Ethanol not the lone cause of higher grain prices

By John Bonitz
Posted Monday, March 17, 2008

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Silk Hope, NC - I feel I must share some information about ethanol and increasing feed prices. My mother runs a dairy in Silk Hope, and her feed costs have risen just as high and quickly as poultry farmers' have. As a Chatham taxpayer, I too am affected by the loss of the Pilgrim's Pride jobs. As a Chatham neighbor, I feel for all those affected.

However, the facts do not show ethanol to be the lone cause of higher grain prices. There are several causes, and we Chathamohicans are partly responsible, too.

The causes are, in no particular order, (Chathamcentricity to follow)

- Increasing wealth in China, India, and other Asian countries, which raises demand for meat and the grain to feed it.
- Declining stocks of grain around the world.
- Drought and other natural crop-losses in other grain producing countries, which shortens supply and drives up prices.
- Increasing costs of petroleum.
- Speculation in markets / weakening dollar.
- Growing demand for corn from ethanol distilleries.
- Decades of corn priced below the costs of production.

Why is this Chathamcentric? I point to Wal-Mart, gas guzzlers, and the way we eat.

#1, Wal-mart is a symbol for the way we spend our money here in Chatham County, NC and the United States. We no longer make stuff, so we pay Asians to make it for us. As a result of several decades of this increasing trade imbalance, Asia is getting wealthier. They are eating more meat and grain. Every pound of meat requires 8 to 10 pounds of corn feed, so China's changing diet raises the price of corn exponentially. Isn't that a good reason to shop at the Farmers Alliance store in Siler City?

#2, our gas-hogging vehicles have made us even more dependent on fossil fuels, which increases demand, leading to higher prices. Higher gasoline prices make corn-ethanol production profitable (at current gas prices, subsidies aren't even needed!). By the way, our massive imports of petroleum act in harmony with our massive imports of cheap stuff from China to weaken our dollar. A weak dollar makes it easier for other countries to outbid us for grain - yet another reason why US corn prices are rising in our economy. Studies show SUVs are not safer than mid-size cars, so that excuse is no good anymore. Be patriotic, stop driving the gas guzzler and start ride-sharing.

#3, we don't eat the way we used to. It was only one or two generations ago for most of us that food production was a part of everyone's lives. Most families had a garden, some kept chickens. We ate whole foods and cooked from scratch. Who has time for that now? Now we eat processed foods, chock-full of corn byproducts. We're all running around like chickens without heads, just trying to make ends meet. Yet corn syrup has been linked to obesity: We Chathamohicans are sick and dying from our addiction to the products of modern agriculture. Fortunately, Chatham County is blessed with lots of great farmers. Farmers markets in Pittsboro, Siler City, and the Chatham Marketplace are great spots to buy locally grown food, to support the local economy, and boost your family's health.

I am no defender of corn-based ethanol, as it is merely a single stepping stone on the path to a clean energy future. At best, it will be an incremental relief to our addiction to oil. However, it does help fight air pollution, and it serves to keep some of our dollars out of the hands of terrorists. And let's not forget that corn at $4 per bushel covers the actual costs of production, and so federal subsidy expenditures are declining.

Our economy is complicated, for sure. But this is the way I see it. I hope I might have opened some new perspectives for my neighbors in this beautiful county we all call home.