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View Full Version : Ethanol As Fuel = Starving Mexicans?



Milo Christensen
02-01-2007, 07:29 PM
Mexico is apparently having a "tortilla crisis" because the price of imported American corn has risen dramatically due to the demand for corn as a feedstock for ethanol.

A difficult moral dilemma lies ahead of us -- do we choose to reduce the energy/global warming crises with ethanol if it means tens of millions more starving illegal immigrants?

As many of us here know from personal experience, ethanol is already creating too many problems.

Dan McCosh
02-01-2007, 07:37 PM
Mexico is apparently having a "tortilla crisis" because the price of imported American corn has risen dramatically due to the demand for corn as a feedstock for ethanol.

A difficult moral dilemma lies ahead of us -- do we choose to reduce the energy/global warming crises with ethanol if it means tens of millions more starving illegal immigrants?

As many of us here know from personal experience, ethanol is already creating too many problems.

There have been loads of questions about the impact of ethanol on agricultural prices, including the pass-through costs on corn sugar, and feedlots. Mexico is particularly weird, as NAFTA has demolished the market for locally produced corn through low-priced imports. Then the imported corn goes up. First unemployment, then high food prices. It's one of the largest political issues in Mexico today. When you consider the use of agricultural land for fuel is going to displace some kind of food-growing ability, the same problem comes up when any biofuel is used. Some more careful studies have determined that you can make ethanol from inedible crops that grow in marginal areas, however.

B_B
02-01-2007, 07:42 PM
this is not the first instance where trade policies of developed countries have devastated the local agricultural capabilities of developing countries - and its always to the detriment of the developing nation.

Milo Christensen
02-01-2007, 07:42 PM
I agree, it just seems foolish to turn food into fuel. But then, I've been a proponent of the nuclear powered hydrogen economy for more than 35 years.

George Jung
02-01-2007, 07:52 PM
Nice troll.

Woxbox
02-01-2007, 08:01 PM
Some more careful studies have determined that you can make ethanol from inedible crops that grow in marginal areas, however.

This is true. The environmentalists keep talking about switch grass, which, it seems, you can grow on just about any tract of land. But the farmers don't think that way. They'll sell any crop to the highest bidder -- and in Pennsylvania it looks like the biofuels folks are prepared to pay more for corn than the dairy farmers. It may hold down the cost of gas, but to expect overall gains is highly dubious. And that's here in the U.S. The effects elsewhere may well be devastating if the massive exports of U.S. grain are curtailed.

George Jung
02-01-2007, 08:48 PM
It's apparent you are not a farmer, Wox. Farmers don't sell to anyone, other than an elevator (perhaps the very large farmers are able to direct market, but no one I've heard of). Recognize that with ethanol production from corn, you also have a glycogen by product, which my farmer friends tell me is actually a better food source than is corn. Farmers product their crops; they sell them; they get paid what the market is paying. I suspect your middlemen may be benefitting from these recent develpments.
Switchgrass show a lot of promise, but I don't know any farmers, locally, switching from corn or other grains. The byproduct doesn't make as good of animal feed; I don't know enough about the econimics to know how switchgrass will be embraced. From what I've seen, farmers may be reluctant to switch from a farming practice with which they're familiar, comfortable, and reasonably successful. How that plays out in the bigger picture of world food production is yet to be seen. Ethanol production has been booming, here, in just the past few years. It's not settled yet.
But I can see marginal land eventually being used in this fashion.

JimD
02-01-2007, 08:53 PM
Mexican corn growers have been driven out of business by American subsidies for US corn producers. Not much to do with ethanol. If the price of US corn imports stay high then Mexicans might get back to growing their own again. See my thread: http://www.woodenboatvb.com/vbulletin/upload/showthread.php?t=60224&highlight=corn+wars

Gonzalo
02-01-2007, 09:29 PM
this is not the first instance where trade policies of developed countries have devastated the local agricultural capabilities of developing countries - and its always to the detriment of the developing nation. The first fundamental fallacy of free trade is to expect the so-called free market to act in favor of anyone's interests except the rich and powerful. Nations who sign on to free trade abdicate the right to control their own destinies and look after the interests of their own people. Even the rich and powerful nations like the US subsume the interests of the nation as a whole to the rich and powerful within the country, and to multinational corporations with no loyalty to any nation.


Mexican corn growers have been driven out of business by American subsidies for US corn producers. The second fundamental fallacy of free trade is that their are free markets. Markets are always unfree.

George Jung
02-01-2007, 10:38 PM
I'm wondering what the market interests were, within Mexico, that lead to the Mexican farmers current dilema. After all, their government is certainly in the best position to act in their interests.

Jim, I re-visited that thread. In that one, as I read it, the US was guilty of destroying the Mexican corn/ag economy by the dumping of it's subsidized corn on the world/Mexican market.

Now the US is the culprit because, suddenly, they are able to utilize all the corn they produce, and as such, are unable to ship to Mexico?

Aren't you trying to have it both ways?

BrianW
02-01-2007, 11:49 PM
Mexico is apparently having a "tortilla crisis"... ...do we choose to reduce the energy/global warming crises with ethanol if it means tens of millions more starving illegal immigrants?

They're not illegal immigrants in Mexico. ;)

George Roberts
02-02-2007, 12:41 AM
In Mexico there is a legal/cultural difference between yellow and white corn.

I believe it is illegal to import the corn "color" which is preferred for food rather than animal feed.

JimD
02-02-2007, 12:42 AM
I'm wondering what the market interests were, within Mexico, that lead to the Mexican farmers current dilema. After all, their government is certainly in the best position to act in their interests.

Jim, I re-visited that thread. In that one, as I read it, the US was guilty of destroying the Mexican corn/ag economy by the dumping of it's subsidized corn on the world/Mexican market.

Now the US is the culprit because, suddenly, they are able to utilize all the corn they produce, and as such, are unable to ship to Mexico?

Aren't you trying to have it both ways?

Sneaky buggers, aren't they? I'm blamin' it on Milo. ;)

Edited to add: But seriously, I'm not very well informed on what's going on in this case. For argument's sake a US government subsidy to American producers doesn't guarantee a low market price, just an unfair advantage to American producers over other country's producers. Supply and demand market forces could still push the price way up in spite of subsidies. But that's just a f'rinstance. If I find any relavant and reliable reporting on the issue I'll pass it along.

Nicholas Scheuer
02-02-2007, 06:57 AM
How the H--- much do the D--- things cost, anyway?

It seems to me that ALL Mexican food has one thing in common, it's CHEAP.

Maybe the average Mexican will have to start scrimping on their Corona.

Moby Nick

Chris Coose
02-02-2007, 07:06 AM
You think the "average" Mexican has a beer budget?

P.I. Stazzer-Newt
02-02-2007, 07:06 AM
Mexico is apparently having a "tortilla crisis" because the price of imported American corn has risen dramatically due to the demand for corn as a feedstock for ethanol.

A difficult moral dilemma lies ahead of us -- do we choose to reduce the energy/global warming crises with ethanol if it means tens of millions more starving illegal immigrants?

As many of us here know from personal experience, ethanol is already creating too many problems.


Who did you think was going to care?

Life is a lot less disappointing is you start with the belief that Nobody and Nothing Cares.

Starving Mexicans - OK.
Haitian rice farmers gon bust and starving - OK
New Orleans underwater - Fine.
Michigan advances towards the third world - Yeah (yawn).
Holland Underwater - think of it as conservation.
Bangla... where's the remote.

WillW
02-02-2007, 09:56 AM
I'm wondering what the market interests were, within Mexico, that lead to the Mexican farmers current dilema. After all, their government is certainly in the best position to act in their interests.

Jim, I re-visited that thread. In that one, as I read it, the US was guilty of destroying the Mexican corn/ag economy by the dumping of it's subsidized corn on the world/Mexican market.

Now the US is the culprit because, suddenly, they are able to utilize all the corn they produce, and as such, are unable to ship to Mexico?

Aren't you trying to have it both ways?


Funny enough, the rising price of corn may negate the impact of subsidies and allow Mexican farmers to get back into business. In the meantime, the urban poor are feeling the impact of the rising cost of food. Some of them are probably farmers who were wiped by US subsidies and had to migrate to the city in search of work. When you live at a subsistence level, the rising cost of food can be a matter of survival.

Interesting what happens when governments start interfering with markets on a wide scale.

The demonstrations in Mexico were aimed at getting the government to subsidize the cost of tortillas, not at lowering the prices to their farmers.

Dan McCosh
02-02-2007, 11:18 AM
las Scheuer;1492635]How the H--- much do the D--- things cost, anyway?

It seems to me that ALL Mexican food has one thing in common, it's CHEAP.

Maybe the average Mexican will have to start scrimping on their Corona.

Moby Nick[/QUOTE]

A Big Mac costs more than a days wages in Mexico.

George Jung
02-02-2007, 02:02 PM
The crop subsidies are not to keep corn prices low; they are to allow farmers to stay in business. The US doesn't set the crop prices, it's market influenced. Without subsidies, crops in this country wouldn't have been produced when when corn was $1.70 last year; it cost more than that to put the crop in. So why even raise crops here? Why not just import everything we need, from other countries? If you recall, Al Gore made the comment, during his pres. bid, that he didn't care if we raised anything here; it was less expensive to import everything from Brazil (as I recall). It hit the news for a day, then was quickly hushed up. Not a smart thing to say if you want to be elected POTUS. Interesting to me that many here seem to think that's not a bad idea, either. Employ our poor neighbors, maintain cheap food..... regardless what that might do to the folks in middle america who rely on agriculture for a livng. And I have to wonder about the wisdom of exporting yet one more thing from this country (jobs/capacity/self reliance) that we could have done in China for less.

Oh, and btw, I wonder just how much impact the corn price actually is having on tortillas. In a typical box of cornflakes, you have perhaps 5 cents worth of corn; production costs, cardboard box, and marketing (plus profit margin!) make up the rest.

Dan McCosh
02-02-2007, 05:10 PM
The crop subsidies are not to keep corn prices low; they are to allow farmers to stay in business. The US doesn't set the crop prices, it's market influenced. Without subsidies, crops in this country wouldn't have been produced when when corn was $1.70 last year; it cost more than that to put the crop in. So why even raise crops here? Why not just import everything we need, from other countries? If you recall, Al Gore made the comment, during his pres. bid, that he didn't care if we raised anything here; it was less expensive to import everything from Brazil (as I recall). It hit the news for a day, then was quickly hushed up. Not a smart thing to say if you want to be elected POTUS. Interesting to me that many here seem to think that's not a bad idea, either. Employ our poor neighbors, maintain cheap food..... regardless what that might do to the folks in middle america who rely on agriculture for a livng. And I have to wonder about the wisdom of exporting yet one more thing from this country (jobs/capacity/self reliance) that we could have done in China for less.

Oh, and btw, I wonder just how much impact the corn price actually is having on tortillas. In a typical box of cornflakes, you have perhaps 5 cents worth of corn; production costs, cardboard box, and marketing (plus profit margin!) make up the rest.


Last I looked, there was no actual corn in corn flakes--they were made entirely from waste shells of corn. The box was more than 90% of the actual cost. FWIW, My father once worked as an engineer in packaging at Kellog's. Tortillas, on the other hand, are virtually all corn, usually sold wrapped in thin paper. There is a huge Tortilla monopoly, however, which is a large part of the political issue in Mexico.

George Jung
02-02-2007, 06:51 PM
That's actually quite interesting - and bizarre; is it true? How do you get the "waste shells' of corn? I assume you're talking about expelling the central soft kernel, and flattening out the outer casing? I thought the flakes were actually just rolled corn. I can't imagine what would motivate them to do this; the economics doesn't seem to be there. Oh well. Let's say you are correct, and there is more actual corn in a tortilla. You're still only talking a very small money amount (? pennies?) per Package, I"d venture. Even if corn prices doubled over the 'norm' for the past thirty years, that wouldn't translate into anywhere near that increase in the end product. Production/marketing etc. still eats up most of the cost, and that hasn't (shouldn't have) changed. Unless the middleman deems opportunity is knocking, and takes advantage of the uncertainty.
A huge Tortilla monopoly? Sorry, just had a mental image of that, and it weren't purty...

Milo Christensen
02-02-2007, 07:38 PM
The price of tortillas has doubled in a year. Mexican minimum wage workers ($4 a day) were spending one third of their income just on tortillas for their family. Seventy-five thousand protesters. The government has instituted a price freeze which is being widely ignored.

Poor Mexicans average 14 oz of tortillas per person per day at about 50 cents a pound, up from about a quarter a pound, frozen at 35 cents a pound. For poor Mexicans, 40% of their daily protein comes from tortillas.

JimD
02-02-2007, 07:52 PM
...The crop subsidies are not to keep corn prices low; they are to allow farmers to stay in business...

The subsidies have allowed US producers to increase the corn supply to the point where high supply pushed down the market price below what it was costing non subsidized producers to grow it, driving other producers out of business.

Woxbox
02-02-2007, 10:20 PM
President Bush's push for corn-based biofuels nationwide and Gov. Ed Rendell's call for an ethanol plant in Clearfield County come with promises of breaking America's reliance on foreign oil and paying less at the pump.

But while popular among voters, the measures are penny wise and pound foolish, some economists say, particularly in the Keystone State, where the economy relies heavily on livestock.

The reason: Ethanol production is driving up the cost of corn, making it tougher for livestock farmers relying on grain for feed to make ends meet. That, in turn, could drive up the prices of meat and dairy products.




http://www.mcall.com/news/local/all-ag_quote-ajan25,0,5897164.story

The above, from the local newspaper (disclaimer - I work there) makes my point a bit more clearly, I hope. What I'm trying to get at is that this is somewhat of a zero sum game. You can only get so much out of a given resource. As corn goes to fuels, there's less feed for livestock. And as corn production is increased, soybean production decreases. And the whole biofuel notion is somewhat dubious, since it takes a considerable amount of energy to produce the raw materials and then convert them into fuel.

So sure, we import less oil, but we'll be paying more for beef and dairy products and who knows what else -- and by force, as a nation, eating less of those commodities. (OK, maybe there's a silver lining.) But, as the article cited points out, some economists see many dairy farmers going bust as a result of all this.
The ripple effects are only just begining to be seen, and I do beleive they'll be felt a lot farther than Mexico.

George Jung
02-02-2007, 11:50 PM
Just a couple of points. Earlier in this thread (or the other, related - I didn't check) I believe (Milo?) said the corn the US produced, and dumped, was to be differentiated from the corn the Mexicans grew and consumed themselves (the other is used for livestock?). Then this last post, noting the doubling of tortilla prices. I'm NOT sure they're connected ; I'd also note, some here advocate loss of supports for US farmers, I believe to make them less competitive? so that the Mexicans can more easily compete, getting higher prices for their grain? How does that help lower the cost of Tortillas for the poor in Mexico? It makes absolutely no sense. Also note the disconnect between the two cultures/countries. The quote was, the poor in Mexico make $4.00 per day; bad news, folks, you can't live on that in the US, and if you expect the Mexican farmers to acheive parity with those in the US, the poor there won't be able to afford their corn, either. Really, you're talking about two different problems. I don't see how you can carry out this debate without addressing this issue. And I see no resolution in sight.
In terms of ethanol production, from what I understand, the alcohol is just about a zero sum game, financially; but the profit comes from selling the glycogen byproduct, which is fed to the livestock, and apparently (from what the farmers/beef producers I know have told me) is a superior feed product for cattle, actually preferred over corn!
But in terms of competing with ourselves for food sources based on corn, vs animal use - yeah, we may see some products cost more. I don't anticipate that will include beef, based on the above.
And finally, alternative energy is certainly needed. At least until we learn to go for economy, and decreased demand. I think that will happen over the next 4 - 10 years (maybe).

B_B
02-03-2007, 01:36 AM
A Big Mac costs more than a days wages in Mexico.

Just came back from a trip to Malawi in Africa - daily wage for those lucky enough to get a job, 50 kwacha - loaf of bread cost 75 kwacha. Gotta work a day and a half just to afford a loaf of bread and work days don't consist of 7.5 hrs, two 15 min. coffee breaks, hour lunch breaks and days off for sickness

B_B
02-03-2007, 01:41 AM
Funny enough, the rising price of corn may negate the impact of subsidies and allow Mexican farmers to get back into business.
sadly that is generally not the case as many farmers in the developing world who have lost their markets also lose their farms - they sell the seeds needed for planting as a last gasp, they sell their tools and implements to 'tide them over' until things improve, they sell their farms, or abandon them completely, and move to cities to look for work where they join 80% of the rest of the population scavangeing, begging, scrounging, selling trinkets or otherwise trying to put food in their bellies and clothes on their bodies.

It ain't pretty and it takes a long while for an agricultural economy to recover the devastation caused by subsidized imports.

George Jung
02-03-2007, 02:17 PM
I think I'm following you.... the poverty seen in Mexico, Central and South America (at Least!) is a direct result of the subsidy paid to American farmers? And most probably the high standard of living the US enjoys? With reasoning like that, I think perhaps you haven't looked closely enough in the mirror; after all, we all know Canada has a much higher standard of living than does the US; and obviously, if that was not true, that same US success would have bankrupted Canada, right? Nice, well reasoned response.

JimD
02-03-2007, 02:34 PM
I think I'm following you.... the poverty seen in Mexico, Central and South America (at Least!) is a direct result of the subsidy paid to American farmers?.. that same US success would have bankrupted Canada, right? Nice, well reasoned response.

Now George, that's just plain hurtful! Not to mention blatant trolling. But just to recap: This thread started out concerning the combination of a specific agricultural subsidy followed by a market price hike due to increased corn demand for ethanol. Blaming America for global poverty in general is another thread.

George Jung
02-03-2007, 02:40 PM
Touche'

Dan McCosh
02-03-2007, 07:16 PM
That's actually quite interesting - and bizarre; is it true? How do you get the "waste shells' of corn? I assume you're talking about expelling the central soft kernel, and flattening out the outer casing? I thought the flakes were actually just rolled corn. I can't imagine what would motivate them to do this; the economics doesn't seem to be there. Oh well. Let's say you are correct, and there is more actual corn in a tortilla. You're still only talking a very small money amount (? pennies?) per Package, I"d venture. Even if corn prices doubled over the 'norm' for the past thirty years, that wouldn't translate into anywhere near that increase in the end product. Production/marketing etc. still eats up most of the cost, and that hasn't (shouldn't have) changed. Unless the middleman deems opportunity is knocking, and takes advantage of the uncertainty.
A huge Tortilla monopoly? Sorry, just had a mental image of that, and it weren't purty...

I was passing on some of the comments my father mentioned regarding his work with Kellogg's. I think the issue is that the milled corn that ends up as Corn Flakes is made by processing out much of the nutrients--primarily corn oil. The residue was sold mainly as animal feed, but it also ends up as corn flakes. The corn flakes get a heavy dose of vitamins an supplements that give them some nutritional value. FWIW--My dad wouldn't eat corn flakes himself. I think that is typical of people who work in the food industry. I did once know a women who worked in a Cheeto factory, however, who said the big problem was to keep from snacking and getting fat.