A bushel of corn was $1.86 at the end of 2005. It is now $6.10 (22 April 2008) Why? Ethanol.
The United States has jumped on the Ethanol bandwagon and is starving peoplebecause of it. The United States looked to Brazil (which uses sugar cane) as a model and tried to copy it. Only the United States didn't do the math right.
Brazil uses ethanol effectively for two reasons: A better source for ethanol and less demand.
The source plays a huge factor. Brazil, being tropical, can grow large amounts of dense sugar cane fields. On top of that, sugar cane contains
huge amounts of available sugars for ethanol production. This makes Brazil's feedstock a decent choice for ethanol production. A lower demand also means that the small amount produced has a very visible
impact on overall oil demand.
The United States has neither of these factors going for it. While the United States has amazing amounts of corn, it is only half as good as sugar cane for ethanol production. On top of that the corn grows less densely than sugar cane in the tropics. So it will take more land area to make the same amount of ethanol.
The United States also has a much larger demand for ethanol that Brazil.
Even if the production capabilities approached Brazil's, it would have a small impact on the overall demand.
So you have an inefficient system making little impact. Why else is it bad?
It takes away from feeding people.
Corn is the mainstay of the poultry, pork and beef industry. While humans generally only consume one specific type of corn (in America it is the selected sweet variety) the rest goes toward feedstock and corn meal. With the price jumping up over 3 times in as many years this impacts all the rest of the food following the chain. With corn becoming the new cash crop, other crops are shunned in favor of corn. So this makes a shortage of wheat and soybeans, which are mainstay food crops. Less supply and raising demand mean prices in these sectors rise as well.
As these prices rise, less is available for poor countries and less is sent via food subsidies. The food riots in Haiti can in some part be traced back to the ethanol misstep.
We need to look at ethanol as not a final solution, but an interim piece to the bigger picture. While ethanol is useful for certain applications, it will never be able to produce enough fuel to make a large enough impact without consuming too much arable land necessary for sustenance of the human species.
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