"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Wednesday, August 1, 2012

Chatter begins that Ethanol Mandate is going to be Cut

I mentioned a short time ago that talk was growing - scratch that - extreme disgust was growing - among livestock and poultry producers - concerning the federal mandate for ethanol. In the midst of the most extreme drought to hit the US corn and bean growing region since 1988, supplies of corn have been shrinking to very tight levels. However, a good deal of this can be attributed to the federal mandate requiring ethanol blended gasoline. Some of you may know, but this ethanol comes mainly from distilling corn.

As a matter of fact, approximately 40% of all corn demand goes to this boondoogle. While the by product of ethanol demand, DDGS, can be fed to livestock, the facts are that without this mandate, a large share of the corn grown in this nation would be otherwise available for feed use, something that has not been lost on the nation's livestock and poultry producers who are suffering extreme hardships as they watch their feed costs escalate into the stratosphere, destroying their profits in the process and threatening their very livelihoods.

I suspect that this the level of this outrage is going to continue to increase in the weeks and months ahead. I also suspect that more and more pressure is going to be brought to bear upon the policy makers to temporarily rescind this mandate to alleviate the tightness in the supply situation for corn.

The question is whether this comes prior to the election or after the election. Keep in mind that Senators and Congressmen from farm belt states have generally been in favor of this mandate as it has, in the past, helped push demand higher for corn and thus favored a large number of their constituents. However, Senators and Congressmen from those states with large concentration of beef, dairy, pork and poultry producers have tended to be on the opposite side of this issue.

This could very well turn out to be a tremendous factor in determining when the bull market in corn comes to an end. A temporary rescinding of the mandate would lead to a decent sized drop in the price of corn and would tend to lessen some of the recent upward price pressures on the entire food complex.

We will continue to monitor this situation and keep the readers posted.


  1. Feeding food to machines is plain nuts.
    Has the USA lost its way? Gore Vidal (1925-2012) thought it had:
    "Half of the American people have never read a newspaper. Half never voted for President. One hopes it is the same half."
    "The United States was founded by the brightest people in the country - and we haven't seen them since."
    "In America, if you want a successful career in politics, there is one subject you must never mention, and that is politics. If you talk about standing tall, and it's morning in America, and you press the good-news buttons, you're fine. If you talk about budgets, tax reform, bigotry, and so on, you are in trouble. So if we aren't going to talk issues, what can we talk about? Well, the sex lives of the candidates, because that is about the most meaningless thing that you can talk about."

  2. It can appear to be a poor use of resources turning corn into ethanol. I have no idea of the particulars but couldn't a price be established above which the amount of the subsidy for ethanol is diminished? Devil in the details of course.

  3. Ethanol waiver unlikely to help livestock industry as oil refiners will continue blending, U of I ag economist Darrel Good says (8/3/12)


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