Corn Con Carnage

This post at Zero Hedge is making the rounds this weekend, and it's a bit of an eye opener.  Ethanol blended gas is big here in the Midwest, but I was unaware that some 40% of America's corn crop went into making ethanol.  With corn supplies being fed to ethanol plants instead of people, corn prices are rising, ethanol prices are rising, and gas prices are rising, and that's affecting everything we buy.

Corn is the most widely produced feed grain in the United States, accounting for more than 90% of total U.S. feed grain production. 81.4 million acres of land are utilized to grow corn, with the majority of the crop grown in the Midwest.  Although most of the crop is used to feed livestock, corn is also processed into food and industrial products including starch, sweeteners, corn oil, beverage and industrial alcohol, yogurt, latex paint, cosmetics, and last but not least, fuel Ethanol. Of the 10,000 items in your average grocery store, at least 2,500 items use corn in some form during the production or processing. The United States is the major player in the world corn market providing more than 50% of the world’s corn supply. In excess of 20% of our corn crop had been exported to other countries, but the government ethanol mandates have reduced the amount that is available to export.

And with world corn and grain prices up because our exports are down, we're seeing food shortages and price spikes in countries that are net importers of foodstuffs...countries like Algeria and Tunisia.

It's all connected, folks.

The United States is the big daddy of the world food economy. It is far and away the world’s leading grain exporter, exporting more than Argentina, Australia, Canada, and Russia combined. In a globalized food economy, increased demand for corn, to fuel American vehicles, puts tremendous pressure on world food supplies. Continuing to divert more food to fuel, as is now mandated by the U.S. federal government in its Renewable Fuel Standard, will lead to higher food prices, rising hunger among the world’s poor and to social chaos across the globe. By subsidizing the production of ethanol, now to the tune of $6 billion each year, U.S. taxpayers are subsidizing skyrocketing food bills at home and around the world.

I'm all for renewable fuels, but I think it's high time we took a second look at our current ethanol policy.