Ethanol is the quintessential Big Idea from Big Government. It helps the farmers, helps the drivers, frees us from Arab Oil, stops global warming, reduces pollution, we're told. So Washington has subsidized it, mandated it, and protected it from foreign competition. States have all piled on their own subsidies and mandates. Then the problems started to surface: spikes in crop prices, costs to ranchers, higher gas prices, environmental damage, and more.
In a trade journal called Pork, I just came across this interesting tidbit:
With growing questions about the potential deterioration of the late crop, there are corresponding questions whether corn supplies will meet all of the estimated needs. Currently, USDA is projecting 4.2 billion bushels will be refined into ethanol during the new marketing year.
That will put pressure on livestock producers, exporters, and may even raise corn prices paid by the ethanol industry. What is that delicate balance that must met between supply and demand?
Currently, USDA is projecting a 13.018 billion bushel corn crop as calculated in the October Crop Report. Ag economists Daniel O’Brien and Mike Woolverton at Kansas State University report that level of production with the old crop carryover would supply just over 14.7 billion bushels, a volume that would be the largest supply on record.
But they are not certain that amount of corn is really available because of the threats to the new crop. They say both quality and quantity are called into question due to crop immaturity when cold weather halted growth and the damage to the crop from 2009 weather issues.