the fraud that is ethanol

The price of corn per bushel has doubled in the past year, which is great for grain farmers – but not-so-good for livestock producers that count on cheap, corn-based feed for their cattle, hogs and poultry.

AFP reports that “registered Angus breeder Jim Skinner said soaring grain and fuel prices have led to a 40 percent rise in expenses.”

And we all know the main cause of the inflated price of corn – everyone say it together now – ethanol. That’s right.

“Ranching consultant Bob Loucks has added his voice to the chorus of critics claiming the government is unfairly underwriting ethanol at the expense of animal producers, in essence pitting one agricultural sector against another,” the AFP continues.

“Ethanol sucks,” Kevin Kerr put bluntly. “Corn is overbought on the weekly and daily price charts and there is a decent size gap below the market, close to the 50% correction level.”

Many factors are working together that could dampen the over-enthusiasm that traders have been showing corn, including a lower crude price, an oversold U.S. dollar, and harvest pressure.

And the AP reports that ethanol stocks fell yesterday across the board, with several reaching 52-week lows. “A glut of product, limited blending capability and high corn prices continue to overshadow recent enthusiasm about the industry.”

Clearly, some people are catching on to the fraud that is ethanol...but that’s not going to stop the government for dumping money into the industry. They’ve already thrown billions of dollars of taxpayer money at ethanol – so even if you’ve known all along what a fraud ethanol is, you’re still ‘invested’ in it.

Keep reading to learn about 4 rock solid safeguards against the hailstorm of hype ahead:

Milk higher

As high as gas prices are, milk is more expensive. And the high prices for both can be traced to the high cost of another commodity: corn.

Just a year ago, quite a few dairy farmers were calling it quits. The fuel and grain needed to run a dairy were getting more expensive, and farmers were getting such low prices for their milk that it was hard to make ends meet. So some cut back their herd sizes or sold off their cows and got out of the business altogether.

What a difference a year makes. Feeding cows still isn't cheap, but this year, milk prices are rising to near-record levels and farmers are hoping to see more income.

Higher milk prices mean customers are paying more at Amy Green's ice cream shop in downtown Lincoln, Neb. A small cone will set you back $3.50 before tax – up from $2.95 just a few months ago.

Green said she's now paying an extra $150 a week for the rich butterfat she uses to make old-fashioned, slow-churned ice cream.

"I've been serving ice cream for 23 years, and it's really hard for me to say that it will be $16 to a family of four for, you know, four cones. It just feels wrong. But I have no choice," Green said.

The retail price for a gallon of whole milk tops $3, and experts predict it will soon set a new record.

Several factors are creating a sort of "perfect storm" for milk prices this summer. Americans are drinking more milk. Add to that, droughts in major milk-producing countries like Australia.

But another key factor is the demand for ethanol, according to Chris Galen, a spokesman for the National Milk Producers Federation. Ethanol is increasingly being used as an alternative fuel for gasoline.

"Everyone is paying more for feed; and it's not just corn," he said, noting that the increase in corn plantings means there's less acreage available for soybeans and for alfalfa. "So the products that go into cows that make milk are much higher than they've typically been in the past."

One year ago, it cost about $2 for a bushel of corn. Now that price has nearly doubled.

Galen says when you pile that on top of high fuel prices and last year's low milk prices, it has been hard for the dairy industry to respond to the growing demand.

It's a warm summer afternoon on Lowell Mueller's dairy farm about 70 miles north of Lincoln. Wearing a red and white baseball cap and a short-sleeved plaid shirt, Mueller and a farmhand usher a new group of cows — eight at a time — into the small barn that holds his milking machines.

He considers himself one of the lucky ones because he grows his own corn, soybeans and alfalfa. But even he struggled last year to make back what he was spending to produce milk. Mueller says he's hoping things will improve this year.

"Milk prices are a little higher, but unfortunately our costs have gotten a little higher too. So it's always tough to keep up with all the escalating costs," he said.

Industry leaders predict milk prices could top out this summer at about $4.60 a gallon, which just might make a gallon of gasoline look like a bargain.

Food fight divisive for farm lobby

The Nation's Business: Food fight divisive for farm lobby
Corn farmers lobby for ethanol as producers of meat and dairy products push back

By Christopher Leonard
Associated Press
Published on: 09/18/07

St. Louis —- As a chief advocate for corn farmers across the country, Rob Litterer will be working the halls of Congress this fall to push for increased ethanol production. But he's facing stiff opposition from what on the surface seems an unlikely source —- the farm lobby.

The burgeoning ethanol industry is creating a wave of prosperity for rural towns throughout the Midwest, but the energy bonanza is also pitting farming groups on separate sides of the fence.

Corn farmers are pushing for more ethanol production as the industry creates an enormous new market for their crop, giving prices the kind of lift they haven't seen in years. But the corn farmer's win is the hog farmer's loss. Meat, dairy and other food producers are pushing back against the ethanol boom as higher grain prices cut into their already slim profit margins.

So as Litterer, the incoming president of the National Corn Growers Association, visits with members of Congress in coming months, he knows that meat and dairy lobbyists will be close behind.

"There is no question they have a policy that they are opposed to an increase," Litterer said. "But I don't think their opposition carries any water."

The tension between grain producers and food producers is roiling agricultural markets around the world as high oil prices spur governments to subsidize food-based fuels such as ethanol and biodiesel.

The Mexican government this week put a cap on tortilla prices after prices shot up between 20 percent and 30 percent over uncertainty that there would be enough U.S. corn available for export. Brazil will ask the World Trade Organization to formally investigate U.S. farm subsidy programs —- including payments for ethanol production. Brazil is the second-largest producer of ethanol in the world after the United States but is the No. 1 exporter of the fuel, which in Brazil is mainly made from sugar cane.

The political waves —- and their effect on government policy —- can mean life or death for the budding biofuels business. Ethanol and biodiesel served a niche market before the U.S. government imposed a mandate —- called the Renewable Fuel Standard —- requiring the United States to use 7 billion gallons of renewable fuels by 2012.

This fall, Congress will consider a new fuel standard that could boost production as high as 36 billion gallons by 2022. But the future of that bill is uncertain because of the food fight shaping up.

"It's very true that the agricultural lobby will speak with a louder voice if it's saying the same thing. In that sense, it's been a less united voice than it has in the past," said Pat Westhoff, an economist at the University of Missouri.

Westhoff said it's inevitable that a rise in corn prices will increase the cost of food. Corn and its derivatives, such as corn syrup, are staples for a variety of foods, including soft drinks and wheat bread.

But a $6 billion increase in the cost of corn —- which amounts to about $1 a bushel —- would still only raise food costs about 1 percent, he said.

'Food vs. fuel' debate roils popcorn country

By Amy Lorentzen
Associated Press
Published on: 08/03/07

Johnston, Iowa —- Ethanol producers are clamoring over food industry claims that prices on everything from popcorn to soda are skyrocketing because of the rising demand for corn to make the renewable fuel.

Ethanol backers in Iowa focused their ire on the industry, particularly popcorn, during a news conference Wednesday.

"We're here today to pop the popcorn propaganda bubble," said Monte Shaw, executive director of the Iowa Renewable Fuels Association.

Standing in front of 11 large plastic bags containing 38.5 pounds of popcorn, Shaw claimed a person could buy that amount directly from a farmer for $5. He pointed to a bag of movie theater popcorn on a nearby table and said it costs the consumer just as much, if not more.

Some food companies argue that escalating corn prices, sparked by the increasing demand for ethanol, have forced them to raise prices for items containing corn, including meat and dairy products from animals that are fed the grain. It's been dubbed the "food vs. fuel" debate.

When it comes to popcorn, Shaw said, recent claims that moviegoers will pay 25 cents more per bag of popcorn because of the ethanol demand is ridiculous.

The $5 bucket of movie popcorn, he said, contains just 0.15 of a pound of corn before popping. Based on the 9-cents-per-pound rate that farmers made on the corn last year, that bucket contained slightly more than a penny's worth of popcorn, he said. Higher corn prices mean the moviegoer is getting about 2 cents worth of popcorn per bucket, he said.

"It just shows that there's no way that small increase in the price of popcorn that the farmer gets justifies the large increases that they're talking about at the movie theater," Shaw said. "And this is true for so many other things."

For example, a six-pack of soda contains just 6 cents worth of corn sweetener —- or about a penny a can, said Craig Floss, chief executive of the Iowa Corn Promotion Board and the Iowa Corn Growers Association.

"So if your six-pack of soda is going up any more than about six cents in this food-vs.-fuel debate, then somebody else is profiting, and it certainly isn't the huge profits going to the Iowa corn grower," he said.

Tracy Boever, a spokeswoman for American Pop Corn Co. in Sioux City, Iowa, which makes the Jolly Time brand, said the company hasn't been blaming anyone for higher prices, but "the fact remains that there are only so many acres of land and the popcorn industry, along with others, are competing for those acres."

The company's president, Garrett Smith, recently told the Des Moines Register that the demand for corn has led to a 65 percent increase in contract costs to get farmers to plant his product —- the highest increase he has seen in 30 years.

"The reality is that we have not raised our prices, nor do we set movie theater concession prices," Boever said.

Shaw said consumers should instead look at transportation costs when it comes to rising food prices.

"So with the price of gasoline going up, and the price of diesel fuel going up, that probably has a bigger impact on the price at the grocery store and the movie theater than what the farmer is getting," he said.

Popcorn prices popping thanks to ethanol boom

Tue Jul 10, 2007 2:27PM EDT

By Christopher Doering

WASHINGTON (Reuters) - A trip to the local Cineplex may become even pricier soon thanks to surging popcorn costs.

U.S. popcorn prices have risen more than 40 percent since 2006 as soaring demand for feed corn to fuel the ethanol boom has spilled over into the favorite snack of American movie-goers.

Companies that purchase popcorn each year, as opposed to larger crops such as corn and soybeans, are confined to choosing among a relatively small number of suppliers. This makes it important for popcorn companies to offer competitive prices and forge good relationships with farmers.

"I think (ethanol is) going to have a uniform effect on all geographical areas that produce popcorn," said Dennis Kunnemann, president of AK Acres Popcorn, which buys, processes and then sells popcorn to distributors, packagers and snack-food retailers.

"This year, we've paid the highest price ever that I've contracted for, 13 cents a pound," compared with 9 cents per lb last year, Kunnemann added.

The family-owned company in Imperial, Nebraska, has passed its increased cost on to customers by signing new contracts for between 18 and 20 cents a lb, up about 40 percent from 2006.

AK Acres also has helped in the ethanol boom by selling land next to its facility for the construction of an ethanol plant slated to begin later this year.

Americans consume 4 billion gallons of popcorn annually, totaling 13.5 gallons per person, according to the Popcorn Board, which promotes the industry. An estimated 70 percent of the snack food is consumed in homes, with the remaining 30 percent eaten at theaters, stadiums and schools.

Since most of the world's popcorn is grown in the United States, it seems fitting that American movie-goers and retail shoppers consume more of the snack than their counterparts in any other country.

U.S. ETHANOL OUTPUT ON TRACK TO DOUBLE

At American Pop Corn, which makes Jolly Time Pop Corn, the 90-year-old company has increased the price tag for bulk items 20 percent from a year ago, and smaller bags between 1 and 4 lbs were increased 10 percent in June. The increase has helped buffer a 63 percent jump in the price it now pays for seed.

Greg Hoffman, vice president of production at the company, said the industry is holding off price hikes on microwaveable bags "in anticipation of what this final impact on ethanol will really be."

U.S. corn prices have risen to $3.38 per bushel from around $2.40 per bushel at the same time in 2006. This year alone, ethanol is forecast to consume 27 percent of the 12.5 billion-bushel U.S. corn crop, the U.S. Agriculture Department has estimated. That compares with 21 percent of last year's 10.5 billion-bushel corn crop going to ethanol.

U.S. ethanol output is on track to double to more than 12 billion gallons a year by the end of this decade. There are 117 distilleries in operation now in the United States with annual capacity of 6 billion gallons. Projects with 6.5 billion gallons of capacity should be completed within two years.

The surge in corn prices has lead several popcorn growers to shift some of their acres into corn. Don Villwock, an Indiana grain farmer, planted white corn this year on 200 acres of land he used for popcorn in 2006.

"The price run-up in corn made the decision for us," said Villwock, who also is president of the Indiana Farm Bureau. "There was a period in January where we did not think we were going to plant any popcorn, but the (buyers) responded with a price increase, and I'm glad they did," he added.

Kevin Poen, an Iowa farmer who sells between 200 and 300 acres of popcorn to packaged-foods maker ConAgra Foods Inc. (CAG.N: Quote, Profile, Research), said he is closely watching corn prices to gauge how much he will receive for his popcorn, which usually moves lock-step with corn, in the future.

"If prices go up, I'm sure they're going to offer me more for my popcorn next year," said Poen. "They all got to compete for acres."

Milk builds bones, breaks wallets

Prices surge toward record highs set in June 2004

By ELIZABETH LEE
The Atlanta-Journal Constitution
Published on: 06/20/07

Sticker shock at the gas pump is almost routine. But at the dairy case?

Get ready. Milk prices are nearing record highs set in June 2004, and there's no sign yet of leveling off.

At metro Atlanta's three largest grocery chains on Tuesday, the cost of a gallon of store brand whole milk ranged from $3.69 to $3.79. Retail prices have been edging up for weeks, following soaring prices paid to farmers.

Karel Burns, shopping with her three children recently at a Kroger near Marietta, has noticed the run-up.

"I'll go wherever it's on sale," says Burns, who buys up to four gallons each week.

Food prices are rising across the board, spurred by higher demand for corn, used to produce ethanol as well as livestock feed and many processed foods.

Milk costs are increasing even faster, for reasons that include a drought in Australia, tighter supplies from the European Union and higher demand for milk products, such as whey for food processing. Americans are drinking more milk, too, with the first consecutive years of increases since 1990.

Dean Foods Co., the largest milk processor in the United States and owner of the Mayfield Dairy Farms brand, recently scaled back its earnings estimates for 2007 because of high raw milk prices. The company told analysts this month that it expects those prices will reach record highs by the fall before moderating.

The federally set minimum price that processors must pay to U.S. farmers has increased 66 percent in the past year, according to the International Dairy Foods Association, a trade group for dairy processors.

Retail prices typically don't rise as steeply. Manufacturers and supermarkets may not pass along all of their increased costs, especially grocery stores that use low milk prices as a way to bring in shoppers, says Ephraim Leibtag, an economist for the U.S. Department of Agriculture.

Estimates vary on how much more consumers will pay by the end of the year. Leibtag predicts 15 cents to 30 cents more, but says that could increase if farm prices pass record levels.

Prices are also higher in the Southeast, with fewer dairies and thus greater transportation expenses for milk. Southerners paid an average of $3.69 a gallon in May, 43 cents higher than the national average.

To keep costs in line, Carrie Price of East Cobb switched the type of milk she buys. She plans to supplement with cheese to make sure her three daughters get enough calcium.

But the price of foods that contain milk, such as butter, ice cream, yogurt and cheese, also is going up. At $3.79, a gallon of milk costs 40 cents more at Publix than it did six weeks ago. Suppliers' prices have risen for each of the past three months, and Publix expects another increase in July, says spokeswoman Brenda Reid.

In early May, Publix switched to milk free of synthetic growth hormones, a type of milk that often costs more. The higher prices for milk aren't connected to the switch, Reid says. At Kroger, which stocks conventional milk, a gallon of store brand whole milk also costs $3.79.

Whole Foods Market, which also owns Harry's Farmers Market, is holding the line for now at $2.99 a gallon for milk, says spokeswoman Darrah Horgan.

Leibtag, the economist, says prices may vary significantly depending on where you shop.

"Some companies will continue to use milk as a loss leader," he says.

Burns is willing to change where she shops to get a better price, but doesn't intend on altering her family's diet.

"I'll still buy milk," she says. "It's a necessity."

The benefits of global warming

If there is one thing I have learned over the past twenty years or so its that any time the government declares an emergency you’d better hang on to your wallet. So let me be the first to say, “hold on to your wallet” now that the current crop of legislators have taken up the mantel of global warming.

In the future, global warming and all the accoutrements that go along with it, is going to be the biggest cash cow in many a generation.

When the government starts doling out all of its subsidies and favored status to the myriad hucksters and schemers that are beginning to crop up like mushrooms, rest assured you as the tax payer and consumer will be the one who inevitably feels the pain.

As the national hysteria gains in volume the level of handouts will increase exponentially. Every quack concept or invention supposedly designed to decrease our level of energy dependence will be met with ringing endorsement by some Senator or congressman, with most of these boondoggles never showing any benefit or proof they actually perform the function they were sold to do.

Fortunes will be made in the alternative energy business and long after many of these harebrained schemes are uncovered as fraudulent the perpetrators will be sipping margaritas on a beach somewhere in the Bahamas.

A new boom will surely follow just like the tech boom which preceded it, this time instead of dot com it will be any stock with the word “alternative” in it that goes through the roof. Millionaires and billionaires will be created overnight who will then wind up in the poor house in the inevitable bust.

The ones for whom a few million in stock options aren’t enough will ride the wave all the way up until the point they end up doing the perp walk ala Bernie Ebbers and Ken Lay for bilking their companies retirement funds and assorted other larcenies. There will be a few of those for sure.

But the people who will suffer the most, as is always the case, will be the ones who can least afford it. Even now, because of the fraud that ethanol can lower the cost of gasoline; any product containing corn will be higher this year at the grocery store. Not only will products containing corn be higher (practically all soda contains corn syrup), but so will dairy products. The demand for corn has dramatically increased, since now it is seen as an alternative fuel and the increased pressure has in turn doubled the cost of feed for livestock. Increased feed costs equal increased production costs for milk, cheese and any other dairy product that ends up in the grocery store. This has already begun to happen.

With the demand for corn sure to escalate, more farmers will plant corn which means that less grain will be farmed, that will in turn send up the cost for bread and any other grain dependent products. The trivial amount of ethanol production will have little or no impact on the price of gasoline, but the impact of higher demand for corn will have a substantial impact on prices at grocery stores nationwide.

Ethanol is just the first of many usufructs that will be foisted onto the citizenry as the United States engages in it’s charade of weaning itself from oil and reducing CO2 emissions. None of these measures will be successful or even very serious until Americans are forced to change due to oil being altogether unavailable. But the issue as always will be dolled up in flowery language and will most assuredly be for the benefit of the children and big business will jog for position at the trough of government contracts and handouts while the taxpayer will take it in the wallet.

http://thedailyobfuscation.blogspot.com/2007/07/popcorn-prices-popping-thanks-to.html