Art,
Not to argue, but I'm curious.
The resulst to date: Corn is up from $2/bushel to (last I looked) $3.64 a bushel. At $2, there is good profit in ethanol. At $4, it's $0.04 per gallon, which has already meant that proposed ethanol production projects have been put on hold.
Which neck of the woods? We're building several more in ours. I know of 7 of them that just broke ground in the last year. It's news to me that they're being put on hold. I'll have to ask my pals at Monroe, Stanley, or Friesland what's up with that.
Wisconsin lags Iowa and Illinois in organic EToH production, and it's one stated goal to at least match them in production, starting with corn as the feedstock, then switching to cellulosic biomass.
As for the poor Mexicans and their tortillas, cry me a river. How much Mexican corn is used for ethanol vs. making tortillas? A relatively small amount of U.S. white corn is imported there to keep Mexican corn prices down so the beaners can have cheap tortillas. I'd wager all that corn could feed more sacred cows in India.
I read the Economist every now and then. This caught my eye:
Food industry executives and some government officials initially attributed the price jump to tight supplies and higher international prices for corn owing to increased production of corn-based ethanol in the US. This was quickly debunked, as the corn consumed in Mexico is not of the same type as that used to produce the alternative fuel (Mexicans consume white cornmeal, while ethanol is made from yellow corn, which has limited uses for human consumption). Moreover, Mexican farmers produced a healthy-sized crop of white corn in 2006, according to official data.
http://www.economist.com/daily/news/displaystory.cfm?story_id=8575130As part of the farm family, I know there are still on the order of 25,000,000 acres left fallow under PIK, so yeah, we're really taxing the farmland hard. Maybe we should plant more white corn specifically for the Mexicans so they can import it duty-free along with the rest of the corn they get from us, keeping their tortilla prices down? It's remarkable how many things some Mexicans can find to blame the evil U.S. for.
Let me know if I'm off-base here, but it appears the angst from South of the Border is misplaced:
Are Mexican Tortilla Prices Affected by U.S. Yellow Corn Prices? In recent months, numerous media reports have suggested higher yellow corn prices and increased ethanol production in the United States are driving tortilla prices higher in Mexico. Its easy to see how an isolated view of the circumstances might lead to the conclusion thatU.S. yellow corn prices and Mexican tortilla prices are fundamentally linked. However, a broader view of the situation reveals numerous other political and market nuances are atplay. A longstanding statistics maxim suggests correlation does not imply causation. In thiscase, while the timing of the increases in U.S. yellow corn prices and Mexican tortilla prices appear well correlated, higher U.S. corn prices should not be interpreted as the sole cause of inflation in Mexican tortilla prices. A truly holistic approach to the issue demands consideration of several important facts, most of which have not been reported in media coverage of this situation. Mexican tortillas are principally made from Mexican-raised white corn. White corn typically accounts for less than 1 percent of corn production in the United States, with yellow cornconstituting the bulk of U.S. production. In 2005, U.S. corn producers planted approximately 700,000 acres to white corn, equating to less than 1 percent of the 81.8 million corn acres.The United States is the worlds largest yellow corn producer, but typically produces lessthan 5 percent of the world supply of white corn. The United States exports approximately 25-30 percent of its white corn to countries in Africa, Asia, and South and Central America. U.S. white corn exports have often helped offset shortages in those markets. White corn for direct human consumption is the primary variety grown in Mexico. White corndominates production in Mexico. The country typically plants 19-22 million acres to cornannually, the overwhelming majority of which is white corn. White corn is used in tortillaproduction because its soft starch is easily ground into meal. The processing of tortillas isfragmented and dispersed around Mexico, with 45,000 tortilla producers and 10,000 cornmillers.Ethanol is made from yellow cornnot white corn. Though uncommon, there is some substitutability between yellow and white corn in food and feed markets. Food-grade yellow corn is used to make corn flakes, chips, beer, and other foods, and white corn can be used as animal feed. However, the U.S. ethanol industry uses only yellow corn for biofuelsproduction. The United States exports very little white corn to Mexico because of existing over-quota import tariffs. Because of trade policies that discourage Mexican importation of significantvolumes of white corn, the countrys tortilla producers cannot rely on white corn imports tooffset domestic shortages caused by drought. The United States exports a significantamount of yellow corn to Mexico for use in the countrys feed and industrial processing markets, but white corn constituted just 2 percent of total U.S. corn exports to Mexico in2006. The North American Free Trade Agreement (NAFTA) established quotas on the amountof white corn that can be imported by Mexico. In the last three years, over-quota white cornimports have been subject to steep import tariff rates (72.6 percent in 2004, 54.5 percent in2005, and 36.3 percent in 2006). According to the USDA Foreign Agricultural Service, the over-quota import tariff will apply to white corn, even in the case of a shortage. In responseto tight domestic supplies of white corn, Mexico President Felipe Calderon in January raisedthe quota for white corn imports. Since the over-quota tariff specified by NAFTA is graduallydeclining to zero, trade may increase markedly once this tariff falls to a level sufficient to make over-quota tariff economical.
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While prices for white corn do tend to track yellow corn prices in the United States, white andyellow corn world markets adhere to separate supply-demand curves and are influenced by independent market drivers and trade policies. U.S. yellow corn prices increased in the last quarter of 2006 due to heightened demand for exports and ethanol production. Because U.S. white corn typically trades at a 30-60 cent/bushel premium to yellow corn, white corn prices inthe United States increased in tandem with yellow corn prices. Though increasing world yellow corn prices may have had a minor influence on white corn prices in Mexico, a more significantprice driver is the fact that Mexican white corn supplies were diminished in 2006 due to drought conditions. Reduced production decreased Mexican stocks, resulting in higher cornprices for tortilla producers. The chart below shows that white corn prices in three corn-producing Mexican states (Sinaloa, Mexico and Jalisco) have been consistently $3/bushelhigher or more than white corn prices in the U.S. reference market of Louisville, KY. This proves that white corn has a distinctly different value curve in Mexican and U.S. markets and prices respond to different drivers. The chart also shows that Mexican white corn prices didntbegin to spike dramatically until December 06 or January 07, several months after U.S. pricesbegan to increase. Additionally, erratic white corn production in South Africa plays a major rolein global supply-demand cycles. White Corn Prices, U.S. & Mexico$0.00$2.00$4.00$6.00$8.00$10.00$12.00Jan-06Feb-06Mar-06Apr-06May-06Jun-06Jul-06Aug-06Sep-06Oct-06Nov-06Dec-06Jan-07Feb-07Mar-07$/bushelSinaloaMexicoJaliscoLouisville, KYLouisville, KY Yellow CornSources: Sistma Nacional de Informacion e Integracion de Mercados, and USDA, AMSThe Mexican government offers a number of farm programs to the countrys farmers toencourage domestic white corn production. In 2005, farmers raising spring and summer crops received a flat rate payment of 963 pesos/hectare ($37/acre). Smaller farms (1-5 hectares) received slightly higher payments. Additionally, the Mexican government paid $88.5 million inComplementary Income Support (CIS) on 3,100,000 metric tons of white corn in 2005. Bycomparison, the government paid $6 million in CIS for 142,000 metric tons of yellow corn.Global production of both white and yellow corn are expected to increase significantly in2007. In keeping with the basic principles of economic theory, white corn growers in Centraland South America are responding to tighter stocks of white corn in Mexico and higher pricesby increasing white corn supplies. Brazil and Argentina, the Western Hemispheres biggest corn exporters after the U.S., are expecting near-record harvests in 2007, according to arecent Associated Press report. And in response to increased white corn demand, Mexican farmers plan to expand corn acreage by 20 percent from 21 million acres to 25.3 million acres this year, according to the National Confederation of Mexican Corn Growers. For more information, contact the National Corn Growers Association at (636) 733-9004
http://www.ncga.com/ethanol/pdfs/032107MexicanTortillaPricesUSYellowCornPrices.pdf+tortillas+white+corn&hl=en&ct=clnk&cd=7&gl=usBoy, are they gonna be ticked at us when we switch over to cellulosic ethanol production in our distilleries over the next few years and the price of Mexican corn heads for the bottom. "The Evil U.S. conspired to bankrupt Mexican Farmers" Much tinfoil hattery will ensue, just like the misinformation being propogated now.
Yes, I drive an E85 vehicle, one of the same ones in the GSA fleet. It's tuned to actually run on 85% EToH, not the 10% E10 that folks are grousing about when losing mileage. I don't see the big mileage losses that the E10 users are complaining about, but that's a bonus of ethanol-specific engine tuning. In the motor vehicle world, the better way to use ethanol is in making E85. The 85 percent blend has a much lower vapor pressure than gasoline or E10. That means less evaporative emissions, a nice side-effect for the enviro-weenies to parlay to their advantage. If one were to commit to driving on E85, your engine could then be tuned to take advantage of the increased detonation resistance and faster flame speed ethanol offers. Running higher compression engines, with or without turbo- or super-charging, can increase HP and mileage performance from EtOH over gasoline performance. Dragsters and similar race vehicles have been running on methanol for decades. I note that there's a new turbocharged Saab engine designed especially for ethanol, and it gets 25 percent more power running on ethanol than on gasoline, with the same mileage. The technology's here.
The question is, who you gonna believe? I made the committment, and according to wacki (that name cracks me up in the irony alone) and others I'm living a big lie here. So be it, and I'm glad we're on good terms with the Canadians for the petroleum we import from them vs. the warm reception we're getting from oh-so-stable Jihadistan.
But I digress. All options that allow citizens to drive themselves everywhere they think they need to go are less environmentally friendly than those that do not. Period. The BIG problem is not what Americans are putting in their cars, it's that they own cars at all. Now, it's certainly not palpable to ask America to give up their cars; they won't even give up their oversized SUVs and truck/car crossovers when they couldn't possibly give you a good reason that they own such a fuel guzzler. That's their Gawd-given right, and I won't deny them that. Death threats would ensue were I to tell a soccer mommy that she doesn't need an Excursion to tote her precious cargo to and from Chuck E. Cheese.
Bottom Line: There's no silver bullet. Stop looking for one. We're about that far from the Golden BB, as it were. EToH from corn is an interim measure, giving us the technology and inertia to take it further to cellulosic EToH (already happening in pilot stage in Canada) and other sustainable biofuels not coming from finite fossile reservoirs in unfriendly countries.
