariffs and blenders credits... in order to give this game away to grass," C. Ford Runge, an economics professor at the University of Minnesota, told reporters at the Council on Foreign Relations in New York.

"We are going to have to find reasons to tell people to plant switchgrass and not corn," said Runge. "As long as we have the structure of corn subsidies and ethanol subsidies that's driving demand for corn-based ethanol, that's not going to happen."

FFV Sales Take Off!

Recent reports indicate that Flex Fuel Vehicles (FFVs) sales are taking off. These vehicles, which run on gasoline, E85 or a mixture of the two, give American drivers a choice when filling up at the pump.

A record number of alternative-fuel vehicles were sold during the first quarter of this year, according to data from R.L. Polk. Company executives said the sale of alternative-fuel vehicles jumped 27 percent during the first quarter.

“There is little doubt that higher gasoline prices (and conversely competitive E85 pricing); more vehicle selection, more E85 pumps, and the attraction of having options when you pull up to the tank are all driving this flex fuel growth. Educational outreach programs from the Illinois Corn Marketing Board (ICMB) along with better marketing by car makers are all having an affect, said Wendell Shauman, ICMB chairman of Kirkwood.

That increase resulted in a total of more than 434,000 of those units being sold in the quarter. Polk reported that sales of E-85 ethanol vehicles spiked by 40 percent during the period, as compared with the same time frame a year ago. The figure for those units rose from 159,992 to 266,859. Sales of hybrid vehicles climbed 31 percent, going from 51,285 to 74,056, according to Polk.

“This success makes it all the more imperative that we keep working to make E85 availability a priority. There is little doubt that consumers are price driven, but E85 must be accessible as well. Consumers want competitive pricing and convenience,” Shauman said.”

It is interesting to note that that sales of clean diesel units slipped from 108,100 during the first quarter of 2006 to 93,012 for the same time frame this year. Officials went on to point out that more than 60 different alternative-fuel vehicles are currently are on the market. Additionally, more hybrid-electric, clean diesel and ethanol capable models also are in development.

balanced food and fuel ethanol energy security ffv

Source: Illinois Corn Marketing Board, http://www.ilcorn.org/update/html/6-11-07.html

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Did You Know?

In 2006, the use of ethanol in the U.S. reduced greenhouse gas emissions, equal to removing the annual emissions of 1.8 million cars.?

USDA DOE Announce Investments in Energy Security

It's worthy to note that the US Government--in this case the Department of Agriculture AND the Department of Energy are working together to promote "greater energy security through increased efficiency and diversification of energy sources."

FOR IMMEDIATE RELEASE
Monday, June 11, 2007

USDA, DOE ANNOUNCE $18 MILLION SOLICITATION FOR BIOMASS

RESEARCH AND DEVELOPMENT

WASHINGTON - The U.S. Department of Agriculture (USDA) and the U.S. Department of Energy (DOE) today announced a combined total of up to $18 million will be available for research and development of biomass-based products, biofuels, bioenergy and related processes. USDA and DOE are issuing these grant solicitations for several types of projects aimed at increasing the availability of alternative and renewable fuels, which will help further President Bush’s bold energy initiatives, including Twenty in Ten. The Twenty in Ten Initiative promotes greater energy security through increased efficiency and diversification of energy sources. USDA will provide up to $14 million and DOE will provide up to $4 million (FY’07).

“Making these funds available represents this Administration’s ongoing commitment to promoting clean energy technologies to help diversify our nation’s energy mix in an environmentally sensitive way,” Energy Secretary Samuel Bodman said. “I am hopeful that these projects will play a critical role in furthering our knowledge of how we can cost effectively produce more homegrown, bio-based products to help reduce our reliance on imported sources of energy.”

“These grants are one of many steps we are taking to meet the President’s goals of reducing petroleum dependency,” Agriculture Secretary Mike Johanns said from South Dakota, where he was addressing the Western Governor’s Association. “They will fund essential research that not only will lead to the creation of new, sustainable energy sources, but also will create new uses and markets for agricultural products.”

The $18 million solicitation will fund projects in the following four categories (the share of overall funding is noted in parenthesis): the development of technologies to convert cellulosic biomass into intermediaries for biobased fuels (45 percent); product diversification (30 percent); feedstock production (20 percent); and analysis for strategic guidance (5 percent)

Johanns cited how research and development (R&D) efforts outlined in past grant awards could develop technology that support the goals of the President’s 20 in 10 Initiative. In Indiana and Illinois, researchers from both the pubic and private sector are working to improve dry mill fractionation. The goal is to increase ethanol production from corn and, as a by-product of that, to produce protein additives for cattle feed. It is anticipated that ethanol production estimates could increase significantly if this research is successful and implemented within the dry mill fractionation process. When this technology is implemented, energy savings annually are estimated at about 1,500 billion BTU's per dry mill. In addition, penetration at a level of 70% of the dry mills with this technology could produce an additional 1.2 billion gallons of ethanol from corn and an additional production of 130 million barrels of biodiesel

Reducing our reliance imported sources of energy is one of President Bush’s top priorities. In effort to break our addiction to oil, the President’s Farm Bill proposal includes $1.6 billion in new renewable energy funding for USDA. It seeks $500 million over 10 years to expand the Renewable Energy and Energy Efficiency Program, $500 million for bioenergy and biobased research, and $210 million to support $2.1 billion in loan guarantees for energy efficiency measures, with a significant focus on cellulosic ethanol. Since 2002, USDA has awarded $58.1 million in grants to 55 projects in 27 states and the District of Columbia under the Biomass Research and Development Initiative. Since the beginning of 2007, DOE has announced nearly $1 billion in funding for biofuels R&D.

For more information on President Bush’s Twenty in Ten Initiative, visit: http://www.whitehouse.gov/stateoftheunion/2007/initiatives/energy.html.