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Ethanol and The Battle Over Corn
Ethanol and The Battle Over Corn
Ethanol and the Battle Over Corn
Ever wonder what America’s number one crop is? If you said corn – you’re right, by a long shot.
We grow two times more corn than anything else.1
But one thing you may not know is the enormous power and impact these little yellow kernels
are going to play in the overall health of our planet in coming years. As we’ll see in the next few
minutes, corn is much more than an agricultural crop. It is really a geopolitical, economic and
environmental force, positioned at the intersection of global food, water and fuel. And a controversy is
starting to emerge over how we should properly use it. Front and center in this controversy is ethanol
– a byproduct of corn that can be used to fuel cars. A competitive atmosphere is beginning to form
between corn farmers, the beef industry – which relies on corn to feed its livestock –
environmentalists, and gasoline producers, who want corn for ethanol. And this fight is only going to
intensify.
The essential question is: How much corn can we reasonably produce, and for what purposes?
To understand the complex web of factors that may make ethanol production a key issue of the
early 21st century, let’s take them one at a time, starting with the importance of grain as a global crop.
Of the foods we produce around the world, none is more valuable than grain. Grains such as
corn account for 56% of the total calories consumed by humans each day. In 1965, world production
of grains was only 1 billion tons. By 2000, it had reached 2 billion tons and by 2020, it is projected to
reach nearly 3 billion tons, roughly keeping pace with our exploding human population. This level of
increased production has been accomplished with only a 12% increase in land use because the
amount of land required to produce a ton of grain today is less than half the amount necessary in
1950.2,3
But a key thing to keep in mind is that grains such as corn have multi-purposes. Worldwide,
50% of grain is consumed by humans, 44% by livestock, and 6% by industry or as waste.4,5 Many
sectors of our society and economy rely on corn. And that’s where the environmental impact of corn
comes into play.
Think about how much water is being used to grow these billions of tons of grain. One unit of
grain production requires one-and-a-half units of water. If the grain is used for raising animals for
human consumption, the cost in water is higher, still. One unit of poultry consumes 6 units of water,
and one unit of beef consumes 15 units of water.3,6
We’ve been fortunate thus far. To date, our water supply is holding up to our current corn
production levels in most areas of the United States.
Now, enter ethanol... and the plot thickens.
Ethanol is a plant byproduct. Corn, sugar cane, or other plants, are fed to micro-organisms,
which, in turn, convert them to alcohol.7,8 This alcohol may be added to gasoline, contributing,
perhaps modestly, to efficiency. At a time of chaos and inflation in the world energy markets, two
clear benefits of the use of ethanol have emerged: a decrease in reliance on imported oil from
increasingly volatile trading partners, and a decrease in harmful emissions contributing to global
warming.7
These objectives stimulated the U.S. Congress to enact new energy legislation in 2005, forcing
the phasing out of the additive methyl tertiary butyl ether, a petroleum product in use since 1990,
because of its harmful environmental effects. In its place, Congress set aggressive expansion targets
for ethanol production.9 This was a political no-brainer according to political strategist Ken Cook, who
noted, “All incumbents and challengers in Midwestern farm country are by definition ethanolics.”7,10
The Congressional action instigated a rapid response: Get more corn in production. That’s not
surprising when you consider that the United States imports 1.6 million barrels of oil a day from the
Persian Gulf. If we wanted to replace that oil with ethanol, we would need 50 billion gallons a year
and approximately half of the current U.S. farmland.8 How much do we produce now? In 2006,
about 4.6 billion gallons, slated to rise to 6 billion in 2007 and 8 billion in 2008. 39 new ethanol plants
will come on line next year, allowing the U.S. to bypass Brazil, which uses sugar cane rather than
corn, as the number one ethanol producer in the world.7,10
And this is where the controversy over ethanol really begins to heat up. We have the capacity to
produce more corn for ethanol, but at what cost, both environmentally and economically? At the core
of the debate are competing concerns of livestock owners and ethanol producers, and two large
government subsidy programs. The first subsidy was established in 1985 when 35 million acres of
farmland were set aside for conservation and to prevent overproduction, and therefore land
exhaustion resulting in volatile price fluctuations. Pricing for corn has generally held at about $2 a
bushel. Current farmers receive $48 per acre for not raising crops on this land.11 The second
subsidy goes to the refiners and blenders that produce and mix ethanol in our fuel. Most fuel now
has 10% ethanol, and all U.S. cars can run on the mix. Currently, 51 cents of every gallon purchased
goes back to the producers as a reward.12 Add to this the fact that the price of ethanol has doubled
over the past two years, and we begin to understand the dilemma of dueling subsidies. Farmers
collecting $48 per acre for leaving the land at rest now see the potential to share high public and
private revenue for growing corn destined for ethanol plants, which currently meet only a small portion
of the potential future U.S. demand.
And don’t forget our earlier discussion about water. If the grain is utilized by industry, say for
conversion to ethanol, additional water – which is already scarce in some parts of the U.S. – would be
consumed.3,6
Food, water, fuel. Clearly, individuals and populations need all of these things to survive and
thrive, to promote individual and societal health. But what happens when these three priorities come
in conflict with each other and compete for resources? Which deserves support – first, second, and
third? We’re about to find out, thanks to ethanol. For Warren Staley, the CEO of Cargill, a Minnesota-
based multinational agricultural company, the answer is clear: “We have to look at the hierarchy of
value for agricultural land use. Food first, then feed, and last fuel.” 7,13
But others may take a different view. Consider Cargill’s competitor, Archer Daniels Midland, or
ADM. ADM has been a proponent of ethanol since 1970, and the company is slated to produce 1
billion gallons of the fuel this year. That’s in comparison to Cargill’s anticipated 220 million gallons.
Many consider this a clear shift for ADM from food processing to energy production. In fact, the
company recently hired Patricia Woertz, a former executive from Chevron, as its new CEO.7
Some are cautiously optimistic that we can balance growth in food and fuel through land
expansion and increasing efficiency. Gregg Doud, chief economist at the National Cattlemen’s Beef
Association, says, “I think we can keep up, assuming we get normal weather. But what happens
when Mother Nature crosses us up and we get a bad corn year?”7,9,14 Other predictions, like that of
agriculture analyst Dan Basse, are more stark. “By the middle of 2007, there will be a food fight
between the livestock industry and the bio fuels or ethanol industry. As the corn price reaches up
above $3 a bushel, the livestock industry will be forced to raise prices or reduce their herds. At that
point, the U.S. consumer will start to see rising food prices.”7
All this reflects an increasingly complex world where food, water, energy and security intersect
and impact the health of individuals, societies, and the global community. The status quo has rapidly
ceased to be an option. Nathanael Greene of the Natural Resources Defense Council puts it this
way: “The cost of the alternative – of staying addicted to oil and filling our atmosphere with
greenhouse gasses.... is unacceptable. We have to struggle through the challenges of growing and
producing biofuels in the right way.”7,15 Since 98% of the oil used goes to cars, trucks and planes, our
own citizens’ greatest contribution may be the more careful choice of efficient vehicles, which could
provide some much-needed breathing room as we sort out the ethanol question.10
It all puts those little corn kernels in a new light.
For Health Politics, I’m Mike Magee.
References
1. Food and Agricultural Organization of the United Nations. The Statistics Division. Available at:
2. United Nations. 2003. The 1st UN World Water Development Report: Water for People, Water
for Life. UNESCO Publishing. Available at
http://www.unesco.org/water/wwap/wwdr/table_contents.shtml.
3. Magee, Michael. Healthy Waters. New York: Spencer Books, 2005.
4. Food and Agricultural Organization. 2001. The State of Food Insecurity in the World. Available
at http://www.fao.org/SOF/sofi/.
5. Food and Agricultural Organization. 2001. Crops and Drops: Making the Best Use of Water for
Agriculture. Available at http://www.fao.org/DOCREP/005/Y3918E/y3918e00.htm.
6. Food and Agricultural Organization. 1997. Water Resources in the Near East Region- A
Review. Available at http://www.fao.org/icatalog/search/dett.asp?aries_id=7932.
7. Barrionuevo A, Romero S, Janofsky M. “For Good or Ill, Boom in Ethanol Reshapes Economy
of Heartland.” The New York Times. June 25, 2006.
8. Kilman S. “DuPont-BP Venture Will Make Competing Product to Ethanol.” The New York
Times. June 21, 2006.
9. Biomass Research and Development Institute. Available at
http://www.biomass.govtools.us/onthehill.asp.
10. Bahree B and Cummins C. “In Oil’s New Era, Power Shifts to Countries With Reserves.” The
New York Times. June 14, 2006.
11. United States Department of Agriculture. The 2002 Farm Bill: Glossary. Available at
http://www.ers.usda.gov/features/farmbill/2002glossary.htm.
12. Energy Information Administration. Legislation and Regulations. Available at
http://www.eia.doe.gov/oiaf/aeo/pdf/leg_reg.pdf.
13. U.S. Corn Production 2002-2004. Corn Refiners Association. Available at
http://www.corn.org/web/uscprod.htm.
14. National Cattlemen’s Beef Association. Available at www.beef.org.
15. Natural Resources Defense Council. DOE to fund biomass research. Available at
http://www.nrdc.org/bushrecord/2001_09.asp.
August 11, 2006
