GoodFuels

Anti-Ethanol Group Loses Credibility

Secretary of Agriculture Ed Schafer says “almost nobody” is talking about the biofuels industry “going backward” - just a few notable exceptions like the Grocery Manufacturers Association and the governor of Texas.

Speaking to the media after a speech at the Cellulosic Ethanol Summit Wednesday, Schafer said the group that held a press conference yesterday calling for an end to ethanol subsidies “stood up there with no credibility whatsoever,” when they claimed that it will take 18-24 months for the lower commodity prices to bring food prices back down.

“I just think that they are totally off base,” Schafer said. “They’re trying to justify their corporate policy in increasing costs to the consumer by blaming it on somebody else - that’s just simply wrong.”

Schafer is especially concerned that the group is working against important public policy for energy independence. “Why would be they be against energy independence?” he asked. “They’re working against economic activity. Why would they be against economic activity?”

Why indeed. He thinks in the end they will get what they deserve, “which will likely be lower purchases of their products because of their increased prices.

I asked the secretary several other questions relating to the biofuels industry, including what he sees as the Bush administration legacy regarding biofuels, his trip this week to Brazil for an International Conference on Biofuels and whether an auto industry bailout might mean more flex fuel vehicles.

Listen to my Q&A with Schafer here:

Brazil to challenge US tariff?

Reuters has posted a story this morning in which they report that Brazil has hired lawyers to look into the current US import tariff against Brazilian ethanol.

“Brazil’s Sugar Cane Industry Association hired lawyers to study the compatibility between the U.S. tariff and WTO rules. The collapse of the Doha Round of world trade talks in July made litigation against the United States more likely.

 Amorim said the case could be presented in the next one or two months, depending on final consultations with producers and the government’s lawyers.”

“My reading is that we have a very strong case and so there is a good chance we will challenge,” Reuters reports Foreign Minister Celso Amorim said on Tuesday.

What will this possible litigation mean for the future of the domestic US ethanol industry? Leave your thoughts in the comments.

Read the whole report here.

The Politics of Ethanol

(This was published Friday, August 31, 2008 in The Ethanol Monitor)

As I reviewed the volumes of information we have gathered over the past 18 months, I couldn’t help but wonder how the ethanol industry survived the massive campaign against it and I can only conclude that strong political support has managed to beat back challenge after challenge designed to undermine and slow its evolution.

Now it comes down to two candidates and two parties, a decision which could bolster or weaken the industry for years to come. No matter how you slice it, this election is pivotal for the future of ethanol in the U.S.—and that includes corn-based and next generation fuels.

This is not about endorsing one candidate or another, but rather pointing out the differences between the two, how their visions contrast with respect to energy and America’s future, both from the standpoint of our addiction to oil and how the U.S., the leading polluter on the planet, should be taking the lead in reducing the potential impact of global warming.

In several instances over the past four years I have had the privilege to meet many in the ethanol industry, and when asked why I ever got involved in this field, my answer is always the same. I have been writing about energy of all types for longer than I care to remember. The oil and gas industries fascinated me simply because I quickly recognized the importance these commodities had to the well being and advancement of civilization, but how politically fractious they were and how nations would take up arms to protect their share of these precious resources.

Russia’s sudden invasion into Georgia recently, the latest in the Soviet Union and now Russia’s desire to control the resources of its presumed empire, is just the most recent reminder of how oil and gas power corrupts.

But my answer as to why I ever got involved with ethanol at all goes back to September 11, 2001. That changed everything and brought to the forefront that we could no longer depend on oil to fuel growth.

The single belief should be that the national security threat to dependable oil resources is not acceptable. From corruption in Nigeria to a semi-dictatorship in Venezuela, to Russian resource expansionist policies represent just a few of the challenges the oil dependent world faces in the years ahead. To the U.S., the threat of Islamic extremism centered in the oil capitols of the world may be more publicized, but no more dangerous than the many geopolitical issues that surround what is the thread that holds together the world’s economies.

More than any other reason, ethanol became a necessity, but it wasn’t always that way.

(more…)

Food Versus Fuel is Fallacy

An analyst with a major agricultural financial institution says “food versus fuel” is basically a misleading sound bite.

According to Karol Aure-Flynn, executive director of the Rabobank Food and Agribusiness Research and Advisory department, “The fallacy of the headline is that there is a direct competition between the two; that it’s either/or. The reality is that strong global economic growth has changed the demand equation for U.S. commodities.”

Aure-Flynn also noted in a recent Rabobank podcast that while prices at the farm level have increased this year, they have been outpaced by production costs for farmers.

“Farmers’ profitability doesn’t change retail prices. And farmers’ profitability isn’t guaranteed by high grain prices. The same factors that are lifting grain prices are lifting production costs,” said Aure-Flynn. “So, yes, the farm price index is at 162 percent of what it was 1990-1992, but at the same time the price index measuring what farmers pay — for services, farm wages — is 189 percent of base.”

Rabobank is a global financial services leader providing institutional and retail banking and agricultural finance solutions in key markets around the world.