Attention Kansas and South Dakota corn farmers.

If you are voting for Sen. John McCain, you are voting against your own self interest.

If you are resident of a small rural town that needs jobs and prosperous famers, you are voting against your self interest.

Just a bit ago in tonight’s Presidential Debate, McCain emphasized that one of the first things he would cut to get the federal budget under control would be ethanol subsidies.

Just wanted to make sure you knew what you were doing to yourself.

 

Barron’s (paid subscription required) has an interesting lead story this week on the impact of the boom in ethanol on farmland prices.

The story basically says if you’re looking at corn ground as an investment, watch out: you might be getting in too late.

Excerpt #1:

Don’t Bet the Farm Farmland prices are soaring, thanks mainly to rising demand for ethanol. But like other bubbles, this one could get sunk. (Video)  http://online.barrons.com/article/SB119882116265055389.html?mod=djemWR

Excerpt #2:

.  . . The catalysts in the farmland bubble are federal subsidies to ethanol producers and the belief that ethanol demand will keep rising and that China’s and India’s new wealth will keep boosting global commodity prices.

Indeed, U.S. farmers are switching to corn from other crops, curbing supplies of food grains. Nationwide, from 2002 to 2007, the number of acres on which corn was planted rose 24%, to 86.1 million. And the energy bill recently signed by President Bush and strongly backed by both parties mandates that oil refiners eventually boost ethanol use as a gasoline additive to 36 billion gallons a year from the current seven billion gallons.

Aided by a drought that reduced food exports from Australia, net U.S. farm income will hit a record $87.5 billion this year. Americans spent $642.5 billion on food in 2006, up 4.5%. And warnings have begun appearing in print — see the Dec. 8 issue of The Economist — on TV and online about the end of “cheap food.” …

http://online.barrons.com/article/SB119882116265055389.html?mod=djemWR&apl=y

 

Of course, South Dakota is a part of this boom, at least eastern South Dakota and its part of the Corn Belt.

This admission will confound my conservative critics but there are no easy answers when it comes to energy independnece.  Short-term, foodstuff ethanol like corn may be a bridge to better, more ecological technologies like cellulosic ethanol.  But I don’t think it is a long-term solution.  There does appear to be some push on food prices because of rising corn prices.  

In the meantime, while I hope South Dakota’s farmers can take advantage of the ethanol boom and the increase in their land values, I hope it is also not an impetus for more out of staters to take an even greater control of our state’s natural resources.  If the out of state capitalists read Barron’s, they might think twice.  

The following is a portion of Brazilian President Lula’s remarks with President George W. Bush in Sao Palo, Brazil yesterday concerning ethanol.

I take them to mean that Brazil is planning to use the export of ethanol to help its balance of trade. That, to me, sounds like it could have disastrous effects on America’s ethanol industry if it can undercut our producers.

This might be an issue were Sen. John Randolph Thune and I actually agree.

The full remarks are here:

President Lula’s excerpt:

Ladies and gentlemen, Brazil is proud of having contributed to the decision by the U.S. government to increase the share of biofuels in its energy mix. I recall the enthusiasm with which President Bush was first exposed in the meeting we had in Brasilia in 2005 to Brazil’s success story in terms of biofuel.

Here in Brazil, we have an extremely successful program, considered a model, which came out of the investment of over 30 years in research and development. It’s a program which brings together respect for the environment with the preservation and intensification of the food security of our society. It’s a program which has a major social impact because of its capacity to generate jobs, to strengthen family farming, and to distribute income.

This is a field where our two countries can cooperate. The memorandum of understanding on biofuels, which our ministers signed today, is a decisive step in that direction. Bringing together their efforts, the U.S. and Brazil can further push the democratization of energy and bring biofuels to all.

One of the most complex tasks that we face will be to assure access to major consuming centers. Brazil hopes that the ethanol market will be benefited by free trade, free of protectionism. That is the only way that the fuel of the future will be able to promote sustainable development. It also benefits poor and developing countries, by making trade a factor of prosperity for all. This will be a challenge about which I spoke at length with President Bush. We need to eliminate imbalances that still constrain world trade and that aggravate the asymmetries of today’s world.

Meanwhile, President Bush didn’t have a whole lot to say in response about ethanol:

The excerpt of President Bush’s remarks:

We talked about foreign policy in our discussions. We spent time on Central America, and one of the messages we will send to our Central American friends is that one way to help develop your countries is for you to adopt ethanol and biodiesel industries.

If I were an U.S. ethanol producer, I would be very, very concerned.

technorati tags:ethanol, Brazil, USA, President, Bush, Lula

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I thought this release today quoting a Tyson executive was interesting. Are we faced with a choice: food or fuel?

Higher Meat and Poultry Prices Seen as Ethanol Demand Hits Corn Supply, Chicken Industry Tells Congress

	WASHINGTON, March 8 /PRNewswire-USNewswire/ -- 

Meat and poultry producers are facing rapid increases 

in the cost of the grain needed to feed their animals, 

which economists predict will result in higher consumer 

prices, the chicken industry told Congress today.

    Soaring demand for corn, the largest component 

of animal feed, from ethanol producers has doubled the 

cost of corn in recent months and driven up by 40 

percent the feed cost of the chicken industry alone, a 

spokesperson told the livestock, dairy and poultry 

subcommittee of the House Agriculture Committee here 

today. . . . 

technorati tags:ethanol, food, corn, grain, chicken, meat, inflation

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