Food Price-Fixing by the Feds?

As the price of food goes higher and higher, you ever wonder if governments (such as ours) have had a hand in it all?

I'm not outright saying they have...

But, think back to their big ethanol push with respect to corn prices. Of course, there are opponents on both sides of the aisle -- one side claiming ethanol has caused the largest increase, the other side claiming skyrocketing corn (and other grain) prices have little to do with the ethanol push, that it plays a very minor roll in the big picture.

While they're debating the issue, I'm going to take you back to another article I wrote called "bailout nation" ...to remind you of where a good chunk of our tax dollars went recently.

In the article I hinted that the Government would probably find a way to bailout the hog industry with our tax dollars, too.

Well, guess what?

Check out this article over at KansasCity.com entitled - "USDA to buy pork for aid programs amid hog market woes"

WICHITA, Kan. | When Agriculture Secretary Ed Schafer announced the government's plan to buy up to $50 million of pork products for child nutrition and other domestic food assistance programs, it seemed to be a generous effort to help poor families struggling with high grocery tabs.

But what the Agriculture Department failed to mention in making Thursday's announcement was that the move was just what the National Pork Producers Council had urged Schafer to do two weeks earlier to reduce sow numbers — ultimately driving up pork prices for all consumers.

In my article, "Desparate Acts by Hog Producers," I had a feeling the bailout would be coming soon. Sure enough, the Feds haven't let me down. So predictable. Sheesh!

When you next consider The High Cost of Food -- think about all the price increases that have been caused, directly and/or indirectly, by Government policies and/or actions.

The price of food keeps going up, up, and up...

The price of gas keeps going up, up, and up...

Taxes keep going up, up, and up...

And, uh, we're paying them to do, err, what exactly?

Are you Fed up, yet?

People love free money

If you thought this blog was about the "big Bush" tax rebates rushing into the hands of taxpayers nationwide, then you'd be wrong.

The title for this post is actually a quote from Senator Tom Harkin which was published by the International Hearald Tribune on April 24, 2008, in an article written by David M. Herszenhorn, titled:

On Capitol Hill, it's farm politics as usual - (link to full story)

Sen. Harkin must be feeling like a lone voice on Capital Hill, as he admitted there was not much he could do about the massive farm subsidies contained in the Farm Bill set to be passed at a cost upward of $300 billion because "I don't have the votes," adding, "People love free money."

My favorite quote actually appears earlier in the article, emphasized by me in this excerpt;

But even strong proponents of the bill, like Senator Tom Harkin, Democrat of Iowa and chairman of the Agriculture Committee, concede that farm interests are deeply entrenched and that there is little appetite for change among many farm state lawmakers, especially when it comes to the direct payment program.

The direct payments are based on the amount of land that certain farmers own, and Harkin, who has sought to eliminate the payments, said that many recipients of the money then use it to acquire more land and qualify for more payments.

"It's like the black hole in space that astronomers talk about, everything gets sucked in and nothing ever comes out," he said.

"This is the black hole of agriculture. It doesn't make sense, but farmers continue to get it."

Important points brought out in the article with respect to the new Farm Bill:

• does little to address many of the most pressing concerns


• will not change biofuel mandates that are directing more corn to ethanol and contributing to a global run-up in food prices


• will do little to ease worldwide food shortages


• demonstrated (by Ken Cook) that the farm subsidies it contains would mostly benefit a small number of wealthy crop producers


• and, at a time of unprecedented volatility in the futures markets, it will not require tougher regulation

Indeed, many experts say the biggest step Congress could take would be to eliminate the direct payment subsidies in favor of a new revenue assurance program that would help farmers in times of need, but save money in boom years when crop yields are strong and prices high.

Let's pause and think about that comment a minute.

Did you happen to see this Globe & Mail news story out of Canada where Ottawa is planning to pay $50 Million for a swine kill owing to the massive surplus in the pork industry right now?

EDMONTON — In what is being called an unprecedented move, the federal government will pay Canadian pork producers $50-million to kill off 150,000 of their pigs by the fall as the industry teeters on the brink of economic collapse.

The animals are being destroyed at slaughter plants and on pig farms in a bid to cull the swine breeding herd by 10 per cent.

Most of the meat is to be used for pet food or otherwise disposed of, but up to 25 per cent of it will be made available to Canadian food banks.

“The value that the market is providing to hog farmers for their breeding animals has fallen to virtually nothing,” said Martin Rice, executive director of the Canadian Pork Council on Monday.

But, I digress.

Back to the Bush rebates (because I can't resist commenting on it)...

Recipients receiving their checks in the weeks ahead might want to think twice about using it to go on a shopping spree. Try checking out the product origins of the items you purchase and see how much of that money you'll actually be sending to China instead of helping to curb the recession here at home. Those "made in China" tags are mighty prevalent, wouldn't you say?

In my most humble opinion, I just can't resist applying someone else's quote to the situation.

"It's like the black hole in space that astronomers talk about, everything gets sucked in and nothing ever comes out."

But I don't want to go down that road of "torchture and politics" (link).

Ahem.

FutureGen Update

Within hours of the announcement that Mattoon won the FutureGen bid, the call to stall came out. Here's an excerpt from one news article on the reasoning behind the DOE's decision:

"The biggest concern this past week for FutureGen Texas was the bickering between the DOE and the FutureGen Alliance over the timing of the announcement," said Hoxie Smith, who served as coordinator of the Permian Basin FutureGen Task Force.

Following this morning's selection of Mattoon, the DOE -- which had requested a delay in the announcement to let the agency evaluate public comments on the environmental impact statements -- issued a statement warning that projected cost overruns involving the plant "require a reassessment of FutureGen's design."

What puzzled me most about this entire project was -- why even pursue coal? Why not solar? Why not wind power? Why not other sources for hydrogen? In this enlightened age, why are we not considering renewable sources of energy rather than continued focus on using fossil fuels?

So... I'm reading through the huge EIS, and I come across this little section titled, "Technology Options Eliminated from Further Consideration," and I find what I think is the answer:

Pursuant to the President's FutureGen Initiative, DOE determined that all project alternatives must use coal as fuel, produce electricity, produce H2, meet very low target emission rates, and capture and store emissions of GHGs.

Well, that explains why maybe this technology -- the algae farm solution by Dr. Berzin, a rocket scientist at Massachusetts Institute of Technology -- was not even considered.

His technology meets all but one of the criteria. It

• does use coal (sort of)
• does produce electricity
• does meet very low target emission rates
• does capture and store emissions of Green House Gases (sort of - actually it converts most of them rather than storing them)

but what it doesn't do is produce H2 (hydrogen). Instead, his technology produces bio-diesel and ethanol -- in abundance -- far more than either soy beans or corn, and with much greater efficiency from what I understand.

In addition, Dr. Berzin's technology also cleans existing coal plant emissions -- by up to 40% of CO2 emissions and up to 86% of nitrous oxide emissions. It can be added to almost any coal power plant and act like a powerful scrubber, sucking up a large portion of those GHGs already being belched into our air.

Now, if we reduced all our aging coal plant CO2 emissions by 40%, that gives us a far larger cut than the Kyoto treaty mandates ...putting us years ahead!

But what is the cost for such a technology?

Well, the algae needs to be harvested daily, so I'm guessing that would up maintenance costs for the power plants but considering the alternative fuels output (bio-diesel and ethanol), according to Dr. Berzin, the power plants can actually make a tidy profit.

And, unlike the almost $1.8 billion price tag for the FutureGen solution decided upon by our DOE, for the algae pilot project using a 1,000 megawatt power plant owned by one southwestern power company, the cost was $11 million in venture capital.

Now, you can imagine how many power plants could be modified if, say, the DOE's original budget agreed for FutureGen to the tune of $950 million were applied to Dr. Berzin's technology instead, right?

Hmmmm... affordable, ...sustainable, ...and profitable?

But for some bizarre reason, the DOE has its heart set on sequestering CO2. They have stricken from the list of consideration any renewable resource technologies, including wind power, wave power, geothermal energy, solar energy, and biomass combustion (which do not use coal and do not allow an opportunity to demonstrate the capture and storage of GHG emissions).

In fact, they're determined to use our tax dollars to sequester (meaning store) the green house gases. And equally determined that hydrogen be a product of the technology chosen, the way I read it in the EIS.

So, how many hundred, thousand, or million years into the future will it be when all that sequestered GHG starts bubbling to the surface?

Well, if you haven't already heard about all that methane bubbling up in the Pacific Ocean and from some of the newly thawing areas of permafrost, you might imagine like me that eventually, somewhere and at some time in the distant future, it's bound to find a way up.

When future generations look back in history at us -- what will they think?

Maybe that's too far into the future. So let's look to today's future generation. Here's a pretty good article that might tell you how they feel about how tax dollars are deployed in this country...

For a change of pace, and some insight for the coming 2008 election year, take a quick read through this insightful article: "10-round rumble: Generational 'fight of the century' looms as taxpayers revolt"

Jasper County Power

Did you hear the news? The ethanol plant in Rensselaer is being sold. (link to news) I'm not sure if you recall me telling you a bit about it a while back (here and here). I'd heard rumors that they were in "financial distress." Guess I lost the bet, though -- I thought it would end up being closed. They got lucky and found a buyer instead ...from Australia.

Speaking of alternative fuels, here's a novel approach. Check out this article from USAToday Science and Space: "Algae — like a breath mint for smokestacks"

Enter Dr. Berzin, a rocket scientist at Massachusetts Institute of Technology. About three years ago, while working on an experiment for growing algae on the International Space Station, he came up with the idea for using it to clean up power-plant exhaust.

If he could find the right strain of algae, he figured he could turn the nation's greenhouse-gas-belching power plants into clean-green generators with an attached algae farm next door.

...Fed a generous helping of CO2-laden emissions, courtesy of the power plant's exhaust stack, the algae grow quickly even in the wan rays of a New England sun. The cleansed exhaust bubbles skyward, but with 40% less CO2 (a larger cut than the Kyoto treaty mandates) and another bonus: 86% less nitrous oxide.

And there's another bonus attached to this unique science that could help coal fired power plants net a tidy sum -- biofuels.

One key is selecting an algae with a high oil density — about 50% of its weight. Because this kind of algae also grows so fast, it can produce 15,000 gallons of biodiesel per acre. Just 60 gallons are produced from soybeans, which along with corn are the major biodiesel crops today.

As the price of corn keeps rising, forcing food costs higher and higher, this new science might become even more inviting for plants like the NIPSCO plant near Wheatfield. Listed as one of the nation's Top 50 Dirty Power Plants, this would be a unique way for them to clean up their emissions while raking in a tidy little side profit.

Update on the Ethanol Cafo Connection

Herb Bucholtz, a Michigan State University professor, spoke at a regional meeting of the Purdue Dairy Extension Team and the Indiana Professional Dairy Producers held for dairy farmers in Decatur yesterday. The Fort Wayne Journal picked up the story (link):

Distillers’ grain contains less starch and a higher concentration of fat than corn. Ethanol production removes much of the starch from corn, but that nutrient helps cows make glucose, which increases their milk production, Bucholtz said. Farmers who want to increase their milk production may be better off feeding more corn to their herd, he said.

“It’s not just a simple substitution” of replacing corn with distillers’ grain, Bucholtz said. The two feeds contain different amounts of nutrients, he said.

What is his recommendation?

Bucholtz advised area farmers to use distillers’ grain for about 10 percent of a cow’s dry feed. Some farmers may be able to gradually increase that amount to as much as 20 percent, depending on what else the cow eats. Distillers’ grain tends to work best when farmers combine it with a diet containing lots of alfalfa, he said.

In an earlier post on the subject, I neglected to include a reference to the USDA website on the subject of adding distillers grain (aka CDG) to livestock feed. The USDA site indicated:

"Our research has shown that distiller's grains can be used for as much as 60 percent of the diet in beef cattle," said Berger. "We've achieved smaller levels with dairy cattle. It is clear, however, that we can greatly expand the use of distiller's grains in growing and finishing rations for beef cattle."

Now I'm left with a question in my mind... Is this the reason the Jasper County BZA (or at least 4 out of 5 members of the BZA) are so eager to see the Poultry-to-Veal Calf operation go through?

The new IBEC ethanol plant is no secret. They even state on their website, "...the wet cake by-product of fermentation, will be marketed to livestock producers."

Since beef cattle seems to be the only livestock where you can "beef up" the volume of distiller grains used in feed (pun intended), then I'm guessing there just might be a few more veal operations coming to Indiana.

As I've mentioned before, I'm all for finding alternative fuels and energy sources. The recent U.S. Treasury statistics are scary enough to convince most anyone:

The U.S. imports two-thirds of its oil, and the strategic oil reserves have declined from 120 days in 1985 (i.e., we had enough oil to go 120 days without imports then). It is now down to 60 days. A hike or embargo could pinch the U.S. economy hard.

But corn based ethanol? I'm still skeptical. A lot of people indicated it would not impact the price of corn much. Well, that prediction appears to have been blown out of the water very early this year. (link)

The price of corn rose steadily throughout 2006. Corn prices have averaged around $2.50 a bushel for the past decade, but increased to than $3.00 a bushel in 2006, and then in January 2007, the benchmark price of corn reached an exchange-imposed limit of $3.96 a bushel shortly after trading began Friday, January 11 at the Chicago Board of Trade.

Another problem many ethanol plants may be facing is where will they be getting all that corn?

Nationwide in the U.S. , supplies of corn are expected to drop to 752 million bushels this year, a drop from last month's forecast of 935 million bushels and a steep decline from last year's supply of 1.967 billion.

As food processors and biofuel producers increasingly compete in the same commodity markets, I'm wondering how many of them will still be in operation in the next 3 to 5 years.

Back to the calf operation planned next to those subdivisions. I've heard the proposed calf operation has changed it's IDEM application, dropping from 10,000-head to 3,500-head CAFO. In my humble opinion, it's the wrong spot to have ANY CAFO, regardless if it's an illegitimate poultry operation or a calving operation. And if the ethanol-plant-distilled-grains-by-product problem factored into the BZA's decision, based on the news coming out... I'm wondering how many of their recent CAFO approvals will survive the next 3 to 5 years. (You heard about the bottom dropping out of pork again?)

Oh... did I tell you? In Europe another interesting prediction has been made. "The days of industrial farming and food production are coming to an end..." (link) Now, I do like the sound of that!