Wednesday, April 25, 2007

Corn and Corruption

The president’s last state of the union address promoted using ethanol to “cut” gasoline, reducing the country’s consumption of oil, and a congressional bill soon followed. The ethanol would come from corn grown in the Midwest. Everybody wins.

Or do they? Since the announcement that the U.S. is going aggressively after corn-based ethanol, corn prices have skyrocketed around the world as food shortages are anticipated (Wall Street Journal 4/9/07 pp. 1, 9). “…corn ethanol is causing Marin Dairy Farmers to be unable to pay the increase in feed corn from $2.00 a bushel in September of 06 to $4.00 a bushel now [Jan., 2007], according to the Marin Independent Journal” ( ).

Who benefits? Corn farmers benefit, especially the big ones, like Archer Daniels Midland (ADM), ConAgra, Cargill, and many other huge corporations in the agriculture and food processing industries. Not only will they benefit from increased demand, but also from huge taxpayer handouts. The U.S. government subsidizes corn, to the tune of $9.5 billion in 2005 alone (that’s million with a “B”), 51 billion dollars in subsidies since 1995 ( ).

Who are the recipients of this largesse? Not charming little farms run by Norman Rockwell’s descendents. Companies like Cenex, Inc., the energy division of CHS corporation, an American manufacturer of corn tortillas among other products (latest half yearly profit of $219 million) ( ). CHS-Cenex is the main stakeholder in Minnesota-based Harvest States Cooperative, which has received $14.5 million in corn subsidies since 1995. And let’s not get into the subsidies they also pulled down on soybeans, wheat, barley, and other crops to the tune of $50 million in taxpayer money. And that’s just one, single recipient of these government crop subsidies. There were 1.5 million recipients since 1995 (

Big agriculture loves this scheme. According to the CATO institute, “Most expensive is Washington's 54 cent-per-gallon tax break for gasohol. This special-interest loophole accounts for the bulk of the more than $10 billion in subsidies to ADM since 1980. All told, analyst James Bovard estimates that every dollar in profits earned by ADM costs taxpayers $30.” ( ) (see also “How ADM makes a killing on ethanol, NY Times, June 25, 2006.”)

The top five corn-producing states are (Iowa, Illinois, Nebraska, Minnesota, and Indiana ( ). It wouldn’t take much detective work to conclude that the lion’s share of government farm subsidy for corn goes to these states.

And isn’t it fascinating that agribusiness ranks eleventh among all political action committees in donating money to congressional candidates, $44.6 million in 2005 alone (which was not even an election year), 68% of it to Republicans, the rest to Democrats. ( Somebody with journalistic skill and perseverance could follow this money trail to the end by checking the elected officials in the top corn states and where their campaign contributions came from ( ). I haven’t got the patience or the stomach. But it would not surprise me to learn that the corn states were well-represented among senate and house members who voted for the corn-ethanol bill. Mutual back-scratching. Or is that symbiosis?

But let’s not forget the oil companies. They benefit too, even though the goal is to reduce consumption of gasoline. How so? They get huge government subsidies for the gesture of adding ethanol to their product. In California alone, big oil refineries collect about 500 million dollars a year for the service of adding 5.6% ethanol to their gas. ( )

But surely, one might think, it is all worthwhile to save the planet! Ethanol produces only water as exhaust from the tailpipe. That has got to be better for global warming, right? Not really. Ramping up ethanol production, will cut greenhouse gases by 2/10 of 1% by 2017. Not much, but that’s something, at least, isn't it? Step in the right direction and all that?

But according to Slate online ( ) “making ethanol from corn requires 29 percent more fossil energy than the ethanol fuel itself actually contains.” If you count the coal and gas that have to be burned to get the ethanol out of the corn, it is a net increase, not decrease, in fossil fuel consumption. Burning ethanol as a gasoline additive actually results in a net energy loss of 65 percent ( ).

But won’t improved technology increase the energy yield of ethanol over time? No. Ethanol simply has less energy than gasoline so you actually get fewer mpg out of your car when you use it. The original model T Ford ran on ethanol. Nothing has changed in the physics of its combustion. “If you get 30 mpg on gas, you'd get 20 mpg on pure ethanol. It has less than 2/3 the energy-per-gallon of gasoline. That's physics. EPA has measured every type of flexible-fuel car in the US fleet, and that's how it turned out in reality.” ( ).

The outlook for ethanol is only slightly better if we look to sugar-cane or other biomass stock. But converting corn, a basic foodstuff, to transportation fuel, makes no economic or environmental sense at all. Its promotion by our government represents either unfathomable stupidity or blatant venality. Hard to decide.

No comments:

Post a Comment