Will the market get cornered?
Published: Saturday, January 27th, 2007
President Bush said in his State of the Union address, “We must continue investing in new methods of producing ethanol, using everything from wood chips, to grasses, to agricultural wastes.” Bush did not mention the primary product the United States uses to produce ethanol, that is “"corn” or “maize.” But that's the product the Mexican President Felipe Calderon was talking about recently when he said: “The unjustifiable price rise of this product threatens the economy of millions of families.” “This product” is maize or corn. (Maize is not sweet corn, which we can eat off the cob, but field corn, used to feed livestock or, ground into flour, used to make tortillas). Yes, Mexico needs maize to make tortillas — the staple of the Mexican diet. Mexico's poor would starve without it. That's why Mexico's president and Mexico's supermarkets, bakers, tortilla-makers, and the associations of thousands of tortilla sellers, signed an agreement to limit the price of tortillas and corn flour. Mexico also raised the quota for duty-free corn imports. If you're wondering why Mexico would put a duty on something they seem to be needing so badly, it's simple: It's a U.S. product. The United States has been exporting corn to Mexico at below the prices of Mexico's farmers. U.S. farmers grow the more productive hybrid corn. That hybrid corn may be why 70 percent of the world's corn exports have been coming from the states. What's the world going to do without U.S. corn? It's expected that this year U.S. farmers will sell more corn for ethanol than for export. Yet the U.S. Department of Agriculture says our export market continues to be strong. For some time economists have been predicting that corn, which has been selling for around $2 a bushel, could go up to $3. News: On Jan. 12, the Chicago Board of Trade benchmark price of a bushel of corn went up to $3.965. Of course, some say there's a limit. Why, if the price of corn goes up to $4.50 or $5 a bushel, buyers might switch to an alternative grain. On the other hand, with the price of corn rising as it is, some might decide to hold off selling to get a higher price. But then, what are farmers and ranchers going to do for livestock if their feed is diverted into our gas tanks? Well, when corn is distilled into, say 2 1/2 gallons of ethanol, it leaves 17 pounds of distilled grain. That grain is fine for cattle, with some limits, but not so good for hogs and poultry. And the distillation into ethanol eliminates what would have been 39 pounds of grain. In other words, to provide cattle with what they're used to, we have to produce almost twice as much grain. Of course, there are millions of acres that the government has been paying farmers not to grow anything. (It's forecast that an additional 10 million acres will be planted this year). Headlines: "Corn Rockets" - "Fuel Or Food?" – "Livestock No Longer Drives Corn Prices" – "Wall Street Is Betting on the Farm." Corn is in the news. It's our latest celebrity. And the list of nations that depend on our corn is a long one. Ethanol, by the way, is alcohol, ethyl alcohol. And back in 1925, Henry Ford was saying: "ethyl alcohol is the fuel of the future." Another proponent was Alexander Graham Bell, inventor of the telephone, who said alcohol was, "a wonderfullyclean-burning fuel ... that can be produced from farm crops, agricultural wastes, and even garbage." In the 1920s, alcohol was considered to be what Ford and Bell said it was, "the fuel of the future." Today, even though we call it ethanol, alcohol again seems to be the future fuel. However, we will have to grow lots and lots of corn to have enough to feed the hungry world – and ethanol enough to feed our hungry gas tanks. And we really don't know how growing all that corn will affect, let's say, the price of pork chops or a pound of bacon, or fried chicken or a tortilla in Mexico. Chelle Delaney is associate publisher for the Quay County Sun. Contact her at 461-1952 or by e-mail: email@example.com
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