The common cycles of weather and price have affected farmers while the price side of things have been based on the ups and downs of the commodity market.Since the creation of alternative fuels like ethanol, the price side of the equation is now affected by the demand on corn as both a source of food as well as a source for the production of ethanol.
Now more than ever, the threat of extreme weather such as drought and flooding threaten the harvesting of corn. If less corn is produced, supply of ethanol will drop and demand will rise because more and more people need corn as a food and as a source of fuel. The result is an exorbitant price for corn in both markets.
Obviously, farmers who grow corn don’t want to see a drought. Neither does anyone else. But scientists are now saying that dust-bowl like droughts could occur regularly this century because of human-induced climate change. Areas that could be affected by the drought is the corn belt of the country — Iowa, Illinois, Nebraska, Minnesota, Indiana, Wisconsin, South Dakota, Michigan, Missouri, Kansas, Ohio and Kentucky.
Such possibilities did not affect the supply of corn all that much in the past. Corn growers typically grew enough to satisfy the year’s demand plus a substantial reserve that could be used in an emergency. But now many people say that the reserve supply has been shrinking due to the use of corn for ethanol. In 2008, the Agriculture Department says that the reserve will be 6 percent of the total corn crop. It is said that over the last two decades, about 16 percent of the total corn crop was held in reserve.
So now many are calling for cellulosic ethanol which can be made from wheat and rice straw, switchgrass, paper pulp, and agricultural waste products. Obviously, the demand for these items does not include the food chain. Cellulosic ethanol can relieve the demand for corn as a source for ethanol and alleviate the problem greatly.
And there could also be added benefit. It is said that ethanol made from corn reduces harmful emissions by 20 percent to 30 percent; cellulosic ethanol is said to cut harmful emissions by 80 percent.
Our take? We guess the moral of this story is that there are many reasons why the government and private sector should be focusing on the development of cellulosic ethanol over corn ethanol.
via How Stuff Works
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