New Blogs Address Current Food Issues

There are two new blogs that have recently started that deal with the current food issues.

As we all know commodity prices have been increasing and that many food manufacturers have made the claim that ethanol is to blame. And while the extent to which ethanol is responsible for higher food prices is up for debate, this could also be the perfect situation for food manufactures to increase prices in excess of what input costs dictate in order to increase their profits. Food Before Profit attempts to hold food manufacturers accountable for such practices.

Food Price Truth was developed to counter the public relations campaign being waged against biofuels by the Grocery Manufacturers Association. Their goal is to provide a clearinghouse of information designed to set the record straight on the domestic and worldwide food crisis.

Ethanol Not Responsible For High Wheat Prices

Two months ago there were numerous articles in the news about how ethanol production was causing wheat prices to rise by taking away wheat acres. Well it turns out that that just wasn't true, at least not according to two wheat industry leaders.

David Cleavinger, President of the National Association of Wheat Growers and Ron Suppes, Chairman of U.S. Wheat Associates provided testimony before the House Small Business Committee Hearing to Examine “Food Prices and Small Businesses” last week. In their testimony they note the following reasons for high wheat prices.

• Strong competition for acres among crops in an environment where wheat is losing competitiveness.
  
• Production problems including poor weather conditions in many wheat growing regions worldwide including the U.S., Australia and parts of Europe.
  
• Global consumption exceeding production seven of the last eight years.
  
• Increased world demand for food, especially high quality food including wheat products, from both larger world populations and a rising middle class in developing countries.
  
• Domestic stocks at 60-year lows and world stocks at 30-year lows.
  
• A weak dollar promoting increased exports from the U.S., which is the world’s largest wheat exporter and sells about half of its wheat crop overseas in a typical year.
  
• Export restrictions by some countries, which have curtailed the world’s access to wheat.
  

We have seen some of these same reasons listed before for general food price increases, but the one thing they say isn't causing wheat prices to rise is ethanol production.

Wheat competitiveness, highlighted in the first bullet point above, has been a particular concern for the wheat industry for a number of years. The decline in wheat acres in the United States is not a recent phenomenon spurred on by biofuels, as many would suggest. On the contrary, wheat acres have been declining steadily for decades; plantings are about 30 percent lower than in the 1980s.

Source : News Release

ASTM Approves New Biodiesel Blend Specifications

The ASTM approved three specifications for biodiesel and biodiesel blends last week.

The biodiesel industry is celebrating today following last night’s final vote by the ASTM International D02 Main Committee to approve a trio of long-awaited ASTM specifications for biodiesel blends. After more than five years of extensive research and subsequent balloting by the ASTM fuel experts in the blended fuel balloting process, ASTM has finally voted to approve three key sets of biodiesel specifications that should significantly bolster automaker support and consumer demand for biodiesel:

* Changes to the existing B100 biodiesel blend stock specification (ASTM D6751)
* Finished specifications to include up to 5% biodiesel (B5) in the conventional petrodiesel specification (ASTM D975)
* A new specification for blends of between 6 percent biodiesel (B6) to 20 percent biodiesel (B20) for on and off road diesel.

Automakers and engine manufacturers have been requesting a finished blend specification for B20 biodiesel blends for several years, with some citing the need for that spec as the single greatest hurdle preventing their full-scale acceptance of B20 use in their diesel vehicles.

Source : NBB Press Release

Hopefully this will lead to greater acceptance by the automobile manufacturers and more refueling locations.

Is Ethanol Causing A Link Between Crude Oil And Food Prices?

I have seen it mentioned in several places over time that ethanol production is causing food prices to become linked to crude prices. An article in the news today put it this way.

The indices for food and non-food agriculturals too have risen by 40% and 25%, respectively, illustrating the close link between crude oil and food prices, the result of land being diverted to the production of ethanol.

A quick look back at the average annual price per bushel of corn, soybeans and wheat does suggest that food prices and crude prices are indeed linked together. Following the oil embargo of 1973 the prices of all three shot up quite a bit. Corn went from $1.57 in 1972 to $3.02 in 1974. Soybeans went from $4.37 in 1972 to $6.64 in 1974. Wheat went from $1.76 in 1972 to $4.09 in 1974. So over the span of two years corn and wheat almost doubled and soybeans went up by about 50%.

But there was little if any ethanol production to speak of in 1974. So with history as our guide, crude oil prices have a large impact on food prices, with or without ethanol production.

Tyson Foods Biofuels Hypocrisy

The opponents of ethanol argue that even though most of the corn from which ethanol is made isn't eaten directly by humans, that diverting corn to ethanol creates higher meat, egg, and diary prices by making livestock feed more costly.

Tyson Foods has been one of the most outspoken opponents of ethanol over the last couple of years. Tyson CEO Richard Bond recently had this to say about ethanol.

It is inefficient because it raises the price on feed stocks to artificially high levels, which increases costs for other uses, such as food.

But Tyson isn't against all biofuels. In fact they have their own renewable fuels division and about a year ago partnered with ConocoPhillips and Syntroleum to produce biodiesel from the animal fat the company produces.

The Springdale, Ark., company plans to convert its fatty byproducts, known as tallow, into fuel. Tyson has struck deals with oil giant ConocoPhillips and Syntroleum, a tiny company that develops synthetic-fuel technology, to process millions of gallons of animal grease each year.

The article also states that about a third of all the animal fat produced in this country flows from Tyson slaughterhouses. So the partnerships that Tyson has formed could potentially lead to the production of millions of gallons of biodiesel while at the same adding value to tallow.

This is a huge advantage over other renewable fuels, like ethanol, that require large capital outlays," says Ramey, who expects tallow prices "to rise significantly, just as the price of corn rose in response to demand for ethanol.

But there is a drawback.

Ramey says that biodiesel adds a higher value use for tallow, which has been used to make other products, such as soap and livestock feed.

So in their quest to produce biodiesel from tallow, they are removing a component of livestock feed from the food supply and increasing the cost of tallow and the cost of livestock feed. In other words they are doing the same thing that they have been criticizing ethanol for.

Distillers Grains offer farmers a choice of lower cost high protein feed supplements.

While corn is currently selling at $233 per ton in Iowa based on recent cash bids, distillers grains are currently being sold direct from the ethanol plants at around $165 per ton (ddgs), and $40 per ton for wet (wdgs). That is a pretty good savings on a high protein (32%) over current prices for soy meal protein which is currently at $409.00 per ton.

Many of the beef and dairy farmers in my area grow their own corn, so corn prices do not concern them that much. However a cheaper substitute to soy meal would be a welcome sight. Hopefully some of distillers by-products will find their way down to the mountain state from some of the new nearby ethanol plants in Ohio.

Grocery Manufacturers Association : When The Truth Just Isn't Good Enough

By now I guess everyone has heard about the high profile public relations campaign that the Grocery Manufacturers Association is waging against ethanol production. And judging by some of their recent comments they aren't going to let the truth stand in their way.

"The federal government's food to fuel mandates are diverting one quarter of America's corn supply from kitchen tables to fuel tanks, and the result is corn selling for $6 a bushel," said Scott Faber, a Washington lobbyist for the Grocery Manufacturers Association Faber.

Source : Consumer Affairs April 7, 2008

According to the USDA this number is correct, about 24% of this marketing years corn crop will go to ethanol production.

But the truth must not have been good enough because two days later Scott Faber had this to say in an interview with OnPoint.

It's no surprise to you that when you divert a third of your corn supply into your gasoline tanks that that's going to drive up the price of corn and that the rising price of corn is going to trickle throughout the economy driving up the price of food.

Source : E&ETV April 9, 2008

Then a week later, he had a new number for us.

“Federal food-to-fuel mandates have led to over one quarter of corn to be diverted from food to ethanol production, driving up the price of corn and other commodities to historic highs,” said Faber.

Source : GMA Press Release April 16, 2008.

So over the span of nine days he went from a quarter, to a third, to over a quarter. It almost seems as if he was trying to find the largest number that people would be willing to believe.

Perdue Farms Ethanol Double Talk

James Perdue, chairman of Perdue Incorporated, a large poultry producer made some interesting comments recently about chicken prices.

Perdue told The Examiner that prices for chickens “are going to have to go up 10 percent,” but he couldn’t estimate how much higher they might go.

And why are chicken going to have to increase by 10% or more?

The culprit is the rising price of corn, which is the main source of chicken feed. More than a third of all corn is going to produce ethanol, a fuel added to or used instead of gasoline.

It would appear that Perdue Incorporated is joining in with others in the meat industry in blaming ethanol for rising food prices. But the part that I thought was really interesting is that Perdue Incorporated has it's own biofuels division called Perdue BioEnergy LLC that has contracts to sell corn for ethanol production.

In May 2006, Perdue signed an agreement to provide corn to Northeast Biofuels LLC for an ethanol plant to be built in Fulton, New York.

Source : Perdue Incorporated

This reinforces in my mind what I think is really going on. Look at it this way, if ethanol production continues as is, they profit from grain sells to ethanol plants but the high feed prices hurt their poultry production profits. If ethanol production ends, they lose the grain sells to ethanol plants, but poultry profits go up because feed costs go down. But under this circumstance, the general public would expect chicken prices to go down.

So the best possible scenario for meat producers would be for the public to buy into the "it is all ethanol's fault" line of thinking. That way Perdue could keep the grain sells contracts and raise the prices of chicken to whatever level they want.

Anaerobic Digestion Could Improve Ethanol's Energy Balance

The Agricultural Utilization Research Institute just finished a study that shows that ethanol plants could displace most of their energy needs through anaerobic digestion of thin stillage.

Anaerobic digestion could boost ethanol plant profits by millions of dollars — and make corn ethanol “greener.”

That’s the finding of a new AURI-sponsored study that showed the feasibility of making methane and fertilizer from thin stillage, dissolved corn solids left over from ethanol production. “Ethanol plants could potentially become energy independent if all the energy in thin stillage could be captured in the form of methane,” says study author David Rein of Rein & Associates, a wastewater engineering company based in Moorhead, Minn.

This would also save ethanol producers money on their energy bills.

Anaerobic digestion could add $10 million to the bottom line of a 50-million-gallon ethanol plant, Rein estimates. Digestion could also conserve water, earn valuable carbon credits, and boost corn ethanol’s energy balance by offsetting fossil-fuel use, he says.

Source : AURI

National Average Gas Price Tops $4.00 Per Gallon

The big story for the day seems to be the fact that the average gasoline price has for the first time tops $4.00 per gallon.

Regular unleaded gas touched $4.005 per gallon, up from $3.988 Saturday and $3.105 a year ago, according to the American Automobile Association Fuel Gauge Report. The figure represented a national average, with many gas stations having long raised their prices above the $4 level.

For owners of flex fuel vehicles, the outlook isn't quite as bad though. According to the Ethanol Promotion and Information COunsil (EPIC), the weekly national average price for E85 is $3.20 per gallon.

Ethanol phase separation?

You often hear a lot about phase separation with ethanol blend fuels. Now I am not saying that it cannot happen, but I do believe that it is way over hyped.

Case in point. My lawn mower and garden tractor sat for over 6 months with a full tank of E10. Both fired right up this spring and ran with no issues.

Last week I fired up my weedeater. It also had a tank of E10 during the winter months. I had no problems what so ever. Remember this is a 2-stroke engine with 2-stroke oil added to the fuel.

I have been doing this for years and have never had any phase separation problems.

Is Ethanol The Reason Beer Prices Are Going Up?

The old argument goes that the demand for corn for ethanol production has caused farmers to switch from growing other crops to grow corn. And it seems that any and all price increases can be explained this way without anyone questioning it. Not even when all the numbers suggest that it is incorrect. Take this recent article on why beer prices are going up.

A worldwide shortage of hops has depleted the supplies available to brewers, particularly for some of the specific blends that craft brewers have made their specialties. The shortage is the result of recent drought in Australia and flooding in Europe that destroyed much of their crops, forcing brewers overseas to turn to U.S. hops supplies that already were strained by a movement to plant more profitable crops like corn.

This all seems logical doesn't it? But the next sentence in the article should have raised a red flag.

Coupled with rising fuel costs, the shortage has hops prices skyrocketing from $5 per pound to as much as $45.

It is hard to see how corn that is currently selling for around $6 per bushel could be more profitable than hops that sell for even the lower number of $5 per pound.

So lets look at how much a farmer could expect to make raising corn. Last year the average corn yield was 151 bushels per acre and the average price was $4.00 per bushel. So a corn farmer would make $604 per acre.

Last year the average hops yield was 1,949 pounds per acre and the average price was $2.81 per pound. So a hops farmer would make $5,477 per acre.

Something tells me that the reporter didn't do their homework on this issue. A quick look at the USDA website provided that information.

A little more study would have told the reporter that hops are perennial plants that grow on upright structures. So to say that farmers have switched from growing them to grow corn would be like saying that farmers switched from growing grapes to grow corn.

The primary region for growing hops is Pacific Northwest, with Washington state being the top producer. That region isn't really known for it's corn production.

Then of course there is the small matter of hops farmers not having the proper equipment to plant and harvest corn.

And one last thing, according to the USDA the amount of hops acres were up last year by about 1,500 acres or about 5% over 2006.

To be fair the author never mentioned ethanol in the article but I think he followed the same general mindset that many have in blaming corn. It seems that someone will try to link any and all price increases to ethanol in some way or another these days. But as a member of the general public being fed this information, I think we should be able to expect that it at least be a little more realistic.

The Number Of E85 Stations Increase To 1579

The number of E85 stations across the country increased to 1579 in May.

June 1, 2008 - 1579
May 1, 2008 - 1560
April 1, 2008 - 1521
March 1, 2008 - 1501
February 1, 2008 - 1475
November 9, 2007 - 1378
May 7, 2007 - 1200

The current number plus the locations of all E85 stations can be found at the National Ethanol Vehicle Coalition.