Inflation, high food costs tied to ethanol

As the latest economic reports come out of Washington, showing massive inflation in food prices and energy costs, the Bush administration is refusing to lay the blame where it belongs: the ethanol boondoggle.

Ethanol is only economically feasible because of massive federal subsidies to the tune of some 50 cents a gallon, and a heavy tariff on Brazilian ethanol made from sugar cane. With all this federal cash in hand, ethanol producers can then bid up the price of corn. This has inflated food costs, as so many products are made from corn or corn sweeteners. It has driven up feed grain prices that livestock producers pay to fatten cattle, hogs and chickens.

This is bad enough, except that all objective studies show that it takes more energy to grow the corn and manufacture ethanol than it returns in motor fuel. Brazilian ethanol works, because sugar cane is so plentiful there and returns a great deal more energy than corn. But U.S. corn and corn refining firms lobby Washington to keep it out of this country.

This is at least a double whammy for livestock producers, because prices received for beef, pork and chicken are down at the same time grain prices are rising. It's not just grain prices that are rising: motor fuels used to run tractors and trucks, fuel for pumping irrigation water, as well as fertilizer and other ag chemicals made from petroleum, are all up in cost.

This is all an economic dislocation for consumers and producers, caused by farm state senators and representatives flush with corn industry campaign cash--passing the tariffs and subsidies to make corn-based ethanol economically feasible. Left to its own devices, ethanol from corn would die a quiet, slow death and corn prices would still be at historical levels without big food price increases.

Sounds kind of idyllic, doesn't it?