Drilling deeper into oil prices

The recent attack on corn ethanol is based on a faulty assumption that, of all the factors affecting food prices, the only one that can be changed by the government is the impact on corn demand and prices by ethanol producers, according the National Corn Growers Association Corn Commentary blog.

Here's what NCGA has to say:

We’ve long been of the opinion, shared by many, that higher energy prices have much more of an impact on retail food prices than grains such as corn. And a Wall Street Journal op-ed today argues that there is much Congress can do in this regard, such as allow more domestic drilling. In fact, its headline is “Blame Congress for High Oil Prices.”

But the real news today actually comes from the Commodity Futures Trading Commission, which has announced “multiple energy market initiatives.”

Among those initiatives? A nationwide crude oil investigation into practices surrounding the purchase, transportation, storage and trading of crude oil and related derivative contracts. In other words, price fixing.

Randy Klien of the Nebraska Corn Board pointed out that Associated Press has already picked up on this.

Popping the popcorn myth

We'd thought the popcorn myth - that ethanol is making popcorn prices go up at movie theaters -- had been popped a year ago. In fact, the Iowa Renewable Fuels Association did a great campaign to make the point. And yet we've seen a few reports about that again this year.

To help explain it, here's a quote from IRFA executive director Monte Shaw from an August 2007 news release:

The ‘blame ethanol’ game has gotten completely out of control. From a consumer standpoint, for $5 you can buy 1 tub of popcorn at a movie theater or 38.5 pounds of popcorn from a farmer, which, when popped fills nearly 12-33 gallon trash bags. From a farm standpoint, in 2006 the farmer received about 1.4 cents for the corn in that $5 tub at the movie theater. In 2007, that same farmer will receive about 2 cents to fill that tub. How can an increase of 0.6 cents to the farmer justify a price hike to movie goers or crazy headlines in the news media?

A recent article in Advertising Age started quite off track - saying that ethanol was driving up corn demand and taking away acres from popcorn production. Pretty crappy. But after the first few paragraphs the truth came out -- that popcorn prices were going up to help theaters cover the high cost of movies. Everyone knows that concessions are how theaters make their money, right? (Ticket prices go to the folks who make and star in the movie.)

And then, my favorite line:

... the price of the paper pulp to produce popcorn tubs has jumped 40% in the past 36 months, making the tub more expensive than the corn inside it.

So...we're paying $7 for a tub of popcorn...which contains 2-3 cents worth of corn. And the tub costs more. How does ethanol even enter into this at all?

UPDATE: The Nebraska Corn Board has sent out a press release on this subject. Check it out here.

A good blog on GoodFuels

The Renewable Fuels Association has launched a new blog called -- GoodFuels.

Check out GoofFuels by clicking here. And be sure to add it to your iGoogle, myYahoo or news reader like NewsGator's Newswire. You can also subscribe to news sources like Brownfield with Google, Yahoo or Newswire.

You're familiar with National Corn Growers Corn Commentary blog, right? Click here to take a peak. And don't forget about Domestic Fuel for fuel-related topics. The Clean Fuels Development Coalition also has a blog, called Clean Fuels Blog.

Food vs. fuel: A false and dangerous premise

Steve Grasz penned a commentary that appeared in one of the state's newspapers recently. The National Corn Growers also received permission to publish it -- click here to view. He is a partner in the law firm of Husch Blackwell Sanders in Omaha, Nebraska. He served as chief deputy Nebraska attorney general from 1991 to 2002 and has a wide-ranging background in agriculture.

Grasz does a great job outlining several ethanol myths...

But here's his conclusion:

America needs ethanol now, more than ever. The U.S. imports 62 percent of its petroleum supply and this is projected to increase to 77 percent by 2025. Oil production is declining in many areas of the world. The last time a new oil refinery was built in the U.S. was over 30 years ago. Taxpayers spend billions of dollars each year on military expenditures to protect our foreign oil supply while Congress refuses to expand domestic drilling for environmental reasons. In contrast, ethanol is made from renewable resources we grow right here in the U.S. Its use reduces our dependence on imported oil. The U.S. ethanol industry will have the capacity to produce 10 billion gallons in 2008.

The idea that people must choose between food and ethanol is a false and dangerous premise. The critics need to be called to account. The next time you hear or read that ethanol production is starving children overseas or causing food prices to soar, consider the all-time record amounts of corn being exported from the United States or the fact that doubling the price of corn raises the cost of a box of corn flakes by less than 4 cents – and think again.

Researchers don't see much concern over distillers grains

Researchers at the University of Nebraska-Lincoln have found no reason to believe the use of distillers grains as livestock feed poses a food safety concern.

This report comes after some headlines a few months ago suggested that feeding the ethanol co-product distillers grains would increase E. coli in cattle -- which could increase the chance of meat contamination during processing.

The researchers presented their findings at the Distillers Grains Technology Council meeting this week in Kansas City. After reviewing research by Kansas State and previous research at UNL, they concluded that distiller grains have had no “demonstrably consistent” effect on E. coli shedding from livestock. They also said that data are inconsistent -- and that more research is needed.

“At this point, there is no scientific evidence that feeding distillers grains, at least at levels being used commercially, is the cause of a food safety crisis,” they conclude. “Additionally, there is no scientific evidence to suggest that the feeding of DGs is the cause of the 2007 recalls.”

The National Corn Growers has posted a copy of the report here.

Corn nearly all planted

Improved weather has allowed Nebraska farmers to catch up on corn planting, according to USDA’s National Agricultural Statistics Service, Nebraska Field Office. In fact, 96 percent of Nebraska’s corn is in the ground, which is the same as last year and the average for this time of year. It's also up 13 percent from last week.

Emerged corn is at 59 percent, ahead of last weeks 25 percent, but behind last years 75 and the average of 76 percent. For details, be sure to check out this week's Crop Progress Report.

Farmers across the country made big strides over the past week in getting their corn in the ground, but are still behind the normal pace. USDA said 88 percent of the corn crop is planted, compared ti the 94 percent average over the previous five-year average.

Podcast: USDA data sets record straight

Corn producer Lynn Chrisp talks about USDA's recent news conference where it discussed ethanol's impact on food prices.

Call to action on smear campaign

The National Corn Growers Association is asking members and other interested individuals who would like to encourage the Grocery Manufacturers Association to end it's ethanol smear campaign to write letters to some GMA member companies.

To participate or learn more, click here!

Senator Chuck Grassley of Iowa is also encouraging citizens to at act. He's posted a news release about it here.

Here's what he had to say:

You can imagine my sadness and disappointment when I learned that the National Retail Federation and National Restaurant Association took part in this call and joined in the GMA’s efforts to undermine our policies to promote renewable energy. Maybe the national associations will rethink their support if they hear from state-level members. The way things go for agriculture and renewable energy in Iowa has a lot to do with how they go for other parts of Iowa's economy, including retail and restaurants. Even before possible job losses and lower profits in farming, without ethanol, people across the country would pay more at the gas pump and have less money left in their pocketbooks to spend.

The 'Astro-Turf' grocery gang campaign

Columnist and former farm boy Alan Guebert pointed his pen this week at the "grocery gang" -- the groups behind the recent anti-ethanol campaign. Read it here.

Guebert said: "The gang — a wealthy lobby of over 300 food and beverage makers and marketers like Kraft Foods, Miller Brewing, Dean Foods and ConAgra — made, then marketed, today’s highly believable, highly fake food vs. fuel debate." As fake as Astro-Turf.

The gang hired Glover Park, a Beltway PR firm, which came up with a plan to sell “a federal agency-level or legislative solution to the economically, environmentally and socially untenable ethanol policies now in place…”

Within weeks, anti-ethanol seeds, bought by GMA and planted by Glover Park, take root. Everyone from the New York Times to World Bank President Robert Zoellick is linking American ethanol to starving Sudanese children or worse.

But wait. Aren’t other, more powerful market forces—global grain demand outpacing production seven of the last nine years, crude oil prices 500 percent taller than 10 years ago, inclement weather—propelling grain prices more than U.S. ethanol?

Sure, but don’t tell the grocery gang.

Falling profit margins, not honesty, is behind their nasty, divisive campaign.

Even worse, these truth-challenged food giants are using the poorest of the poor, “…hunger, food aid, poverty, development, senior, children,” to reclaim their fat margins.

In a town long-known for its shameless demagogues, these folks take the cake.

Standing up for ethanol

The Nebraska Corn Board and Nebraska Corn Growers Association said today they appreciate that a bipartisan group of Senators have spoken out against the misinformation campaign that targets corn producers and the corn ethanol industry as being behind a rise in food prices. (Click here for a previous post.)

Nebraska Senator Ben Nelson (D) said at a news conference: I'm not sure when it happened or why it happened but it's incredible to me that someone decided to add ethanol to the members of the axis of evil. They ignore the fact that the cost of oil has far more triggered the cost of products and living in the U.S. than the grinding of corn into ethanol.

The group of Senators, organized by Iowa Senator Chuck Grassley (R), addressed many of the issues raised by ethanol critics when it comes to the biofuel’s contribution to food costs. “It’s a smear campaign based on ignorance,” Grassley said. “My question to the Grocery Manufacturers Association is, do you want America to place its trust in OPEC or in U.S. farmers? The short-sighted, self-serving campaign of this trade association and its allies is at America's expense.”

Corn Board and Corn Grower leaders said that now is not the time to shy away from renewable fuels like corn ethanol, especially since ethanol is saving consumers at least 15 percent at the pump, which translates to about $70 billion per year nationwide.

For the full story, click here.