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Warming-Driven Drought Pushes Crop Prices To Record Levels, As We Burn 40% Of Corn Crop In Our Engines

By Joe Romm

"Warming-Driven Drought Pushes Crop Prices To Record Levels, As We Burn 40% Of Corn Crop In Our Engines"

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When will the madness stop? In a piece titled, “Nearly Half Of Corn Devoted To Fuel Production Despite Historic Drought,” Bloomberg editorialized:

Record-high corn prices should be sending a clear message to policy makers in Washington: Requiring people to put corn-based fuel in their gas tanks is a bad idea.

Climate Progress has been saying the same for many years (see “The Fuel on the Hill” and “Let them eat biofuels!“). Bloomberg notes:

The damage is far-reaching. Beef and pork producers are slaughtering their stocks at a record pace to cut use of corn feed that costs two-thirds more than three months ago. This week, President Barack Obama told a campaign rally in Iowa that the federal government will buy $170 million of meat to prop up the market. U.S. cattle herds next year are forecast to be the smallest since 1952, a guarantee of more expensive food in years to come.

Researchers at Texas A&M University have estimated that diverting corn to make ethanol forces Americans to pay $40 billion a year in higher food prices. On top of that, it costs taxpayers $1.78 in subsidies for each gallon of gasoline that corn-based ethanol replaces, according to the Congressional Budget Office.

Burning some 40% of the U.S. corn crop was crazy enough before the record drought, but now it is just plain inhumane. As uber-hedge fund manager Jeremy Grantham put it this month:

Our ethanol policy is becoming the moral equivalent of shooting some poor Indian farmers.  Death just comes more slowly and painfully.

What is this drought doing to the breakbasket of the world? AFP reported Tuesday:

US corn and soybean prices closed at new record highs Tuesday as a new survey showed worse-than-expected crop damage from a brutal drought across the country’s central breadbasket…..

“Crops in western Ohio and eastern Indiana were far below the norm,” said Pro Farmer analyst Brian Grete.

Yields in South Dakota meanwhile were called “stunningly low.”

And remember, while this drought may be a record-setter now, if we keep taking no action to reduce carbon pollution, it’ll be the normal climate by my mid-century.  By then, humanity will be desperately trying to figure out how to feed another 2 billion people while dealing with extreme weather beyond anything humans have experienced during the period large-scale farming that (barely) fed ever-growing populations. See “Climate Story of the Year Decade: Warming-Driven Drought and Extreme Weather Emerge as Key Threat to Global Food Security.”

As an aside, conservatives like to claim that it is environmentalists who gave us our current biofuels policy, but in fact I never have met an environmentalist who thought we should mandate anywhere near the current amount of corn ethanol.

The only reason environmentalists and clean energy advocates even tolerated energy deals with corn ethanol mandates is the hope that jumpstarting the infrastructure for corn ethanol would pave the way for next-generation cellulosic ethanol.  That turned out to be a mistake (see “Are biofuels a core climate solution?“).

We have gone far beyond what is tenable.  Yes, the energy-intensive nature of food production means that oil prices will tend to rise in tandem with food prices, thus increasing the profitability of biofuels.  And yes, we are a rich country, the  breadbasket of the world, politically far more impervious to higher food prices than higher oil prices.

But as population grows, developing countries’ diets change, and the extreme weather of the last couple of years increasingly becomes the norm in a globally warmed world, food insecurity will grow and our biofuels policy will, inevitably, collapse.  It must.

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36 Responses to Warming-Driven Drought Pushes Crop Prices To Record Levels, As We Burn 40% Of Corn Crop In Our Engines

    • Paul Magnus says:

      Toast. So we think that we (modern civilization) were going to survive 2C. No no nope. Things are falling appart right now. Not even the might of the US is going to survive much past 2030. Sad times.

  1. Mulga Mumblebrain says:

    I’m afraid that it’s not ‘madness’. First there is, as ever, money to be made, from a nicely rigged ‘market’. Second higher food prices means more under-nutrition, starvation and death amongst the ‘useless eaters’ of the poor world, who the neo-liberals have no use for. Third this hunger can be manipulated to destabilise target countries in the poor world, where current regimes are not obsequious enough to the Empire. One could ponder other negative consequences such as that burning ethanol fuels produces more tree and human killing ozone, but that might simply be an unfortunate by-product, although I never underestimate the malevolence of our masters.

  2. Rabid Doomsayer says:

    http://www.reuters.com/article/2012/08/23/markets-grain-europe-idUSL6E8JNEU820120823

    Russian wheat crop is looking to be in trouble.

    http://au.news.yahoo.com/thewest/a/-/newshome/14650489/make-or-break-month-for-wa-wheat-farmers/

    West Australian Wheat crop faces downgrades.
    On the world market this is significant, because a huge proportion of that crop is exported. WA does however have a significant stockpile.

    • Merrelyn Emery says:

      Yes and a friend in Canada tells me their crop is approx 50% down. Also I wouldn’t be betting on any Aussie crops this coming summer given the events of the last 3 years,and any WA stockpile is likely to be exhausted rapidly if figures for the global stockpile are anywhere near accurate, ME

  3. Lawrence N Allen says:

    Algae is the way to go when it comes to bio-fuels and bio-plastics. It is far superior to corn, hemp, and sugar cane in terms of productivity. It doesn’t require fresh water. It doesn’t compete with the needs of humans or livestock. It is not affected by drought or ocean acidification.

  4. Merrelyn Emery says:

    Once again we see the word ‘normal’ used most inadvisably. Saying we have or will have a new ‘normal’ is dangerous as it implies a sense that we can or should get used to it. ‘Normal’ implies a degree of stability which is not at all on the cards given the rate of acceleration of extremes. We should be stressing just how abnormal it is and what the rate of change means for the immediate and short term future, to say nothing about the longer term, ME

    • john c. wilson says:

      Well said.

    • Mulga Mumblebrain says:

      For things to return to ‘normal’, there would have to be miraculous reversals in all the manifestations of ecological collapse (climate destabilisation, ocean acidification, biodiversity loss, rise in tropospheric ozone levels, the general toxification of the planet by multiple types of pollution etc)economic implosion (caused by huge and rapidly worsening inequality)and geo-political contest (the result of Western refusal to acknowledge the rise of the non-Western world led by China). One can imagine such healing processes being theoretically possible, but in reality they are utterly unattainable. Why? Because the world is totally controlled and dominated by evil imbeciles, who will destroy everything rather than give up their power and dominance.

  5. Lore says:

    Use of corn ethanol was another boondoggle readily adopted by the breadbasket politicians. The problem we now face is that once we remove the ethanol mandate and the 12.87 billion gallons of ethanol that we used last year, it will have to be replaced, with guess what, more oil. Get ready to pay more at he pump regardless.

    • Leif says:

      How about distributed wind and solar bringing both power and MONEY directly to the communities. A “value added” contribution to “We the People” directly without having to pass through the bottomless pockets of the Corpro/People and hidden bank accounts.
      Stop profits from the pollution of the commons. Humanity just might have a chance.

      Each of those farms with a wind turbine on their property have an ~$3,000/ cash cow/year on their property. Nothing to sneeze at when your crop has cost you money.

  6. Leptoquark says:

    The real problem is that we’re getting ethanol from corn, which is about the worst place to get it. People, especially politicians, equate ethanol with corn, but ethanol from corn is totally unsustainable. Ethanol can come from other, better sources, like cellulose, algae or switchgrass (which I heard of for the first time from GW Bush). If I were President in ’08, I would have had a full-bore R&D effort to develop non-corn feedstocks for ethanol. Corn should be just a temporary bridge feedstock on the way to more efficient feedstocks. Good luck explaining that to Iowa farmers and ADM.

    BTW, although spiking corn prices do affect me, spiking gas prices don’t, since I drive a Nissan Leaf, 100% electric car. The last time I bought gas was December 2011 at $3.20/gal. Plug-ins and electrics are what the end of gasoline looks like.

    • Lore says:

      It really affects us all, regardless of what we drive, since most of what you eat and use is produced and delivered through the wonders of burning fossil fuels.

      This puts a real kink in Mitt’s energy plan. He’s going to have to add another 319 million more barrels of oil a year on his road to US energy independence.

    • Paul Klinkman says:

      Gas prices were also spiking four years ago at this time. It turned out that the Koch brothers had rented six oil supertankers, filled them up and anchored them, full, offshore in the Persian Gulf for a few months. This drove worldwide oil prices up. U.S. voters can be influenced by the price of gasoline.

      Would any crusading reporter go look up who is renting out the world’s fleets of supertankers today? Would anyone eyeball where they are parked on satellite images, or through the Arab grapevine? Are they once again anchored in the Persian Gulf? Inquiring minds want to know if a couple of rich oil barons named Charles and David are setting out to kill the United States economy just before this election too.

      • Greatgrandma Kat says:

        well it’s nice to know I’m not the only one asking that question. If I hear back from sources that confirm it I’ll let you know.

    • Carol says:

      Hopefully you are plugging into solar to power your Nissan Leaf?
      If not, where is the electricity coming from—-coal? Nuclear?

      • A.J. says:

        Although pure electric isn’t right for everyone, it is more efficient regardless of the power mix. More renewables would be the ideal, but the typical gasoline car wastes so much more energy that even a partially coal fired Leaf is preferable.

  7. Brooks Bridges says:

    Can someone please confirm what I thought I read a week ago:

    That no corn this year would be made into ethanol because there is a sufficient quantity from last year to meet the mandated amount. I keep expecting to see more on this but haven’t.

    • Lore says:

      The big producers of corn will store a portion of their yearly crop. Like money in the bank in hopes to sell it at better prices in the future, or as a backup to the shortages we are experiencing now. Of course you can only go to the well just so many times. Back to back years of massive crop failure can be fatal in many ways.

      More to your question, ethanol producers have plenty of supplies already stockpiled to meet the requirements of the RFS for this year.

  8. Brooks Bridges says:

    The post above says:
    According to the Congressional Budget Office it costs taxpayers $1.78 in subsidies for each gallon of gasoline that corn-based ethanol replaces.

    Wikipedia says (and ethanol.org gave similar figures)
    The U.S. produced 13.2 billion U.S. liquid gallons (49.2 billion liters) of ethanolfuel in 2010

    $1.78/gal times 13.2 billion gal = 23.5 billion dollars

    The post above says:
    Researchers at Texas A&M University have estimated that diverting corn to make ethanol forces Americans to pay $40 billion a year in higher food prices.

    Sounds like it’s costing taxpayers 63.5 billion dollars extra a year for ethanol. Have I made a mistake?

    They’re still building refineries at scary rate.

    Where’s my head vise?

    • Lewis Cleverdon says:

      Brooks – maybe it’s the apparent irrationality of the ethanol mandate that has you looking for a head vise ? If so, it’s worth reviewing the policy’s background and implementation to identify the rationale driving it.

      The mandate was very minor, effectively a price support to corn growers, until it got boosted by Cheyney, with shills’ deceit about CO2 savings. It played a substantial role in the food commodity price spike of 2008 by exacerbating the scarcity due to climate impacts. This caused widespread food rioting, from Bangladesh to Mexico, which helped to destabilize a number of regimes and to drive the Arab Spring.

      The ethanol mandate was then further boosted by Obama, with shills’ deceit about both CO2 savings and energy independence and lower gas prices. This was done, by an incoming democrat president, despite the virulent critique of the Cheyney mandate from within America and around the globe.

      With climate impacts this year affecting harvests in countries including India, Russia, Canada, and America, global food prices are spiking again, aided by both Obama’s 40% of corn crop mandate and by speculators. Heavy criticism is growing not just among food importing nations, progressive blogs, livestock farmers, etc, but at a senior level. For instance, by the UN agencies who report that 4 million people in Mali are facing death by hunger in the coming months due to drought and unaffordable food import prices, and by not one but two former presidents, both democrats, who have broken strict protocol of not criticizing successors’ presidential policy by demanding the mandate be ended.

      And Obama’s response to calls to end the the mandate and its $63Bn costs, and to shut down food commodity speculation ? It was to direct under $200m to supporting meat prices during the ongoing mass cull imposed by feed prices, and to enact a regulation (that will be in force next winter) that no individual may hold more than 25% of a futures contract on a particular food commodity.

      Given the numbers that will die worldwide as a result of Obama’s refusal to end his enlarged ethanol mandate, if that’s not intransigence, what is ?

      The fact that it’s hitting livestock farmers already hammered by drought means there is no significant net electoral gain calculation in play. Nor would ending the mandate affect global oil prices, not least because US ethanol production is not of a scale to do so.

      Which leaves the fact that hitting ones opponent with popular unrest by causing unaffordable food prices has to be one of the oldest plays in the superpower-rivalry playbook.

      The US has no ongoing military build up to see off China’s rise to global economic supremacy (in 2018 if present trends hold) and while US intransigence over a climate treaty is facing China’s government with the looming prospect of its climatic destabilization, no delivery date can be assured. Exacerbating global food price-hikes via the ethanol mandate advances that delivery date, thus easing the climate impacts the US public will have to endure.

      This is the reason for Obama’s intransigence over the mandate – it is a necessary component of the unspoken climate policy of a ‘brinkmanship of inaction’ with China, and thus it has been maintained even against stringent critique, as from Carter and Clinton.

      This is of course just one person’s view – Others may feel that Obama values the votes of ethanol firms’ employees so much more than those of the widespread drought-hit farming communities facing ruinous feed prices that electoral maths is the rationale – Which of course implies that he accepts the genocide of the coming famine victims as a worthwhile price of winning a second term.

      That analysis seems to me far fetched, not least because the whole issue could easily have been resolved months ago by suspending the mandate and telling the distillers to use their reserve stocks this year. – The idea that Obama is maintaining the mandate – despite its genocidal consequences – as a key factor in the strategy for maintaining US global dominance seems to me considerably more cogent. That level of moral detachment is after all pretty much par for the course in terms of hard-nose decision-making by US presidents.

      Regards,

      Lewis

  9. Paul Klinkman says:

    I suspect that the rank and file environmental movement never wanted corn to be used for fuel. Certainly the movement has been opposing corn for fuel for many years. The whole deal sounds less than honest, a government shoveling money into the feed troughs of millionaire absentee farm investors with no net energy gain for the country. Far too often, modern politics is all about funneling the money to political friends and blaming some hapless third party afterwards.

    The system just spread pesticides all over our country’s best land and contaminated the good corn with GMO genes. Then Monsanto started suing independent farmers whenever Monsanto’s pollen blew into the next farmer’s field.

  10. Joan Savage says:

    A shadowy part of the Irish Potato Famine was that the Irish corn (grain) crop was fine, unaffected by the potato blight. Wealthy British men owned the corn, and they manipulated its price on the Corn Exchange. They resisted humanitarian pleas to divert some of the corn supply to feed the starving Irish peasants. There was food in Ireland, it just wasn’t available for the people who needed it.
    What an irony to see similar dynamics today.

    Good that you brought up the matter of corn.

    • Lewis Cleverdon says:

      Joan – I’ve traveled widely in Ireland and seen how the scars on the national psyche are still plain. In one village an old man showed me a cottage where a man had been found dead of starvation in the garden, with grass in his mouth. In another there was a building where protestant missionaries gave a bowl of thin soup to any who’d recant their catholic faith. In another I was told by their relatives of children as young as seven put on the boats to America by their parents to try and save them, and they were never to be heard from again.

      In this light it doesn’t seem so much like an irony that the same dynamics are now in play – more like a profound disgrace to American democratic politics.

      Regards,

      Lewis

  11. gus says:

    While the ethanol issue is a serious one, nobody’s mentioned the equally problematic passing reference: “Beef and pork producers are slaughtering their stocks at a record pace to cut use of corn feed…”

    Cattle should never have been eating corn in the first place; the fact they are is only because big ag corporations can stuff them into giant feedlots that way. We should have the cattle grazing on the land that corn was growing on by letting it be native grass, which is far more drought-tolerant. That would free up the water, the fertilizers, the fuel, etc and the farmers wouldn’t be killing them early. We’d still be losing the corn crop, but not next year’s meat production potential as well.

    • Spike says:

      It would be a positive development to have less livestock, more expensive meat, and less meat in diets.

  12. Mark El says:

    Let them burn cake!

  13. ColRebSez says:

    Your article has it wrong in some many ways. Much of this corn was specifically grown to be used in ethanol production. And the high prices and benefiting corn farmers who aren’t hit by drought. Ethanol is one part of a national energy policy, and one we shouldn’t abandon.

    You also state with dismay that the high corn prices are resulting in higher beef prices, and therefore farmers are being forced to reduced their cattle herds. Are you aware that methane from cow flatulence is one of the worst greenhouse gases? Are you aware that excess beef consumption is causing us as a society to be unhealthy? If ethanol production is causing all of this, then we need more ethanol production.

    To the best of my knowledge America is not importing corn to make ethanol. We’re using our own. We’re not causing world prices to rise. It’s our corn raised by our farmers. It needs to be used for our people, to help our economy, improve our health, help our farmers, and make our nation energy self-sufficient.

    • scarecities says:

      sheeshhh
      We live in a world economy, which does not consist of an American ‘survival dome’ where everyone in it lives in a state of utopian bliss, while everyone else starves to death outside it.
      food costs are driven by world events, in particular the cost of oil, America will not be exempt from this, even thought a disproportionate number of Americans seem to be convinced that a bronze age idol has in some way absolved them from any kind of subjection to the laws of physics

      • ColRebSez says:

        We may live in a world economy, but a substantial percentage of American corn was planted specifically because of ethanol. Drought may be driving up prices this year, but the fact is that American farmers don’t sit around planting crops in hopes that they can sell them at really cheap prices to people around the world. If American corn prices are high that is a good thing which will help all of our grain farmers.

        The notion that we should bankrupt our farmers at home because people in other countries are refusing to plant their own crops just strikes me as silly.

    • Leif says:

      Give the farmers wind and solar power for a cash cow. Save the dirt and water for people food. the existence of starvation in the world demands nothing less.

    • Mark El says:

      Also, increasing foreign dependence on fertilizer isn’t exactly a good way to “make our nation …. self-sufficient”

  14. Dr.A.Jagadeesh says:

    Go for Biofuel from Agave Americana(Sisal Agave which is a care-free growth plant which does not require much water. Already mexico is doing it.

    Dr.A.Jagadeesh Nellore(AP),India
    E-mail: anumakonda.jagadeesh@gmail.com

  15. Rabid Doomsayer says:

    Add Kenya to the list
    http://www.irinnews.org/Report/85788/KENYA-Massive-crop-failure-in-grain-basket
    Rice forecasts lowered but still look good (Not for India)
    http://www.fao.org/news/story/en/item/154122/icode/
    NSW Australia planting of canola is way up, but aphids are now threatening the crop
    http://www.abc.net.au/rural/news/content/201208/s3568347.htm

    Put this all together and the picture could be grim in a few months, not that it is a pretty picture now.

  16. bratisla says:

    I’ve read on french newspaper that fracking companies begin to have difficulties to get water for their operations because of the severe drought, and they even begin to predate its use against farming. Is it true ?

  17. SecularAnimist says:

    Joe wrote: “Burning some 40% of the U.S. corn crop was crazy enough before the record drought, but now it is just plain inhumane.”

    The EPA reports:

    “According to the National Corn Growers Association, about eighty percent of all corn grown in the U.S. is consumed by domestic and overseas livestock, poultry, and fish production.”

    Feeding 80 percent of the corn crop to factory-farmed animals to mass produce cheap meat — with a resulting LOSS of up to 90 percent of the protein available for human consumption, not to mention the resulting epidemics of entirely preventable disease, and the hideous cruelty to animals — is a much bigger problem, and a lot more “inhumane” than using corn as fuel.