Corn, Food and Fuel

A chilling report at AgWeb regarding the demand for Corn and our ability to meet the demand for both feed and fuel production:

Economist Examines Ag/Energy Relationship
Purdue University extension marketing specialist Chris Hurt has closely examined the relationship of the agriculture and energy sectors. He says agriculture will be asked to contribute to the energy industry in a much larger way in the coming years, and that would change the landscape for the feed industry.

The greatest fear for livestock producers is that energy prices remain high in coming years, and then a short corn crop occurs in 2007 or 2008, resulting in the need to drastically ration corn usage for feed, he said. The corn surplus will be gone with the 2006 crop, as expected total corn use may exceed production by about one billion bushels," said Hurt. "Thus, the supply crunch year appears to be the 2007-08 marketing year. Of course, a weather-related small crop this summer could still bring the supply crunch and much higher corn prices this summer."

Hurt says agriculture's traditional role as the foundation of the food industry will experience increasing competition as more corn is used for fuel. "One of the largest of the groups this will impact is animal agriculture, which is among the biggest users of corn," he adds. "Both crop and animal agriculture will face exciting new challenges to meet the growing demands that are currently being proposed. The next decade will be an exhilarating period for U.S. agriculture as it seeks the balance between food and fuel uses."

Emphasis mine -- "exhilarating" my ass -- the customers are the ones who will bear the brunt of this exhilaration as a tight market will drive up costs. Price of fuel and of corn chips will both rise. This is especially galling as the only reason that people are looking at corn as a source of energy is the government subsidies for development. We are paying for this twice -- once out of our IRS and again at the gas pump (or supermarket checkout line). How about curtailing our use of Coal for power generation (use Nuclear instead) and using the Coal as a feedstock to produce diesel and gasoline. There is a process (the Fischer-Tropsch process) that has been around since the 1920's that is not very efficient and leaves a lot of CO2 gas but it works and we certainly have the technology to improve it. I wrote about one such effort here: A new catalyst?