Corn-to-Alcohol: US Agribusiness' Magic Path To A World Food Monopoly
By Charles E. Carlson
September 27, 2007
Eight years of Biofuels (ethanol) policy and legislation has cemented in place the first worldwide food cabal, which threatens a humanitarian disaster, a famine more serious than those caused by any tsunami, earthquake, or drought. This crisis is not in the dim future; it is here.
Congress has, in a series of acts passed in this millennium, handed the perfect monopoly to a few giant agribusiness companies that already have enormous economic power. If you can afford $6.00 a gallon for milk, $4.00 for a loaf of bread and still have money left over for a $50.00 steak at Outback, you may be prepared for 2008, but what about the future? Even if you and I may think we are prepared financially to buy food, whatever the cost, we must have concern for the billion souls who are not and who are condemned to starvation by the corn-to-alcohol conversion scheme.
Subsidies do not make the giant agribusiness firms criminals, only opportunists. Their Public Relations distortion about the value of grain alcohol as fuel is criminal. Congressional representatives are the real cheats, for they could acknowledge this if they wanted to, but they do not, so they share in the crimes' grand theft and murder by starvation. This being a "Christian" society, it falls to those who heed Jesus' repeated admonitions to feed the needy and protect those who cannot protect themselves to stop corn-to-alcohol conversion. Make no mistake this is a moral issue.
Many of us Americans still think we have a layer of financial fat and can afford a doubling or tripling of food costs without going hungry. Not so in the third world, and with some in America as well. A friend reminded me, "Meat is not good for us anyway." Some would not mind giving up meat sometimes, but in Darfur or Uganda, there may be no meat or luxury foods to give up. When the price of rice, corn, or beans rises suddenly by a third or half, many will go without. This recently happened in Mexico City with corn tortilla shells; in the third world, the price of corn may be the difference between life and death. The tortilla story demonstrates that commodity markets are now world markets, when price of corn rises in Chicago the impact is felt in India and Russia.
Engineering a food monopoly
Political leaders of both parties have appropriated billions of dollars to subsidize major agribusiness corporations to destroy food; the latest appropriation was $14 billion. They call the process "bio-fuel" or ethanol production, but because the amount of fuel produced is less than the amount of fuel it takes to produce it, the only correct term for the process is systematic destruction of the food consumed in the process. Agribusiness giants include Archer Daniels Midland, whose income was $44 billion last year, are subsidized to burn up America's surplus food (mostly corn), while they carry out their principle business, marketing the remaining food which is made more scarce, expensive, and profitable in the process. Congress has created over us the first nearly foolproof, open-ended, food monopoly.
Corn is the most abundant readily storable and amazingly cheap basic foodstuff, and it is being wasted in an age when millions of grain eaters face starvation for lack of vegetable calories. Darfur is only one of many well-publicized examples in central and southern Africa where corn (maize) is a staple but will not grow because of a water shortage. Darfur needs imports, not occupations; food and water will solve its problem quicker than troops. But when the price of commodities goes up the quantity of gifts to the poor go down simply because we all define what we give in dollars, not pounds of food, and our dollars buy less food.
The corn-to-alcohol scheme may well be the largest single financial crime of all time. Its cost to consumers (disregarding the direct subsidies) will exceed the total cost of the so-called war in Iraq, plus the cost of the escalated oil prices. It will dwarf the cost of every war, going back and including Vietnam and World Wars II and I. It will even exceed the cost of the oil increase to $81.00 per barrel. There cannot be a bigger issue than food. No problem in America comes close to it in importance, because no one can escape depending on food for survival -- and we are talking about doubling or tripling its cost of basic commodities on which the non-rich survive.
The problem we will expose in this brief paper is not a natural one like drought, tidal wave or earthquake. It is totally manufactured for the profit of a few, and it is based on a preposterous, proven lie--that ethanol is a good fuel to burn in autos. The Ethanol subsidy is "take from the poor and give to the rich," scheme. A humanitarian food crisis is a moral issue requiring us to act in the interest of those who cannot act for themselves. Christians should lead.
The perpetual ethanol boondoggle started with laws passed by Congress to subsidize the fermenting of corn and other foods to create grain alcohol, which was supposed to burn in cars instead of fossil fuel to reduce "global warming" and to save precious natural fuel, or so we are told. It is every bit as evil a scheme as if it forced all of us to drink the 13-billon gallons of "white lightning" now being produced in America. (1)
Editor's note: Oil is not a fossil fuel. See the 19th edition of this publication for proof. You can read the technical articles for proof or read the easy to understand articles. Both prove that oil is not a fossil fuel. Additionally, global warming is not caused by humans, as if it were, then there would be no global warming on planets in which no humans live. The powers-that-be are so worried that you will learn this truth that they have begun to prosecute those who have the knowledge to understand that phenomenon so as to be able to explain it to us authoritatively.
Ethanol, known as grain alcohol, was called moonshine or "white lightning" in the long past years called "Prohibition." Ethanol has many chemical uses and certain medical properties, but a fuel to run autos it is not, being poor in performance, expensive to make, difficult to transport, all well documented by qualified scientific experts. We will introduce a few whose scientific works explain that corn to ethanol has been an unworkable fraud from the very start and exists only because consumers are forced to subsidize it. Those who predicted that ethanol was an economic farce and it would never be economical have been vindicated. What too few foresaw was how bio-fuels were in fact a fraud to bring basic food commodities under monopoly price control.
We Hold These Truths believe rising food costs and controlled and engineered world famine are results of ethanol legislation. Our conclusions are not based on complex scientific evidence, though such evidence has been available for years. Common sense and the simple laws of the marketplace are our guides, and there is no better place to begin than at the filling station.
If you look at the gas pump, you will see a little sign: "Contains 15% (or 10%) ethanol." Therefore, if your tank holds 20 gallons and you fill it for a total cost of $50.00, three of the 20 gallons you pump into the tank are grain alcohol made from corn. One study tells us the subsidy to those who make ethanol cost taxpayers $2.21 per gallon of fossil fuel replaced, or $6.63 for three gallons. (The lowest estimate of direct subsidies we find is $.51 per gallon, or $1.53 for your three gallons of alcohol.) This subsidy is over and above the $7.50 you pay for the three gallons of alcohol you pumped into your tank, which will not take you as far as the fuel farmers burned to raise the corn that went into the alcohol! No wonder agribusiness wants to build more plants and distill more corn into alcohol. The three gallons of ethanol are distilled from about 70 pounds of corn that would otherwise have been converted into beef, chicken, eggs, milk, pork, or catfish. Corn would and does sustain human life quite nicely as a main staple for those who cannot afford meat, eggs, or milk.
USA Agribusiness already has the capacity to produce about 13.5 billion gallons of ethanol, which will result in the destruction of over 5 billion bushels of corn. Its capacity is skyrocketing, because the more corn agribusiness destroys, the more subsidies they "earn." Agribusiness spokesmen have voiced plans to consume 25% of the country's approximate 1.4 billion bushel corn harvest; the price of corn in the marketplace clearly tells us the scheme has already effectively dried up most of the corn reserves. It is likely that we will discover that there are no longer significant grain reserves in the USA.
Starvation is the issue
Grain alcohol, or "white lightning" as it was once called, is reputed to have driven many to insanity. It is your author's terrible vision that the monopoly created by it will drive many Americans out of the middle class, and it will condemn many millions of third world children to starvation. Huge as the subsidy to grain alcohol distilling is, it is only the tip of a much bigger iceberg; it is this hidden effect that concerns We Hold These Truths--the impact on world food availability, an issue rarely discussed. The enormous, unjustifiable subsidies to agribusiness may not bring famine, but the food shortage that results from food burning for profit will bring famine and slow starvation. This shortage of food will profit agribusiness just as the shortage of oil from the shutdown of Iraq is benefiting big oil now.
Burning food technically, distilling grain to be grain alcohol--was mandated by Congress, probably because they were lobbied by US agribusiness, and no one objected. It was well known that ethanol burned inefficiently in our autos, could not solve the energy problem, and costs taxpayers incalculable billions at the gas pumps. It can be shown that most of what we pay for ethanol goes directly into the pockets of big Agribusiness in the form of subsidies. (1)
Make no mistake about it; the manufacturing of ethanol (grain alcohol) is no different from burning corn needed for human food in most of the third world. Well-researched reports by academic and industry sources make it clear that ethanol is counterproductive in a variety of ways, including economically, and produces a negative result on the environment.
How Big Is the Corn-to-alcohol Fraud?
The Renewable Fuel Association, a trade organization of big agribusinesses, lists 129 existing plants with 76 more under construction, and projects the total production capacity to a staggering 13,429 billion gallons of ethanol every year. All but a few small, experimental ones burn corn. (2)
History shows an explosion of production in recent years:
2001 1,770 (billions of gallons)
2007 13,429 Projected
(2) The Renewable Fuel Association
Figures on subsidies and industry profits are hard to obtain, but there is no shortage of experts who say the industry exists on subsidies. One very credible report was done by David Pimentel, professor of ecology and agriculture at Cornell, and Tad W. Patzek, professor of civil and environmental engineering at the University of California, Berkeley, a detailed analysis of the energy input-yield ratios of producing ethanol from corn and "bio-diesel" from soybean and sunflower plants. Their report is published in Natural Resources Research (Vol. 14:1, 65-76). We cite a summary report entitled "Producing ethanol and bio-diesel from corn and other crops is not worth the energy." Physorg.com quotes Dr. Patzek: (3)
"In terms of renewable fuels, ethanol is the worst solutions. It is the highest energy cost with the least benefit."
"In terms of energy output compared with energy input for ethanol production, the study found that: --"corn requires 29 percent more fossil energy than the fuel produced." Soybeans and other fuel sources are no better.
"Ethanol production in the United States does not benefit the nation's energy security, its agriculture, economy, or the environment
Professor Pimentel of Cornell added in the same paper:
"Ethanol production requires large fossil energy input, and therefore, it is contributing to oil and natural gas imports and U.S. deficits." "There is just no energy benefit to using plant biomass for liquid fuel." "These strategies are not sustainable."
As negative as the Pimentel-Patzek 2004 study, Science Daily's Energy Bulletin summarized a later study by Dr. Patzek in its 1 Apr 2005, headline, Study: Ethanol Production Consumes Six Units of Energy to Produce Just One, stating the results:
"Dr. Patzek published a fifty-page study on the subject in the journal Critical Reviews in Plant Science. This time, he factored in the myriad energy inputs required by industrial agriculture, from the amount of fuel used to produce fertilizers and corn seeds to the transportation and wastewater disposal costs. All told, he believes that the cumulative energy consumed in corn farming and ethanol production is six times greater than what the end product provides your car engine in terms of power." (5)
The report warns:
"In 2004, approximately 3.57 billion gallons of ethanol were used as a gas additive in the United States, according to the Renewable Fuels Association (RFA). During the February State of the Union address, President George Bush urged Congress to pass an energy bill that would pump up the amount to 5 billion gallons by 2012. UC Berkeley geoengineering professor Tad W. Patzek thinks that's a very bad idea."
However, it appears as of the writing the 5 billion gallon ethanol production goal has already been surpassed, according to The Renewable Fuel Association, which lists the present capacity of the industry at over 13.4 billion gallons. Our simple arithmetic tells us this would use up about five billion bushels of corn each year, exceeding 25% of the entire USA new corn harvest! (2)
The bottom line of alcohol energy non-efficiency
Imagine, according to the most conservative estimates, one must spend 1.29 calories of fossil fuels to raise enough corn to get back 1 calorie of ethanol. This seems to be the best case, and it may be much worse. This is the obscene economics of ethanol. However, for taxpayers and consumers it gets much worse. It seem we are forced to pay three times for alcohol fuel; first to subsidize those who make it from corn; next, we pay in higher priced fuel at the pump that does not take us as many miles as if we had no alcohol in our tanks; and lastly (and much the worst) in the perpetual higher cost of food that is destroyed and never to be recovered.
The astonishing subsides
Facts reports ethanol from corn subsidies totaled $7.0 billion in 2006 for 4.9 billion gallons of ethanol. That's $1.45 per gallon of ethanol (and $2.21 per gallon of gas replaced)"... resulting in a "$5.4 billion dollar windfall of profits paid to real farmers, corporate farmers, and ethanol makers like multinational ADM (Archer Daniels Midland)." According to this study, consumers paid $3.6 billion extra at the pump. * Subsidies for corn ethanol (4)
1. 51¢ per gallon federal blenders credit for $2.5 billion = your tax dollars.
2. $0.9 billion in corn subsidies for ethanol corn = your tax dollars.
3. $3.6 billion extra paid at the pump.
In summary, our Congress has licensed big agribusiness to burn food in exchange for worthless alcohol. Yes, worthless is the right word for corn made ethanol as fuel because it requires more calories to produce than it returns when you burn it. Having a negative value is indeed "worthless" except to those paid to make it by destroying valuable food.
Ethanol is 200 proof "white lightning." The infamous days of "Prohibition" created laws that made it profitable for a few who raised corn to have a still. Today's corn-to-alcohol scheme produces almost two gallons of white pure white lightning for every man woman and child on the face of the earth! This means the entire world population could be kept drunk for at least 60 days on the grain alcohol U.S. Agribusiness will produce in just one year by destroying valuable food.
The scarcity factor in burning food
As outrageous as $7 billion of subsidies in one year are, the worst part of burning food is the shortage of humanly consumable calories and animal food that are an inevitable result. The same agribusinesses that destroy corn, also sell what they do not destroy for food! They are the big wholesale food beneficiaries from the shortage they are paid to create; what a brilliant monopoly? Corn burning has an even more sinister side. It is the primary and greatest direct cause of higher food prices we all feel already, and is a direct threat to the subsistence nutrition of the third world poor. Ethanol subsidies are the key to controlling the food chain. Agribusiness industry giants can control and set the price of food to whatever level they wish to maintain, much as a few companies now control the price of petroleum, so long as they are subsidized to burn surplus corn in unlimited quantity. As long as subsides are available there seems to be no limit to the scheme.
American corn surpluses are a blessing to humanity that has kept world grain prices down for years, a gift to the world from American farmers, and a gift from God! The largest surplus in the world was corn, attesting to the incredible efficiency of the American farmer. If Agribusiness giants can destroy America's surplus and set the price we pay for corn and everything that substitutes for corn. They can and will then ration food worldwide and determine who lives and who dies.
We have already described the process by which distilling alcohol from corn consumes more energy in fossil fuels than it creates. It is also logical to observe that petroleum prices have gone up very steadily since ethanol became mandatory in gasoline. Crude oil just touched $81.00 per barrel, up 400% from day 911. If ethanol did alleviate the energy shortage, why would we not be seeing lower demand and prices for crude oil?
Every American is paying for this subsidized destruction of corn, not once, but three times. First we pay the subsidized ethanol makers billons (we assume someone pays for what our congress gives away) to create a non-economic product we are forced to use. We pay at the pump because alcohol is better for firewater than for auto fuel; finally, we again pay in higher food prices resulting from the massive destruction of corn and other food surpluses. We pay this, by far the worst cost over and over again every time we eat a hamburger, buy a gallon of milk or a box of cereal.
Corn is not the only food being burned by American agribusiness giants, but it is the only one they need to burn in their drive to control all food prices. Corn triggers the rest. Poor Mexicans were the first to complain. They felt the pinch from a 30% increase in the price of white corn after the wholesale alcoholization of field corn caused the price to shoot up to $4.00 per bushel in 2006...when ethanol finally absorbed most of the corn surplus. Corn is an international market, and the poor in Mexico City felt the pinch immediately even though they eat foods made of white, not yellow, corn.
Corn, a native crop to the Americas, is a blessing to humanity--a truly cheap food, rich in calories and capable of sustaining life. The average wholesale price of corn was less than $.02 per pound in 2000; but by 2007, thanks to the new alcohol refineries in the Midwest, the average price doubled to $.06 per pound. Even after doubling in price, corn is still our cheapest foodstuff, so what is the problem? You might not eat much corn at your house, a few tacos once in a while, a little corn syrup, maybe some in the dog food, but for the most part you eat bread, meat, milk, fresh fruits, and vegetables, so who cares about the price of corn?
The problem is that when the price differential among commodities exceeds the difference in food value, the prices of other grains go up too. Farmers also switch what they raise, from what is cheap to what is hot in the marketplace; this year they switched en masse to raising corn. Now, wheat has tripled and soybean prices have more than doubled! The runaway corn price finally bubbled over into the soybean and wheat markets in 2007. Soybeans, another food staple, now sell for more than $10/ bushel, then double.
In 2001, the average price of wheat was about $2.50 per 60 pounds or $.04 per pound; right now, the price is $9.25 per 60 pounds or $.15 per pound, and has gone up more than 350% since our government started to burn corn. Wheat prices have more than doubled in 2007. Everything made from wheat is already on the rise. We only recently got used to paying $3.00 for a loaf of bread, but this week I bought my first $4.00 dollar loaf of bread, thanks to those who burn corn.
Consider the effect of the wheat price skyrocket in the one huge starvation experiment being carried on in the world today, the 1.3 million citizens of the Gaza Strip. Gaza is a fenced compound with no significant means of foreign exchange other than gifts. Gaza is therefore almost very dependent upon the wheat elevated over a fence and dumped on the ground near its northern border with Israel. Israel does not interfere with the humanitarian efforts of European countries and private agencies. Imagine the impact of tripling of the price of wheat? Suppose the European Union, which pays for most of the wheat, defines its gift in Euros. With a tripling of wheat prices the amount of bread available inside the wall drops from three loafs to one. Assuming a substance diet inside Gaza 2/3 of the population will now starve unless someone comes up with three times as many Euros. (6)Grain of Hope for Gaza Residence
Meat is made from corn
It is obvious we ask what will happen to meat prices when grain prices have doubled twice; how much will be future chicken, eggs, pork, and milk prices? If milk was to double twice, as grains have, it will be about $8.00 per gallon! It takes a certain factor of grain to produce a pound of beef on the hoof; it is a direct ratio, so corn costs translate into beef, pork, and chicken cost of production. There is delayed action in the meat market, before the cost of production hits the dinner table, a boom-bust effect in the marketplace. The grain price explosion has already happened, but the meat explosion is still quietly fizzling away like steak on the grill, ready to explode. It will; it must.
The hungry all over the world who live on corn are the most immediately affected; many more will starve, especially in sub-Saharan Africa where corn is a staple of the diet. However, a large part of the American middle class is about to become vegetarian, whether we like it or not, because a meat shortage is right around the corner, and many will soon find meat an unaffordable luxury.
Ethanol is a money loser and an energy waster and could not exist for a day without massive subsidies to agribusiness giants, who in turn can pay giant lobbies to control your Congressmen. I hope we have shown that ethanol is a purposeful, deliberate wasting of food that could feed a hungry world! This author speculates that we will see even higher food prices as agribusiness burns a larger and larger part of the corn crop, now estimated to be approaching 25% of the entire crop. There will be no shortage of ethanol plants along the highways, because someone is being paid to build them, so the capacity to burn food will run wild until forcibly stopped.
The food burners have put the price on a one-way upward trajectory. In the past, high prices always corrected themselves by stimulating more production from farmers, but not this time. Never before did one industry have the ability to destroy almost limitless amounts of surplus commodities, and charge the consumer for doing it. Now, agribusiness and their central bankers will have the ability to set the price of all foods by controlling supply and creating convenient "shortages" at will; they have the perfect monopoly.
Our political leaders may lack knowledge, but only because they do not look! The "bio-fuels" lobby appears to have unlimited money with which to convince congressional representatives to cooperate. These agribusiness monopolists would not build plants for such an obviously uneconomic venture as ethanol, were it not for the subsidies that guarantee their costs.
This paper only scratches the surface of the criminal acts surrounding ethanol. America has been known as the land of plenty and the land that shares it is plenty. So who is to blame? With 80% of Americans professing Christian beliefs, we have a responsibility before our God not to allow corporate and political criminal elements among us to cast a pall of starvation over the planet. Leaders in Christian churches, who have become quite political of late, now must help fix the problem of starvation that they failed to prevent by given carte blanche support to those of one party most responsible.
Congress has total responsibility for creating the corn-to-alcohol monopoly, but it will never reverse itself unless absolutely forced to do because it is bought and paid for. We must arouse a mass with the ability to force Congress to repeal every subsidy for ethanol, regardless of who is hurt by doing so. If this can be accomplished food prices will again stabilize, and there will be enough. Only force will change Congress, do not send this to your congressional representative in hope that the logic of it will change him. This letter. Instead, give it to moral persons. This is a moral issue. If you, as a reader, want to see a wide Internet distribution of this story, please contribute generously to our ongoing efforts. We do not accept any subsidies, and we do have a plan.
Endnotes to Part I
(1) Biofuels Policy and Legislation
(2) How big is Bio Fuels, The Renewable Fuel Association?
(3) Producing ethanol and biodiesel from corn and other crops is not worth the energy, Physorg Magazine: http://www.physorg.com/news4942.html
(4) Zfacts.com, Subsidies for corn ethanol: http://zfacts.com/p/63.html
(5) Science Daily, Ethanol Production Consumes Six Units of Energy to Produce Just One http://www.energybulletin.net/5062.html
(6) Grain of Hope for Gaza Residence
(7) The High Costs of Ethanol, New York Times September 19, 2007
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