Overheard from the farmers' table at the neighborhood Quick-Shop: How do you make ethanol?
Answer: Take corn and water; add subsidies.
The fields all around my neighborhood are coming up, and this year they're mostly biotech corn. It's a hopeful time, but the hope isn't to reap good yield and fair prices. The hope is to reap better subsidies, which will offset the cost of planting and raising a crop.
It's been decades since corn growers were paid enough to cover costs. Keeping production high and the market price low has been an excellent strategy for industry, however, because they buy the commodity at a low price to use in corn flakes, corn sweeteners, animal feed and other products. With a low price, they have plenty of room to tack on a high profit for processing, marketing and packaging. That makes industry's earnings high.
To make up the difference so the farmer can keep producing, the government pays out subsidies. Corn is the most subsidized crop, bringing $42 billion in subsidies between 1995 and 2004, according to EWG.org. And to keep the subsidies coming, the industrial ag organizations pay out campaign dollars.
The new gasoline substitute, ethanol, is corn's new end-product. It's easily made by adding water to corn and letting it ferment. The next federal budget includes $2 billion in new corn subsidies for loans, demonstrations and other handouts. The corn industry has gone so far as to ask states to require ethanol to be added to gasoline. In Missouri, a new law requires that all gas at the pump will contain 10% ethanol by January 1, 2009.
To sell the idea, industry says that ethanol will solve America's oil addiction, but there is serious doubt. At present, there's little gain in energy between what comes out of the ethanol plant and what's used to prepare the fields; plant, fertilize, reap and transport the crop; and process it.
Since the bookkeeping hasn't worked out, industry is reworking the books. Now they say that the side-products will really help the equation work out. The spent corn hulls after fermentation, for example, can be used as animal feed for Confined Animal Feeding Operations, or CAFOs, those penitentiaries for livestock that produce more pollution, bad food and animal and human misery than you can shake a stick at.
For consumers, there's no price benefit in using ethanol instead of gasoline, unless you add more subsidies. The per-gallon price of ethanol, according to the Wall Street Journal, was $4.50 in May. Gasoline, on the other hand has been selling at around $2.50 to $3 per gallon. And, most shocking, ethanol may not deliver the same mileage as gasoline because it delivers less energy per gallon.
The hypesters counter that Brazil has become nearly energy-sufficient in the last 30 years because the government, farmers and consumers have put their muscle behind ethanol production from sugar cane. That's good news, right?
Well, it's good news for Brazil but there are a lot of variables. For one thing, their ethanol comes from sugar cane, which yields up to eight times as much energy as corn.
For another, as their capability to produce ethanol increased, car engines have been redesigned to burn it. Today, Brazil's gas stations sell 25% ethanol. Next year, new cars will burn 100% blends and the gas stations will be selling it. The achievements, by the way, came after Brazil ended its subsidies. Among other things, the freewheeling market forces convinced Brazilians to invest in mass transit, further reducing the need for cars and petroleum. Even though transit systems are private rather than publicly owned, mass-transit systems are planned for city infrastructure before cities are completed. At least one city can boast that their citizens spend less than 10% of their income on transportation even though their families each own one or more car.
At the end of the day, however, it must be said that Brazil has become self-sufficient because its petroleum industry has grown. Unlike countries that hitched their oil wagons to US companies, Brazil's resources are mined by a government-owned company. While the state-owned oil company produced 180,000 barrels a day 30 years ago, today it produces 2 million.
Now you may think that this column will end with a solid condemnation of America's ethanol hoaxsters, but it won't. Fact is, I appreciate the effort to get America off oil. The tinkering with corn may end up with some kind of solution -- more efficient processing or a better way to get ethanol from "cellulosic biomass," the entire plant including stalks and leaves. Or, the dismal outcome of the industry may convince us to invest in mass transit and put the cars away for special occasions.
Or the idea of importing goods such as food and clothing from far away may soon seem absurd and we'll start producing and using from sources nearby. Any of these outcomes would be good, and greatly overdue.
What we don't need, and this is something to guard against, is more phony subsidies that everyone knows only serve to keep a failing industry alive.
Margot Ford McMillen farms and teaches English at a college in Fulton, Mo. Email: email@example.com.
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