(I highly recommend Michael Pollan's "Omnivore's Dilemma". It provides an excellent history and prospective on U.S. farm policy and food production.)
My best guess is that number 2 Field Corn, directly or indirectly, provides over half of the calories Americans consume. Meat, milk, and eggs are primarily corn derivatives... as is most of the caloric content of processed foods. All this talk about grass fed beef and other meats? Though a very good idea, the long and short of it is that at the pace we are going there will be no alternative.
There is a collision in here somewhere. Going from ZERO to 787,000 bpd of ethanol in less than 5 years, consuming 42.5% of the U.S. corn crop in the process, is a rather brisk rate of change - particularly when talking about a nation's food supply. Of course, the U.S. has some wiggle room as it is still an exporter of corn. But that is on an absolute basis - the issue will be the effect on price... particularly in a nation where 1 in 8 depends on food assistance from the federal government.
The USDA is NOT the U.S. Department of Energy. The USDA is charged with assuring America's food supply is secure and safe. To say that they have been derelict in their duties does not begin to describe the situation.
You see, the risk to our food supply was, is, and always shall be THE WEATHER. The USDA seems to be OK with a "Just In Time" delivery and inventory of U.S. grain crops. This is BEYOND dangerous. If the U.S. experienced a 1936 style drought and heat wave during the next growing season the consequences would be catastrophic.
The administration has its eye on the money supply rather than the food supply. They are playing with fire.
Libertariananimal (at) gmail (d0t) com
37 comments:
Amen.
Regards,
Coal Guy
No Amen. :) There's no problem here.
1) The prices for corn skyrocketed in 2008 NOT because of any suppply and demand issues, but because of commodity speculation (see how fast the prices went DOWN for everything in late 2008?) Same thing happened with oil prices and every other commodity out there.
2) Let the cattle eat hay. That's what they should be eating anyway.
3) The Jewel supermarkets in Chicago are stacked to the ceiling with products. I've never seen so many cracker boxes in my life! There is no shortage of food, even with a million gallons of ethanol being burned per year (burned by who, I have no idea. I'm the only one who buys it in its E85/85% form :))
4) Your next piece, which would be very believable, should compare the BTU potential of corn ethanol versus the BTUs in gasoline and diesel that are burned. There's the REAL problem. We can never produce enough corn to replace even 15% of the gasoline and diesel. There just aren't enough BTUs in corn ethanol, even if you planted 5 times the corn we do now.
The Pollyanna principle or Pollyannaism describes the tendency for people to agree with positive statements describing themselves. It is sometimes called positivity bias. The phenomenon is similar to the Forer effect. Research indicates that, at the unconscious level, our minds have a tendency to focus on the optimistic while, at the conscious level, we have a tendency to focus on the negative. This unconscious bias towards the positive is often described as Pollyanna Principle.
The concept as described by Matlin and Stang in 1978 used the archetype of Pollyanna, a young girl with infectious optimism.[1]
Within the morning job hunt/doom and gloom reports, I came across this.
http://www.marketskeptics.com/2009/12/2010-food-crisis-for-dummies.html
It seems to tie in with the last two posts. Although I'd care to side with bureaucrat, again, the state by state breakdown leads me to think that 2010 could get ugly, fast.
From the above link...
'While a food crisis was unavoidable to some extent because of the abnormal weather and financial crisis, the total panic which will soon grip world agricultural markets is a creation of the USDA and its fictitious production estimates. If not for the USDA's interference, food prices would have risen in the first half of 2009 in anticipation of the 2009/10 shortage. The United States Department of Agriculture, has caused incalculable damage to the world economy by encouraging overconsumption of rapidly diminishing food supplies.'
It seems to me that labeling the USDA an anti-Christ may be tame if even half of what this link is indicating comes to pass...
Thanks to Jeff. The traders (Jeffers' former cowboy trader compatriots) don't seem to think that anything is wrong either. Only commodity going up recently is orange juice and sugar. Rice-corn-wheat-soybeans are still in a trading range. No real increases since 2008.
And these are the people with REAL MONEY on the line.
greg,
I work for a major grain company in the river shipping division.
We shipped grain all year preety much as usual. at harvest time though we had a few boats sitting idle for a while.
The last time in N ew Orleans there were all kinds of ships lined up waiting
Keep in mind these boats(the river boats) do not sit if there is anything to push.I think it is quite possible we ran out of product to ship or came real close.
Confederate:
The increase in corn rail cars going to ethanol plants would, by mathematical necessity, have to be accompanied by a decrease in river shipments to the ports exports if the crop is relatively static.
Thanks for the data point (and not just because it supports my assertion...)
Jeff from Brooklyn:
I read that article prior, and can only say that its author mixes in just enough truth to make his lies more believable.
That does not mean he could not be right, it jst won't be for the reasons he lists.
I hope you do some more post on this.I don't think people understand the full impact.
early half our production of corn going to ethanol and corn is $4 a bushel? Something is wrong with that picture.
"And these are the people with REAL MONEY on the line."
The other people with real money on the line missed the sub-prime crisis as well. How do you explain that?
"2) Let the cattle eat hay. That's what they should be eating anyway."
I don't mean this sarcastically but...do you have any idea what you are talking about?
Do you know how much more hay it would take? Who would grow it? Where would they grow it? Would it be grown close enough to the cattle to be shipped there at an acceptable cost? Do you know how much more hay it would take over corn to turn out the same weight?
Big issues in switching to hay from corn. I agree it would be better but you wouldn't see the same meat prices.
Hi Bill. :)
1) The bloggers saw the subprime bubble coming a mile away. I was reading about it in the Mish blog in 2006. I got my money out of the stock market in late 2007, and saved myself from a steep drop. The good traders would have seen it coming. I do not believe most traders are idiots. If they see an opportunity to make money, they will grab it. :)
2) Corn products as animal feed is not the norm. Corn has become so subsidized and so cheap that company farms started feeding animals corn products. Before that, they had hay. Now, would prices have to temporarily rise because the population has obviously grown and we'd have to changeover meat production from corn to hay -- most likely prices would go up for a little while. The animals would be better for it anyway.
Here in Arizona I've seen more fields than ever growing alfalfa. It's high quality hay, not equal to corn, but can be grown on marginal (desert) land and loves heat. At first I thought that folks were just trying to keep the farm property tax designation, since the building boom is busted, (a common tactic to keep the tax man away is to plant a 'scratch' crop of alfalfa) but these are being irrigated and harvested multiple times. There's the normal amount of other crops, cotton, maize and such, but new land is being plowed and irrigated with alfalfa.
feeding livestock corn is most certainly the norm. Corn puts on weight much faster than hay by itself. If a farmer can take $4 worth of corn and turn it into $5 worth of meat he will. Ifd he cannot make a profit using corn he may switch to hay or depending on the price of hay not raise any at all. either way expensive corn equals more costly meat
hogs eat corn. Try raising a hog on hay and let me know how that works out for you.
One can think of cattle is a marginal crop in that when land won’t support anything but grass or is undesirable for other reasons, such as constant flooding along the Mississippi river, you can run cattle on it at next to no cost. It is absolutely insane that grass-fed beef costs more than corn-fed beef.
Yet insanity reigns in the US and the marginal land prime development real-estate. Nearly every stinking year some town gets ruined and rebuilt thanks to government sponsored flood insurance.
Dan why is insane grass frd beef cost more? ALL cattle are gass fed. about half a cows feed must be fodder. Most cattle are fed all the grass/hay they can eat.the corn is more nutriyionally dense .If you don,t feed them the grain they don,t have the time in the day to eat enough fodder they are already eating as much of that as they are physically able
Please somebody tell me yhey understaad what i am trying to explain.
I got out of the market as well but my point is just because the 'traders' aren't moving doesn't mean things aren't changing. The sub-prime issue shows that.
"2) Corn products as animal feed is not the norm....Before that, they had hay...we'd have to changeover meat production from corn to hay"
Corn is not normal cow feed but that is how we get them to market so fast. They did have hay before but that was a different time and place than our current market.
How can we change from corn to hay if the corn is being grown for ethanol? That doesn't make sense.
Also, you can't just say, "I'll grow more hay." Where will you grow it? Who will grow it? Can you meet the nutritionally dense needs of the animal to get it to market in the same time frame?
These are not simple questions and there are no simple answers to them. I'm not a doomer but I do think you are oversimplifying how easy it would be to switch to hay feed beef. It would be near impossible with our current setup and we could not maintain the same prices.
tweel,
Is that alfalfa going to beef or dairy cattle? In the farm country I'm familiar with the good alfalfa goes to the dairy first because they want the cows to live a long time. Corn kills cows if it's too much a part of their diet.
B,B,B,B,
You sure get the ball rolling!
First,with all do respect to coal guy,I agree on the cost of organic food verse cheap corn derived food. Try buying a week's worth of organic, then the cheap crap the following week. Cheap crap will be cheaper.lb. for lb.
I tried. And quit half way. realizing the organics costs would leave me with a lot less food.
There is no chance in hell any animal can go of grid and feed our sorry butts. Stop debating and stock up! oh,unless they eat every blade of grass in the country.
peace
Dan,
"It is absolutely insane that grass-fed beef costs more than corn-fed beef."
How so? The largest beef lot in Colorado has 100,000 head of cattle. The cows are densely held and are fattened on corn.
Do you know how many marginal acres it would take to run that many head? On good land it would take 100,000 acres at least. On marginal land it could 400,000 - 500,000 acres.
Then you stretch out the time to market because the cow can't eat enough grass to get fat. It takes a long time.
Grass-fed beef costs more because it takes way more land and more time to get the cow to market.
BILL , you said they did have hay before but that was a differet time. What are you talking about?
Hay is still kentuckys' number one crop! Adding grain to cattles diet is the norm.
Confederate; cattle will fatten up on a diet of 100% grass and a little alfalfa. The more alfalfa the faster they fatten, though it still is not as fast as on corn and agricultural wastes. Since healthier (leaner) cuts are in favor now it shouldn’t be that big an issue. There is no need for irrigation and very little harvesting required. Just put them out to pasture, feed them about a pound of alfalfa per hundredweight, and water em.
Conversely, if they are going to the feed lot they will have already gained about 650 lbs on roughage and now they will need a heavy course of antibiotics because of all the cattle in close proximity. Then corn must be grown, harvested, flaked, and brought in. hay and alfalfa still needs to be brought in; while you don’t need as much, you are now harvesting it and trucking it in. to top it all off you have that awful smell which is the ammonia and nitrogen escaping into the ether where it is not only totally wasted, it becomes a nuisance to boot.
How on earth can that possibly be cheaper? I think the price difference is a marketing ploy.
Bill; when I say marginal land I don’t just mean the open ranges in Wyoming, I also mean lush land on the flood plain where cattle run just fine, but no one in their right mind wants to build or plant because of the frequent flooding.
Dan all of shpping handling etc is reflected in the price.
Alfalfa is a high quality grass it is not comparable to grain in enegy density.Say you had a cow that gets all the hay he can eatp plus grain. If you take away the grain he will still be consuming the same amount of grass.he has already reached his physical limit on his ability to consume anymore. Maybe he could eat eat enough to to replace a1/20 of the grain.
Maybe you are talking about pasture raised. Say a rancher had 1 acre he raised one cow AS FAR as the market goes it doesn't care meat is meat. say it took one year on pasture to raise one for market. If he added corn he could send it to market in 9 months. If he recieved the same ptice he would of course as long as the price of corn is right feed the corn. you need a higher price to cause him not to feed the corn
If cows are more expensive to feed, then beef and dairy gets more expensive and you all eat less of it - no problem (and probably good for you).
But if grain gets expensive and 40% goes into ethanol then millions, literally millions, starve to death in developing world countries.
Always good to keep some perspective about what's important!
Donal,
I completely agree.
Regards,
Coal Guy
Just for the record. I don't think that organically grown food is a damn bit better than food grown using chemical fertilizer. My gut feeling is that the push is a bunch of marketing crap to sell essentially the same food for a higher price. Further, the organic ship has sailed. The world's population is too large to sustain without chemical fertilizer.
I do believe that a relatively simple diet of food that you cook yourself using a variety of vegetables, fresh of frozen, cheap lean meats and a moderate amount of starch is the cheapest and healthiest. I'm no fanatic about it. If you get fancy, the saturated fat and sugar content of what you eat tends to be higher. The cost goes up as well. If you go cheaper, you suffer from the lack of protein and nutrients lost cutting out the more expensive meat and vegetables in favor of high starch food.
My argument with Bur is that there is no economic or nutritional advantage in junk food over what you cook for yourself. In fact the advantage is so skewed in favor of home cooking in both cost and nutrition that there is no rational argument to the contrary.
Put that cheese doodle down!
Regards,
Coal Guy
One thing that doesn't get mentioned too much, but is very important to be properly prepared for hard times is to maintain good health. Lose the tire, eat right, get fit.
Regards,
Coal Guy
I still disagree on your junk vs. healthy, cheap vs. more expensive argument, as I said on the previous AmerEnerCrisis post, but that's ok. We were supposed to be talking about ethanol as a vehicle fuel anyway. :)
The dairies have been suffering lately. The low price of milk and the high cost of feed has been forcing many out of business, no dairies here are expanding.
The increase in alfalfa cultivation has been very evident in the Yuma area. You can get six or more cuttings a year due to the warm winter. Water is the main concern, the new wells will be drawing down the water table quickly and the Colorado River is completely taken.
Does anyone have any idea what the breakeven prices for corn gas to make ethanol are?
I have a farm not three miles from here that sells grass fed beef. It's nice to drive by and see the beef in the field sunning, grazing and doing beef stuff.
Grass fed beef takes a bit of getting used to. It's much leaner, a little tougher and not nearly as nicely marbled as that beef that's finished with so much corn. It has a very beefy taste. Only costs maybe 10% more than the local Stop and Screw.
BTW the farm is in one of the most expensive towns in Massachusetts - Weston.
Coal Guy;
I don’t see where organic makes any improvement either. However, letting the produce ripen in the garden makes an enormous difference. I sold my place last July, kitchen garden and all, and the produce I buy at the store is just awful. The difference between tomatoes that ripen on the vine and those that ripen in the back of a truck is about as much as the difference between ribeye and spam. The difference between fresh (picked that day) green peas and frozen is even bigger.
From http://newsblaze.com/story/20090807091234zzzz.nb/topstory.html
Dr. David J. Peters, Assistant Professor of Sociology - College of Agriculture and Life Sciences at Iowa State University, has developed a calculator to determine the long-term economic viability of proposed ethanol plants. Dr. Peters was surprised to learn how sensitive the bottom line is to small changes in corn and ethanol prices. According to Dr. Peters, a typical 100 MGY corn ethanol plant built in 2005 (financing 60 percent of its capital costs at 8 percent interest per annum for 10 years, with debt and depreciation costs of $0.20 per gallon of ethanol produced, and labor and taxes at a cost of $0.06 per gallon) will lose money in the current market:
At $3.25 corn, the ethanol break even price is $1.76 per gallon.
At $3.50 corn, the ethanol break even price is $1.82 per gallon.
At $3.75 corn, the ethanol break even price is $1.88 per gallon.
At $4.00 corn, the ethanol break even price is $1.94 per gallon.
Dan,
I've got my garden, too. There is no comparison.
Regards,
Coal Guy
Tweel:
Thanks for that data point. I will definitely check that out.
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