Food, the new global crisis

Corn grows in a farm field near Seneca, Illinois. Rising demand for grain to make fuel, food and livestock feed has helped push the prices of corn and soybeans.

"At the centre of the imminent food catastrophe is corn - the main staple of the ethanol industry. The price of corn has risen about 44% over the past 15 months, closing at US$4.66 a bushel on the CBOT yesterday - its best finish since June 1996."

Corn-to-Ethanol: US Agribusiness Magic Path To A World Food Monopoly

by Charles E. Carlson, WHTT - Nov 7, 2007

Eight years of Biofuels (ethanol) policy and legislation has cemented in place the first world wide food cabal, which promises a humanitarian disaster, a famine more serious than those caused by any tsunami, earthquake or drought. This crisis is not in the dim future, it is here.

Congress has, in a series of acts passed in this millennium, handed the perfect monopoly to what appears to be few giant agribusiness companies that already have enormous economic power, but which may be a much broader cabal.

If you can afford $6.00 a gallon for milk, $4.00 for a loaf of bread and still have money left over for a $50.00 steak at Outback, you may be prepared for 2008, but what about the future? Even if you and I may think we are prepared financially to buy food, whatever the cost, we must have concern for the billion souls who are not and who are condemned to starvation by the corn-to-alcohol conversion scheme.

Subsidies do not make the giant agribusiness firms criminals, only opportunists. Their Public Relations distortion about the value of grain alcohol as fuel is criminal. Congressmen are the real cheats, for they could acknowledge this if they wanted to, but they do not, so they share in the crimes—grand theft and murder by starvation. This being a “Christian” society, it falls to those who heed Jesus Christ’s repeated admonitions to feed the needy and protect those who cannot protect themselves to stop corn-to-alcohol conversion. Make no mistake this is a moral issue.

Many of us Americans still think we have a layer of financial fat and can afford a doubling or tripling of food costs without going hungry. Not so in the third world, and with some in America as well. A friend reminded me, "Meat is not good for us anyway." Some would not mind giving up meat sometimes, but in Darfur or Uganda, there may be no meat or luxury foods to give up. When the price of rice or corn, or beans rises suddenly by a third or half, many will go without. This recently happened in Mexico City with corn tortilla shells; in the third world, the price of corn may be the difference between life and death. Commodity markets are now world markets, when price of corn rises in Chicago the impact is felt in India and Russia.

Engineering a food monopoly

Political leaders of both parties have appropriated billions of dollars to subsidize major agribusiness corporations to destroy food; the latest appropriation was $14 billion. They call the process “bio-fuel” or ethanol production, but because the amount of fuel produced is less than the amount of fuel it takes to produce it, the only correct term for the process is systematic destruction of the food consumed in the process. Agribusiness giants include Archer Daniels Midland, whose income was $44 billion last year, are subsidized to burn up America’s surplus food (mostly corn), while they carry out their principle business, marketing the remaining food which is made more scarce, expensive, and profitable in the process. Congress has created over us the first nearly foolproof, open-ended, food monopoly. This finacial scam is to big and too well sheltered not to come from the highest level of banking and politics.

Corn is the most abundant readily storable and amazingly cheap basic foodstuff, and it is being wasted in an age when millions of grain eaters face starvation for lack of vegetable calories. Darfur is only one of many well-publicized examples in central and southern Africa where corn (maize) is a staple but will not grow because of a water shortage. Darfur needs imported grain, not occupation…food and water will solve its problem armies can't. But when the price of commodities go up the quantity of gifts to the poor go down simply because we all define what we give in dollars, not pounds of food, and our dollars buy less food.

The corn-to-alcohol scheme may well be the largest single financial crime of all time in its impact on people. Its cost to consumers in higher food prices, disregarding the direct subsidies, will exceed the total cost of the so-called war in Iraq, plus the cost of the escalated oil prices. It will dwarf the cost of every war, going back and including Vietnam and World Wars II and I. It will even exceed the cost of the oil increase to $81.00 per barrel. There cannot be a bigger issue than food. No problem in America comes close to it in importance, because no one can escape depending on food for survival -- and we are talking about doubling or tripling its cost of basic grain commodities on which the non-rich survive.

The problem we will expose in this brief paper is not a natural one like drought, tidal wave or earthquake. It is totally man-made for the profit of a few, and it is based on a preposterous, proven lie--that ethanol is a good fuel to burn in autos. The Ethanol subsidy is "take from the poor and give to the rich," scheme. A humanitarian food crisis is a moral issue requiring us to act in the interest of those who cannot act for themselves. Men of faith should lead.

The perpetual ethanol boondoggle started with laws passed by Congress to subsidize the fermenting of corn and other foods to create grain alcohol, which was supposed to burn in cars instead of fossil fuel to reduce “global warming” and to save precious natural fuel, or so we are told. It is every bit as evil a scheme as if it forced all of us to drink the 9 billon gallons of pure 200 proof alcahol now being produced from corn in America. (1)

Ethanol, known as grain alcohol, was in a diluted and impure form called "moonshine" or “white lightning” in the long past years called “Prohibition.” Ethanol has many chemical uses and certain medical properties, but a fuel to run autos it is not, poor in performance, expensive to make, difficult to transport, all well documented by qualified scientific experts.

We will introduce a few whose scientific works explain that corn to ethanol has been an unworkable scam from the very start and exists only because consumers are forced to subsidize it. Those who predicted that ethanol was an economic farce and it would never be economical have been vindicated. What too few foresaw was how bio-fuels were in fact a scam to bring basic food commodities under monopoly price control.

We Hold These Truths believe rising food costs and controlled and engineered world famine may well be a planned results of ethanol legislation. Our conclusions are not based on complex scientific evidence, though such evidence has been available for years, and is too obvious to have been overlooked at the top. Common sense and the simple laws of the marketplace are our guides, and there is no better place to begin than at the filling station.

If you look at the gas pump, you’ll see a little sign: “Contains 15% (or 10%) ethanol.” So, if your tank holds 20 gallons and you fill it for a total cost of $50.00, three of the 20 gallons you pump into the tank are grain alcohol made from corn. One study tells us the subsidy to those who make ethanol cost taxpayers $2.21 per gallon of fossil fuel replaced, or $6.63 for three gallons. (The lowest estimate of direct subsidies we find is $.51 per gallon, or $1.53 for your three gallons of alcohol.) This subsidy is over and above the $7.50 you pay for the three gallons of alcohol you pumped into your tank, which will not take you as far as the fuel farmers burned to raise the corn that went into the alcohol! No wonder agribusiness wants to build more plants and distill more corn into alcohol. The three gallons of ethanol are distilled from about 70 pounds of corn that would otherwise have been converted into beef, chicken, eggs, milk, pork or catfish. Corn would and does sustain human life quite nicely as a main staple for those who cannot afford meat, eggs, or milk.

USA Agribusiness already claims to have the capacity to produce about 13.5 billion gallons of ethanol, which will result in the destruction of over 5 billion bushels of corn. Its capacity is skyrocketing, because the more corn agribusiness destroys, the more subsidies they “earn”. Agribusiness spokesmen have voiced plans to consume 25% of the country’s approximate 1.4 billion bushel corn harvest; the price of corn in the marketplace clearly tells us the scheme has already effectively dried up most of the corn reserves…it is likely that we will discover that there are no longer significant grain reserves in the USA.

Starvation is the issue

Grain alcohol, or “white lightning” as it was once called, is reputed to have driven many to insanity. It is your author’s terrible vision that the monopoly created to make it will drive many Americans out of the middle class, and it will condemn many millions of third world children to starvation. Huge as the subsidy to grain alcohol distilling is, it is only the tip of a much bigger iceberg; it is this hidden effect that concerns We Hold These Truths--the impact on world food availability, an issue rarely discussed. The enormous, unjustifiable subsidies to agribusiness may not bring famine, but the food shortage that results from food burning for profit will bring famine and slow starvation. Those who have food will control those who do not. This shortage of food will profit agribusiness just as the shortage of oil from the shutdown of Iraq is benefiting big oil now.

Burning food—technically, distilling grain to grain alcohol--was mandated by Congress, probably because they were lobbied by US agribusiness, and no one objected. It was well known that ethanol burned inefficiently in our autos, could not solve the energy problem, and costs taxpayers incalculable billions at the gas pumps. It can be shown that most of what we pay for ethanol goes directly into the pockets of big Agribusiness in the form of subsidies. (1)

Make no mistake about it; the manufacturing of ethanol (grain alcohol) is no different from burning corn needed for human food in most of the third world. Well-researched reports by academic and industry sources make it clear that ethanol is counterproductive in a variety of ways, including economically, and produces a negative result on the environment.

How Big Is The Corn-to-alcohol Fraud?

The Renewable Fuel Association, a trade organization of big agribusinesses, lists 129 existing plants with 76 more under construction, and projects the total production capacity to a staggering 13,429 billion gallons of ethanol every year. All but a few small, experimental ones burn corn. (2)

History shows an explosion of production in recent years:

2001 1,770 (billions of gallons)

2002 2,130

2003 2,800

2004 3,400

2005 3,904

2007 13,429 Projected capacity

(2) The Renewable Fuel Association

Figures on subsidies and industry profits are hard to come by, but there is no shortage of experts who say the industry exists on subsidies. One very credible report was done by David Pimentel, professor of ecology and agriculture at Cornell, and Tad W. Patzek, professor of civil and environmental engineering at Berkley, a detailed analysis of the energy input-yield ratios of producing ethanol from corn and "bio-diesel" from soybean and sunflower plants. Their report is published in Natural Resources Research (Vol. 14:1, 65-76). We cite a summary report entitled “Producing ethanol and bio-diesel from corn and other crops is not worth the energy.” Physorg.com quotes Dr. Patzek: (3)

"In terms of renewable fuels, ethanol is the worst solution…it is the highest energy cost with the least benefit."

“In terms of energy output compared with energy input for ethanol production, the study found that: --“corn requires 29 percent more fossil energy than the fuel produced;” Soybeans and other fuel sources are no better.

"Ethanol production in the United States does not benefit the nation's energy security, its agriculture, economy or the environment."

Professor Pimentel of Cornell added in the same paper:

"Ethanol production requires large fossil energy input, and therefore, it is contributing to oil and natural gas imports and U.S. deficits." "There is just no energy benefit to using plant biomass for liquid fuel." "These strategies are not sustainable."

As negative as the Pimentel-Patzek 2004 study, Science Daily’s Energy Bulletin summarized a later study by Dr. Patzek in its 1 Apr 2005, headline, Study: Ethanol Production Consumes Six Units of Energy to Produce Just One, stating the results:

“Dr. Patzek published a fifty-page study on the subject in the journal Critical Reviews in Plant Science. This time, he factored in the myriad energy inputs required by industrial agriculture, from the amount of fuel used to produce fertilizers and corn seeds to the transportation and wastewater disposal costs. All told, he believes that the cumulative energy consumed in corn farming and ethanol production is six times greater than what the end product provides your car engine in terms of power.” (5)

The report warns:

“In 2004, approximately 3.57 billion gallons of ethanol were used as a gas additive in the United States, according to the Renewable Fuels Association (RFA). During the February State of the Union address, President George Bush urged Congress to pass an energy bill that would pump up the amount to 5 billion gallons by 2012. UC Berkeley geoengineering professor Tad W. Patzek thinks that's a very bad idea.”

However, it appears as of this writing the 5 billion gallon ethanol production goal has already been surpassed, according to The Renewable Fuel Association, which lists the present capacity of the industry at over 13.4 billion gallons. Our simple arithmetic tells us this would use up about five billion bushels of corn each year, exceeding 25% of the entire USA new corn harvest! (2)

The bottom line of alcohol energy non-efficiency

Imagine, according to the most conservative estimates, one must spend 1.29 calories of fossil fuels to raise enough corn to get back 1 calorie of ethanol. This seems to be the best case, and it may be much worse. This is the obscene economics of ethanol. But for taxpayers and consumers it gets much worse. It seem we are forced to pay three times for alcohol fuel; first to subsidize those who make it from corn; next, we pay in higher priced fuel at the pump that does not take us as many miles as if we had no alcohol in our tanks; and lastly (and much the worst) in the perpetual higher cost of food that is destroyed and never to be recovered.

The astonishing subsides

Zfacts reports ethanol from corn subsidies totaled $7.0 billion in 2006 for 4.9 billion gallons of ethanol. That's $1.45 per gallon of ethanol (and $2.21 per gallon of gas replaced) "... resulting in a "$5.4 billion dollar windfall of profits paid to real farmers, corporate farmers, and ethanol makers like multinational ADM (Archer Daniels Midland)." According to this study, consumers paid $3.6 billion extra at the pump. * Subsidies for corn ethanol (4)

1. 51¢ per gallon federal blenders credit for $2.5 billion = your tax dollars.
2. $0.9 billion in corn subsidies for ethanol corn = your tax dollars.
3. $3.6 billion extra paid at the pump.

In summary our Congress has licensed big agribusiness to burn food in exchange for worthless alcohol. Yes, worthless is the right word for corn made ethanol as fuel because it requires more calories to produce than it returns when you burn it. Having a negative value is indeed “worthless” except to those paid to make it by destroying valuable food.

Ethanol is 200 proof “white lightning.” The infamous days of “Prohibition” created laws that made it profitable for a few who raised corn to have a still. Today’s corn-to-alcohol scheme produces almost two gallons of white pure white lightning for every man woman and child on the face of the earth! This means the entire world population could be kept stupified most of the time on the grain alcohol U.S. Agribusiness will produce in just one year…by destroying valuable food.

The scarcity factor in burning food

As outrageous as $7 billion of subsidies in one year are, the worst part of burning food is the shortage of humanly consumable calories and animal food that are an inevitable result. The same agribusinesses that destroys corn, also sell what they do not destroy for food! They are the big wholesale food beneficiaries from the shortage they are paid to create, what a brilliant monopoly. Corn burning has an even more sinister side. It is the primary and greatest direct cause of higher food prices we all feel already, and is a direct threat to the subsistence nutrition of the third world poor. Ethanol subsidies are the key to controlling the food chain. Agribusiness industry giants can control and set the price of food to whatever level they wish to maintain, much as a few companies now control the price of petroleum, so long as they are subsidized to burn surplus corn in unlimited quantity. As long as subsides are available there seems to be no limit to the scheme.

American corn surpluses are a blessing to mankind that has kept world grain prices down for years, a gift to the world from American farmers, and a gift from God! The largest surplus in the world was corn, attesting to the incredible efficiency of the American farmer. If Agribusiness giants can destroy America’s surplus and set the price we pay for corn and everything that substitutes for corn. They can and will then ration food worldwide and determine who lives and who dies.

We have already described the process by which distilling alcohol from corn consumes more energy in fossil fuels than it creates. It is also logical to observe that petroleum prices have gone up very steadily since ethanol became mandatory in gasoline. Crude oil just touched $81.00 per barrel, up 400% from day 911. If ethanol did alleviate the energy shortage, why would we not be seeing lower demand and prices for crude oil?

Every American is paying for this subsidized destruction of corn, not once, but three times. First we pay the subsidized ethanol makers billons (we assume someone pays for what our congress gives away) to create a non-economic product we are forced to use; then we pay at the pump because alcohol is poor auto fuel; finally, we again pay in higher food prices resulting from the massive destruction of corn and other food surpluses. We pay this, by far the worst cost over and over again every time we eat a hamburger, buy a gallon of milk or a box of cereal.

Corn is not the only food being burned by American agribusiness giants, but it is the only one they need to burn in their drive to control all food prices. Corn triggers the rest. Poor Mexicans were the first to complain. They felt the pinch from a 30% increase in the price of white corn after the wholesale alcoholization of field corn caused the price to shoot up to $4.00 per bushel in 2006...when ethanol finally absorbed most of the corn surplus. Corn is an international market, and the poor in Mexico City felt the pinch immediately even though they eat foods made of white, not yellow, corn.

Corn, a native crop to the Americas, is a blessing to mankind--a truly cheap food, rich in calories and capable of sustaining life. The average wholesale price of corn was less than $.02 per pound in 2000; but by 2007, thanks to the new alcohol refineries in the Midwest, the average price doubled to $.06 per pound. Even after doubling in price, corn is still our cheapest foodstuff, so what is the problem? You might not eat much corn at your house, a few tacos once in a while, a little corn syrup, maybe some in the dog food, but for the most part you eat bread, meat, milk, fresh fruits and vegetables, so who cares about the price of corn?

The problem is that when the price differential among commodities exceeds the difference in food value, the prices of other grains go up too. Farmers also switch what they raise, from what is cheap to what is hot in the marketplace; this year they switched en masse to raising corn. Now wheat has tripled and soybean prices have more than doubled! The runaway corn price finally bubbled over into the soybean and wheat markets in 2007. Soybeans, another food staple, now sell for more than ten dollars a bushel, more then double.

In 2001 the average price of wheat was about $2.50 per 60 pounds or $.04 per pound; right now the price is $9.25 per 60 pounds or $.15 per pound, and has gone up more than 350% since our government started to burn corn. Wheat prices have more than doubled in 2007. Everything made from wheat is already on the rise. We only recently got used to paying $3.00 for a loaf of bread, but this week I bought my first $4.00 dollar loaf of bread, thanks to those who burn corn.

Consider the effect of the wheat price skyrocket in the one huge starvation experiment being carried on in the world today, the 1.3 million citizens of the Gaza Strip. Gaza is a fenced compound with no significant means of foreign exchange other than gifts. Gaza is therefore almost totally dependent upon the wheat elevated over a fence near the now sealed Karni gate into Israel, and dumped on the ground inside. Israel presently does not interfere with the humanitarian efforts of European countries and private agencies. Imagine the impact of tripling of the price of wheat? Suppose the European Union, which pays for most of the wheat, defines its gift in Euros. With a tripling of wheat prices the amount of bread available inside the wall drops from three loafs to one. Assuming a substance diet inside Gaza 2/3 of the population will now starve unless someone comes up with three times as many Euros. (6)Grain of Hope for Gaza Residence

Meat is made from corn

It is obvious we ask what will happen to meat prices when grain prices have doubled twice; how much will be future chicken, eggs, pork and milk prices? If milk was to doubles twice, as grains have, it will be about $8.00 per gallon! It takes a certain factor of grain to produce a pound of beef on the hoof; it’s a direct ratio, so corn costs translate into beef pork chicken cost of production. There is delayed action in the meat market, before the cost of production hits the dinner table, a boom-bust effect in the marketplace. The grain price explosion has already happened, but the meat explosion is still quietly fizzling away like steak on the grill, ready to explode. It will…it must.

The hungry all over the world that live on corn are the most immediately affected; many more will starve, especially in sub-Saharan Africa where corn is a staple of the diet. But a large part of the American middle class is about to become vegetarian, whether we like it or not, because a meat shortage is right around the corner, and many will soon find meat an unaffordable luxury.

SUMMARY AND CONCLUSION:

The world market for food has been tipped upside down by the creation of a government funded, privately run, monopoly with the power to alter the available food supply by destroying surpluses of corn or other grains. Prices have only started the upward spiral to shortage and famine for some.

The US monopoly which we call "corn-to-alcohol" is fronted for by big agribusiness in the USA and it has eliminated the surplus of corn in a few short years. This has resulted in instant shortages of other grains as well. Now prices of grains are exploding in the world markets, meat prices will follow. Unlike past "bull markets" in commodities, this one cannot self correct by increased world crop productions because the corn-to-alcohol monopoly has open-ended subsidies to buy and destroy as much corn as it find necessary to prevent surplus. We have no doubt Congress will just appropriate more dollars for subsidies whenever called for; there is no limit so long as there is no public outcry.

Surplus food is a blessing of freedom; shortages play into the hands of tyrants. Surpluses are Godly and are talked of in the Bible (remember the wise Pharaoh stored a 7-year supply of wheat).

The Ethanol monopoly could not exist without massive subsidies to agribusiness giants, who in turn can pay giant lobbies to control your Congressmen. The present system assures shortages of everything except the subsidized ethanol plants seen along our highways. The monopoly's capacity to burn food is unlimited, so long as Congress pays for the subsidies. No other argument is relevant, no excuses should be accepted. The subsidy is the only issue that counts.

This paper only scratches the surface of the criminal acts surrounding ethanol. America has been known as the land of plenty and the land that shares its plenty. The corn-to-alcohol monopoly is the engine of planned poverty for the entire world. Who will stop it?

Congress has total responsibility for creating the corn-to-alcohol monopoly, but it will never reverse itself unless absolutely forced to do so because most of its members are bought and paid for.

This is a moral issue. The 80% of Americans that are professing Christians have a responsibility before our God not to allow corporate and political criminal elements among us to cast a pall of planned starvation over the planet. Leaders in Christian churches, who have become quite political of late, now must help fix the problem of starvation that they failed to prevent by giving carte blanche support to those most politically responsible.

~~~~~~

Endnotes to Part I

(1) Biofuels Policy and Legislation
http://genomicsgtl.energy.gov/biofuels/legislation.shtml

(2) How big is Bio Fuels, The Renewable Fuel Association?
http://www.ethanolrfa.org/industry/locations/

(3) Producing ethanol and biodiesel from corn and other crops is not worth the energy, Physorg Magazine: http://www.physorg.com/news4942.html

(4) Zfacts.com, Subsidies for corn ethanol: http://zfacts.com/p/63.html

(5)Study: Ethanol Production Consumes Six Units Of Energy To Produce Just One
http://www.energybulletin.net/5062.html

(6)Grain of Hope for Gaza Residence
http://whtt.org/index.php?news=2&id=1591

(7) The High Costs of Ethanol, New York Times Sep 19, 2007
http://whtt.org/index.php?news=2&id=1773

If you, as a reader, want to see a wide Internet distribution of this story, please contribute generously to our ongoing efforts. We do not accept any subsidies, and we do have a plan. http://eshop.whtt.org/eshop.php?id=24

The Hidden Agenda behind the Bush Adminstration's Bio-Fuel Plan

Buy Feed Corn: They’re about to stop making it…

by F. William Engdahl - July 25, 2007

That bowl of Kellogg’s Cornflakes on the breakfast table, or the portion of pasta or corn tortillas, cheese or meat on the table is going to rise in price over the coming months as sure as the sun rises in the East. Welcome ladies and gentlemen to the new world food price shock, conveniently timed to accompany our current world oil price shock.

Curiously it’s ominously similar in many respects to the early 1970’s when prices for oil and food both exploded by several hundred percent in a matter of months. That mid-1970’s price explosion led President Nixon to ask his old pal, Arthur Burns, then Chairman of the Fed, to find a way to alter the CPI inflation data to take attention away from the rising prices. The result then was the now-commonplace publication of the absurd "core inflation" CPI numbers--sans oil and food. Stephen Roche was the young Fed economist who was assigned the statistical manipulation job by Burns.

The late American satirist, Mark Twain once quipped, "Buy land: They’ve stopped making it…" Today we can say almost the same about corn or all grains worldwide. The world is in the early months of the greatest sustained rise in grain prices, for all major grains including maize, wheat, rice that we have seen in three decades. Those three crops constitute almost 90% of all grains cultivated in the world.

Washington’s calculated, absurd plan

What’s driving this extraordinary change? Here things get pretty interesting. The Bush Administration is making a major public relations push to convince the world it has turned into a "better steward of the environment." The problem is that many have fallen for the hype.

The center of his program, announced in his January State of the Union Address is called ’20 in 10’, cutting US gasoline use 20% by 2010. The official reason is to "reduce dependency on imported oil," as well as cutting unwanted "greenhouse gas" emissions. That isn’t the case, but it makes good PR. Repeat it often enough and maybe most people will believe it. Maybe they won’t realize their taxpayer subsidies to grow ethanol corn instead of feed corn are also driving the price of their daily bread through the roof.

The heart of the plan is a huge, taxpayer subsidized expansion of use of bio-ethanol for transport fuel. The President’s plan requires production of 35 billion gallons (about 133 billion liters) of ethanol a year by 2017. Congress already mandated with the Energy Policy Act of 2005 that corn ethanol for fuel must rise from 4 billion gallons in 2006 to 7.5 billion in 2012. To make certain it will happen, farmers and big agribusiness giants like ADM or David Rockefeller get generous taxpayer subsidies to grow corn for fuel instead of food. Currently ethanol producers get a subsidy in the US of 51 cents per gallon ethanol paid to the blender, usually an oil company that blends it with gasoline for sale.

As a result of the beautiful US Government subsidies to produce bio-ethanol fuels, and the new legislative mandate, the US refinery industry is investing big time in building new special ethanol distilleries, similar to oil refineries, except they produce ethanol fuel. The number currently under construction exceeds the total number of oil refineries built in the US over the past 25 years. When finished in the next 2-3 years the demand for corn and other grain to make ethanol for car fuel will double from present levels.

Not just USA bio-ethanol. In March Bush met with Brazil’s President to sign a bilateral "Ethanol Pact" to cooperate in R&D of "next generation" bio-fuel technologies like cellulosic ethanol from wood, and joint cooperation in "stimulating" expansion of bio-fuels use in developing countries, especially in Central America, and creating a "bio-fuels OPEC-like" cartel market with rules that allows formation of a Western Hemisphere ethanol market.

In short, the use of farmland worldwide for bio-ethanol and other bio-fuels—burning the food product rather than using it for human or animal food—is being treated in Washington, Brazil and other major centers, including the EU, as a major new growth industry.

Phony green arguments

Bio-fuel—gasoline or fuel produced from refining food products—is being hyped as a solution to the controversial Global Warming problem. Leaving aside the faked science and the political interests behind the sudden hype about dangers of global warming, bio-fuels offer no net positive benefits over oil even under best conditions. Its advocates claim that present first generation bio-fuels "save up to 60% of carbon emission." As well, amid rising oil prices at $75 per barrel for Brent marker grades, governments such as Brazil’s are frantic to substitute homegrown bio-fuels for imported gasoline. In Brazil today 70% of all cars have "flexi-fuel" engines able to switch from conventional gasoline to 100% bio-fuel or any mix. Bio-fuel production has become one of Brazil’s major export industries as well.

The green claims for bio-fuel as a friendly and better fuel than gasoline are at best dubious, if not outright fraudulent. Depending on who runs the tests, ethanol has little if any effect on exhaust-pipe emissions in current car models. It has significant emission, however, of some toxins including formaldehyde and acetaldehyde, a suspected neurotoxin which has been banned as carcinogenic in California.

Ethanol is not some benign substance as we are led to think from the industry propaganda. It is highly corrosive to pipelines as well as to seals and fuel systems of existing car or other gasoline engines. It requires special new gas pumps. All that conversion costs money.

But the killer-diller about ethanol is that it holds at least 30% less energy per gallon than normal gasoline, translating into a loss in fuel economy per gallon of at least 25% over gasoline for an Ethanol E-85% blend. No advocate of the ethanol boondoggle addresses the huge social cost which is beginning to hit the dining room tables across the US, Europe and the rest of the world. Food prices are exploding as corn, soybeans and all cereal grain prices are going through the roof because of the astronomical—Congress-driven—demand for corn to burn for bio-fuel.

This year the Massachusetts Institute of Technology issued a report concluding that using corn-based ethanol instead of gasoline will have no impact on greenhouse gas emissions, and would even expand fossil fuel use due to increased demand for fertilizer and irrigation to expand acreage of ethanol crops. And according to MIT "natural gas consumption is 66% of total corn ethanol production energy," meaning huge new strains on natural gas supply, pushing prices there higher.

The idea that the world can "grow" out of oil dependency with bio-fuels is the PR hype being used to sell what is shaping up to be the mist dangerous threat to the planet’s food supply since creation of patented genetically manipulated corn and crops.

US farms become bio-fuel factories

The main reason US and world grain prices are soaring in the past two years and now pre-programmed to continue rising at a major pace, is the conversion of US farmland to become de facto bio-fuel factories. In 2006 US farmland devoted to bio-fuel crops increased by 48%. None of that land was replaced for food crop cultivation. The tax subsidies make it far too profitable to produce ethanol fuel.

Since 2001 the amount of maize used to produce bio-ethanol in the USA has risen 300%, trend increasing going forward. In fact, in 2006 US maize or corn crops for bio-fuel equaled the tonnage of corn used for export. In 2007 it is estimated it will exceed the corn for export by a hefty amount. The US is the world’s leading corn exporter, most going for animal feed to EU and other countries. The traditional USDA statistics on acreage planted to corn is no longer a useful metric of food prices as all marginal acreage is going for bio-fuel growing. The amount available for animal and human feed is actually declining.

Brazil and China are similarly switching from food to bio-fuels with large swatches of land.

A result of the bio-fuel revolution in agriculture is that world carryover or reserve stocks of grains have been plunging for six of the past seven years. Carryover reserve stocks of all grains fell at the end of 2006 to 57 days of consumption, the lowest level since 1972. Little wonder that world grain prices rose 100% over the past 12 months. This is just the start.

That decline in grain reserves, the measure of food security in event of drought or harvest failure—an increasingly common event in recent years—is pre-programmed to continue going as far ahead as the eye can see. Assuming modest world population increase annually of some 70 million people over the coming decade, especially in the Indian subcontinent and Africa, the stagnation or even decline in the tonnages of feed corn or other feed grains including rice that is harvested annually as growing amounts of bio-ethanol and other bio-fuels displaces food grain, in fact means we are just getting started on the greatest transformation of global agriculture since the introduction of the agribusiness revolution with fertilizers and mechanized farming after World War II. The difference is that this revolution is at the expense of food production. That preprograms exploding global grain prices, increased poverty and malnutrition. And the effect on gasoline import demand will be minimal.

Prof. M.A. Altieri of Berkeley University estimates that dedicating all USA corn and soybean production acreage to bio-fuels would only meet 12% of gasoline and 6% of diesel needs. He notes that though one-fifth of last year’s corn harvest went to bio-ethanol, it met a mere 3% of energy needs. But the farmland is converting at a record pace. In 2006 more than 50% of Iowa and South Dakota corn went to ethanol refineries. Farmers across the Midwest, desperate for more income after years of depressed corn prices, are abandoning traditional crop rotation to grow exclusively soybeans or corn with dramatic added impact on soil erosion and needs for added chemical pesticides. In the US some 41% of all herbicides used are already applied to corn. Monsanto and other makers of glyphosate herbicides like Roundup are clearly smiling on the way to the bank.

Going global with bio-fuels


The Bush-Lula pact is just the start of a growing global rush to plant crops for bio-fuel. Huge sugarcane, palm oil and soy plantations for bio-fuel refining are taking over forests and grasslands in Brazil, Argentina, Colombia, Ecuador and Paraguay. Soy cultivation has already caused the deforestation of 21 million hectares in Brazil and 14 million ha in Argentina, with no end in sight, as world grain prices continue to rise. Soya is used for bio-diesel fuel.

China, desperate for energy sources, is a major player in bio-fuel cultivation, reducing food crop acreage there as well. In the EU most bio-diesel fuel is produced using rapeseed plants, a popular animal feed. The result? Meat prices around the globe are rising and set to continue rising as far ahead as the eye can see. The EU has a target requiring minimum bio-fuel content of 10%, a foolish demand that will set aside 18% of EU farmland to cultivate crops to be burned as bio-fuel.

Big oil is also driving the bio-fuels bandwagon. Prof. David Pimentel of Cornell University and other scientists claim that net energy output from bio-ethanol fuel is less than the fossil fuel energy used to produce the ethanol. Measuring all energy inputs to produce ethanol from production of nitrogen fertilizer to energy needed to clean the considerable waste from bio-fuel refineries, Pimintel’s research showed a net energy loss of 22% for bio-fuel—they use more energy than they produce. That translates into little threat to oil demand and huge profit for clever oil giants that re-profile themselves as "green energy" producers.

So it’s little wonder that ExxonMobil, Chevron and BP are all into bio-fuels. This past May, BP announced the largest ever R&D grant to a university, $500 million to the University of California-Berkeley to fund BP-dictated R&D into alternative energy including bio-fuels. Stanford’s Global Climate and Energy Program got $100 million from ExxonMobil; University of California-Davis got $25 million from Chevron for its Bio-energy Research Group. Princeton University’s Carbon Mitigation Initiative takes $15 million from BP.

Lord Browne, the disgraced former CEO of BP declared in 2006, "The world needs new technologies to maintain adequate supplies of energy for the future. We believe bioscience can bring immense benefits to the energy sector." The bio-fuel market is booming like few others today. This all is a paradise for global agribusiness industrial companies like Cargill, ADM and Monsanto, Syngenta.

All this, combined with severe weather problems in China, Australia, Ukraine and large parts of the EU growing areas this harvest season, guarantee that grain prices are set to explode further in coming months and years. Some are gleefully reporting the end of the era of "cheap food." With disappearing food security reserves and disappearing acreage going to plant corn and grains for food, the bio-fuel transformation will impact global food prices massively in coming years.

Another agenda behind Ethanol?

Uh Huh. The dramatic embrace of bio-fuels by the Bush Administration since 2005 has clearly been the global driver for soaring grain and food prices in the past 18 months. The evidence suggests this is no accident of sloppy legislative preparation. The US Government has been researching and developing bio-fuels since the 1970’s. The bio-ethanol architects did their homework we can be assured. It’s increasingly clear that the same people who brought us oil price inflation are now deliberately creating parallel food price inflation. We have had a rise in average oil prices of some 300% since the end of 2000 when George W. Bush and Dick Halliburton Cheney made oil the central preoccupation of US foreign policy.

Last year, as bio-ethanol production first became a major market factor, corn prices rose by some 130% on the Chicago in 14 months. It was more than known when Congress and the Bush Administration made their heavy push for bio-ethanol in 2005 that world grain reserves had been declining at alarming levels for several years at a time when global demand, driven especially by growing wealth And increasing meat consumption in China, was rising.

As a result of the diversion of record acreages of US and Brazilian corn and soybeans to bio-fuel production, food reserves are literally disappearing. Global food security, according to FAO data, is at its lowest since 1972. Curiously that was just the time that Henry Kissinger and the Nixon Administration engineered, in cahoots with Cargill and ADM—the major backers of the ethanol scam today—what was called The Great Grain Robbery, sale of huge volumes of US grain to the Soviet Union in exchange for sales of record volumes of Russian oil to the West. Both oil and corn prices rose by 1975 some 300-400% as a result. Just how that worked, I treated in detail in: A Century of War: Anglo-American Oil Politics.

Today a new element has replaced USSR grain demand and harvest shortfalls. Bio-fuel demand, fed by US government subsidies is literally linking food prices to oil prices. The scale of the subsidized bio-fuel consumption has exploded so dramatically since the beginning of 2006 when the US Energy Policy Act of 2005 first began to impact crop planting decisions, not only in the USA, that there is emerging a de facto competition between people and cars for the same grains. Lester Brown recently noted, "We’re looking at competition in the global market between 800 million automobiles and the world’s two billion poorest people for the same commodity, the same grains. We are now in a new economic era where oil and food are interchangeable commodities because we can convert grain, sugar cane, soybeans—anything—into fuel for cars. In effect the price of oil is beginning to set the price of food."

In the mid-1970’s Secretary of State Henry Kissinger, a protégé of the Rockefeller family and of its institutions stated, "Control the oil and you control entire nations; control the food and you control the people." The same cast of characters who brought the world the Iraq war, the global scramble to control oil, who brought us patented genetically manipulated seeds and now Terminator suicide seeds, and who cry about the "problem of world over-population," are now backing conversion of global grain production to burn as fuel at a time of declining global grain reserves. That alone should give pause for thought. As the popular saying goes, "Just because you’re paranoid doesn’t mean they aren’t out to get you."