The Politics Of Ethanol Seem To Be Changing – A Little
Even though ethanol has been the primary driver in our industry the last couple of years, the beef industry has always been on the outside looking in on the debate. It makes issues like BSE, country-of-origin labeling, industry consolidation and international trade seem trivial by comparison.
Initially, the argument seemed to be over whether ethanol made economic sense, the answer to which is obviously “no” or it wouldn’t require massive subsidization. So ethanol advocates argued that it might make sense down the road, which ethanol opponents couldn’t much refute. It seemed that ethanol’s support came from the no-harm, no-foul mentality – while it might not help, it’s preferable to pay U.S. farmers than sheiks in the Middle East.
The impact on the livestock industries and/or consumers was easily dismissed because most people miscalculated the size of ethanol’s economic impact. But regardless of whether you pick up the Wall Street Journal, Newsweek or USA Today, the storyline about ethanol has changed today.
It’s no longer simply about the golden era for grain producers but rather the huge costs of this policy on society in general. And the past week provided a prime example of how the rhetoric around ethanol is evolving.
Texas Gov. Rick Perry petitioned the Environmental Protection Agency for a 50% waiver from the federal renewable fuels standard (RFS) mandate for ethanol, in order to gain relief from higher food costs. The grain and ethanol industries responded that rising corn is only a small reason for the increase in food prices. That, of course, will always be the case if one looks at processed foods because the commodity inputs are such a small fraction of the cost.
It seems like more and more people are now questioning these mandates. I think that is wise. I am not saying that all the food price increase is due to corn prices rising due to ethanol, but it ain't helping. It just doesn't seem smart as a society to subsidize ethanol production which in part hurt the poorest consumers in the world with higher food prices. Will support for ethanol drop? I agree with the articles author on that point.
But cattlemen, don’t get too giddy over the prospect that the American people will demand, or our elected officials will act to re-establish, free-market capitalism and move away from buying the votes of one small constituency at the expense of a much larger one. Today’s politicians are weak-kneed when it comes to making the hard decisions. Politicians today no longer advocate the principles that led to our success, but pander unembarrassingly to the culture of consumption that believes there is no real cost as long as that cost can be put off until the next election cycle.
No end in sight to the problem since the politicians will just ignore it.