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Sunday, April 06, 2008

Environment - Of hogs and corn and ethanol

Jeff Swiatek of the Indianapolis Star has a long story today in the business section of the Indianapolis Star headed "Hoosier pig farmers are struggling with rising feed costs and a market oversupply that's pinching swine producers." Some quotes:

Farmers are losing $20 to $30 for every hog raised to market weight of about 240 pounds, creating a financial crisis that could be the most damaging period ever for the nation's hog farmers, worse even than the record low prices of 1998-99.

The reasons for the pig farm downturn are twofold: An oversupply of pork has sent market prices down and the jump in grain prices has sent feed costs way up. Hogs are voracious eaters and feed makes up half the cost of raising them. * * *

The hit to pig farmers is especially painful to Indiana, the nation's fifth-largest hog-producing state. And it imperils Gov. Mitch Daniels' ambitious goal to double the state's hog production by 2025. * * *

One of the largest planned hog operations in the state, run by North Carolina-based Maxwell Foods, has put on hold its plans to locate 30,000 sows in Eastern Indiana. So far, Maxwell has populated eight buildings with 10,000 sows.

"It sure put a damper on our business plan," said George Pettus, environmental manager in Indiana for Maxwell. "Basically, we put a hold on it right now until we see an increase in protein prices . . . and until we can see these grain prices stabilize."

Maxwell sees Indiana as a good spot to grow its hog business, taking advantage of the state's ready supplies of corn and land -- to spread manure from pigs. North Carolina has had a building moratorium on large hog factory farms.

From the April 1st LA Times, a story by Jerry Hirsch that begins:
The U.S. Agriculture Department sent shudders through much of the food industry Monday when it released estimates that showed farmers would plant 8% less corn this year.

With corn prices already pushing up food prices, a spokesman for the Grocery Manufacturers Assn. called the projection "alarming" and warned that the estimate bodes ill for consumers at the supermarket.

"Food prices are rising twice as fast as inflation, placing significant pressure on American families who are already suffering from economic uncertainty," spokesman Scott Faber said. "It's time for Congress and the administration to offer families some relief and stop food inflation."

In particular, the association is protesting federal energy policies that have created increased competition between the nation's food producers and energy companies for corn.

Pam Tharp writes today in the Richmond Palladium Item:
Corn prices have nearly tripled since 2005. Prices for both grains improved this week after the report. Cash corn on Friday was about $5.50 a bushel and soybeans about $12.25 a bushel.

Ethanol subsidies are also being blamed for higher corn prices. The number of corn-based fuel plants has almost tripled since 1999 and more are being built, according to the Renewable Fuels Association. The plants could gobble up more than a quarter of the country's corn crop.

"Food prices being driven by the food-to-fuel mandates will most significantly affect the working poor," said Scott Faber of the Grocery Manufactures Association.

Taking a long range view, Anne Kibbler of the Bloomington Herald Times writes today in a story ($$$) headed "Ethanol: A price too high? Questions surround homegrown answers to energy production.". Some quotes:
But not all the news about ethanol is positive. A study by Purdue University agronomy professor Tony Vyn says increased corn production for ethanol could result in more soil erosion, a decrease in air and water quality and an increased risk of weeds, insects and disease. A paper published by Science magazine in February said corn-based ethanol production would almost double greenhouse gases worldwide over a 30-year period because of the carbon that would be released by ploughing forests and grassland. And the U.S. Geological Survey says fertilizer runoff from corn and soybean crops in Indiana contributes to a “dead zone” in the Gulf of Mexico.

In economic terms, ethanol production has far-reaching consequences. Purdue agricultural economists Corinne Alexander and Chris Hurt estimate that U.S. consumers paid $15 billion more for food, based on 2007 farm level crop prices, than they did in 2005 because of the increased demand for crops grown for fuel.

And while ethanol can play a role in reducing U.S. dependence on imported oil, an entire corn crop converted to ethanol would yield only enough to cover 15 percent of the nation’s gasoline use, says Purdue agricultural economist Otto Doering. By 2012, the country will use about one-third of its corn crop for ethanol, producing about 5 percent of gasoline use.

What’s more, while energy plants are forging ahead with the production of biofuels, the U.S. Government Accountability Office says the Department of Energy hasn’t done enough to ensure there’s an infrastructure in place — including appropriate vehicle production — to deal with the new market.

Still more questions. Bob Bent, an emeritus professor of physics at Indiana University who has spent years studying global energy problems, raises larger questions about the drive to produce ethanol.

“My main worry is that the human species, which already appropriates 40 percent of the productivity of the Earth’s biosphere, will ruin the planet in desperate and futile attempts to solve the ‘energy problem’ by endless increases in supply, which obviously isn’t possible on a finite planet,” he said. “The question regarding ethanol is, ‘How much, under what conditions, and with what environmental impacts?’ The answer seems to be that although the biofuel contribution can be positive, it will remain small, being restricted by the ability of the natural environment to provide both fuel and food for a large and energy-demanding world population. How these restrictions will apply remains to be seen.”

Posted by Marcia Oddi on April 6, 2008 05:21 PM
Posted to Environment