Burning Food in Cars – an ‘anti-human ethos’

Smokey, I thought you were not a big fan of ad hominems.

Um, snarky insult != ad hominem. It is the Internet illiterati that have invented the use of ad hominem in place of insult to lend some logical credence to their charge of a flawed argument. Klimatologists are particularly fond of this misuse, and generally commit both insults and true ad hominem arguments while screaming from the rooftops.
Mark

Great new insight regarding the rise of biofuels. I honestly did not see this coming.
Ed

Smokey says:
July 24, 2012 at 7:56 pm
Carl Brannan,
“I did no research on you at all, I just suspected from your comment that you have a vested interest in ethanol. Now it turns out that you’re also young enough to know everything. Must be nice, having no need of decades of real world experience.”
Well, that would, indeed, explain his problem with facts, and perhaps logic, too.

Smokey says:
July 24, 2012 at 7:41 pm
End the ethanol madness!
And Viv Forbes, you are so right. If anyone could accurately forecast commodity prices, he wouldn’t just be sipping champagne from a glass slipper, he would have scores of naked teens peeling grapes for him as he counted his gold bars. And that’s just for starters…
_________________________
Seems Goldman Sachs and the rest tried and won big.

Bankers recognized a good system when they saw it, and dozens of speculative non-physical hedgers followed Goldman’s lead and joined the commodities index game, including Barclays, Deutsche Bank, Pimco, JP Morgan Chase, AIG, Bear Stearns, and Lehman Brothers….
Since the bursting of the tech bubble in 2000, there has been a 50-fold increase in dollars invested in commodity index funds. To put the phenomenon in real terms: In 2003, the commodities futures market still totaled a sleepy $13 billion. But when the global financial crisis sent investors running scared in early 2008, and as dollars, pounds, and euros evaded investor confidence, commodities — including food — seemed like the last, best place for hedge, pension, and sovereign wealth funds to park their cash….In the first 55 days of 2008, speculators poured $55 billion into commodity markets, and by July, $318 billion was roiling the markets. Food inflation has remained steady since…
http://www.foreignpolicy.com/articles/2011/04/27/how_goldman_sachs_created_the_food_crisis?page=0,1

“The first thing we do, let’s kill all the lawyers bankers. ~ 17th Earl of Oxford

eyesonu says:
July 23, 2012 at 5:22 pm
A. Scott says:
July 23, 2012 at 1:42 pm
“And eyesonu and others claimed corn prices increased from 2006 to 2008 because of ethanol production ramping up – while ignoring that wheat, soybeans, barely and most other commodities increased faster and higher during the same time.
In the last go around on this eyesonu tried to make claims about planted acres – that corn acreage took over other commodities acreage – which was proven equally incorrect. ”
====================
My comment (Ref: eyesonu says: July 23, 2012 at 1:27 pm ) simply showed a summary of the USDA data from year 2005/2006 to 2011/2012.
I would agree with “Hotrod Larry’s own words that it would make good business sense to plant corn rather than any other crop to maximize profit “Duh”. Perhaps that is why we see a dramatic drop in planted acres in other grains and a dramatic increase in corn.

Sorry – didn’t have time to respond back … but will now.
Supply and demand is a factor with most every product. But you show you don’t understand the relevance of historical data when you blew off the comments regarding production in the 1990.
You also show you do not understand when you think Krugmans chart helps your case – by all appearance seems you don’t understand what it shows and means – the difference between yield and production – and how that is relevant to the corn discussion.
You have – as the last time – cherry picked a couple numbers you think shows the smoking gun – but again becasue you do not understand the data or subject – you think this partial picture somehow proves your point.
You make the claim that corn prices rose starting in 2005 and that it is becasue ethanol use began increasing demand for corn about the same time. You are correct – corn prices started rising in 2005 and ethanol use increased in 2005 as well.
Unfortunately correlation does not equal cause.
If, as you claim, the corn prices were driven by ethanol demand – which is very different than watt Larry said – then you’ll have a hard time proving that after a look at this chart:
Corn & other crops price history 1997-2012
I can make the same claim as you – I claim because wheat, soybeans, and barley prices all skyrocketed almost EXACTLY the same as corn – that their price increases are also a result of ethanol.
But wait – that would be silly – there is no relation between those products and ethanol. Yet their prices went up just like corn did.
I also wonder why you stopped your earlier comparison of acres planted at 2011 – comparing 2005 to 2011 acres planted – instead of using the 2012 numbers that were right there.
Actually I know why – but that’s for the next post.

eyesonu says:
July 22, 2012 at 5:28 pm

A. Scott says:
July 22, 2012 at 4:49 pm

1. Would like to tell us what the price of corn was prior to the government ethanol mandate? IIRC last years price was a record by about 600% above the avg prior to government mandates for ethanol.
2. Would you like to tell us how much of a reduction in planted acres of soybeans, oats, and other grains were reduced as a result of the government ethanol mandate?
3. Would you like to tell us how much the price of the grains increased with the land being converted to corn production?
4. Would you be more truthful with your figures on this thread than the last?
Would you tell us why you have such a dedicated interest in defending the corn lobby?

Since you refuse to support your claims I guess I’ll have to address them. I’ll even use your data to do so for a good share of the response – you provided link earlier to a table from the “USDA Feed Grains Data: Yearbook Tables” … and other USDA data for rest.
1. Avg corn price:
1975-2000 – $2.37 actual … $ 2.30 CPI adjusted
1913-2000 – $1.45 actual … $ 4.19 CPI adjusted
2001-2012 – $3.58 actual … $ 1.72 CPI adjusted
Sorry – while prices increased in the last 10 years as ethanol came in to use, as has been shown above those increases were not in any significant part related to ethanol – as wheat, barley, soybeans etc all saw nearly identical price spikes during that time.
The CPI adjusted numbers show the real story however. Current prices are, when adjusted for inflation, well below the prices of the past – the many decades before ethanol.
2. Sure … lets use your data, but this time lets not leave out 2012 numbers (million acres) …
Corn –
2005 = 81.78 … 2012 = 96.14 … net 14.63 million more acres of corn 2005 to 2012 …
Sorghum –
2005 = 6.45 … 2012 = 6.21 … net 0.24 million less acres of Sorghum2005 to 2012 …
Barley –
2005 = 3.88 … 2012 = 3.68 … net 0.20 million less acres of Barley2005 to 2012 …
Oats –
2005 = 4.25 … 2012 = 2.75 … net 1.50 million less acres of Oats 2005 to 2012 …
Soybeans –
2005 = 72.03 … 2012 = 76.10 … net 4.07 million MORE acres of soybeans 2005 to 2012 …
Wheat –
2005 = 57.21 … 2012 = 56.02 … net 1.19 million less acres of Wheat 2005 to 2012 …
Funny thing there eyesonu … corn planted IS up 14.63 million acres 2012 vs 2005 …
… but when you look at the rest of the crops the total reduction in planted acres 2012 vs 2005 is quite interesting … add up the reduction for all BUT soybeans and the answer to your question is there was a total reduction of 3.13 million planted acres between 2005 and 2012.
And as for soybeans – their planted acres INCREASED by 4.07 million acres from 2005 to 2012.
So the correct answer to you question is that 20012 vs 2005 the total reduction in acres planted for all the other other products – wheat, sorghum, barley, oats and soybeans – was … ooops a net INCREASE of 0.94 million acres (3.13 million less + 4.07 million more soybeans)
There was NO NET REDUCTION IN PLANTED ACRES FOR OTHERS from 2005 to 2012 as a result of increased corn plantings.
Well now … wasn’t THAT inconvenient to your claims?
With that I need to get some sleep .. you ponder how you got in to such a predicament again … and I’ll try and address rest of your questions later …
Here’s some help for you – the spreadsheet where I compiled the data for you … the answer why your conclusion, that the increased corn crop has seriously reduced other plantings, is wrong – is in there
Now to be fair to you … I did not research locations – where each crop grows and/or was planted …the data set you orig provided – the USDA Feed Grains Data Yearbook, while extensive only gives us a national picture

According to this story:
http://www.agriculture.com/news/business/using-crop-insurce-in-2012_5-ar22519
In Illinois for example – 81% of corn and soybean acres were insured in 2011 with multi-peril policies (all risk vs single policies ie: for hail only). The vast majority were insured with a form of Revenue Protection policies. The loss coverage ratio’s on the vast majority of the polices weres 7% to 85%
As I understand it from this story:
http://www.agriculture.com/news/crops/hedging-to-protect-crop-revenue_2-ar25402
… the Crop Insurance works like this:
The insurance protects farmer for a certain revenue guarantee. They take a “trend adjusted actual production yield history” yield times the higher of original projected price of the harvest price. When revenue is below the guarantee they pay projected (insured) revenue minus actual revenue received.
When prices are above the projected, as they are now, insurance pays the yield shortfall times harvest price. It appears to me it would work like this:
160 bushel/acre expected yield
x 80% insured coverage
= 128 bu/ac insured yield
x $5.68 (2012 projected price)
=$727 insured revenue per acre
If your actual yield was 70 bu/acre and the harvest price was $7.00/bushel you would receive $490 per acre plus insurance would pay $237 per acre for total received of $727 per acre.
Your FULL expected revenue per acre would have been 160 bu/ac yield x $5.68 projected price = $908 per acre. You would have taken a loss of 20% … but still likely made a small profit – I saw break 2012 even costs for corn noted as approaching $5.
The story goes a step further and outlines how, when harvest price is well above projected insurance price, that the insurance becomes yield insurance. … (and how the insurance can be used as a hedge.)
In same example above if the insured yield is 80% of 160 – or 128 bu/ac … and if the actual yield is 70 and the harvest price is $8.50 per bushel, the insurance would pay for 58 bushels at $8.50 = $493, plus the farmer would receive $8.50 x the 70 bu/ac actual crop = another $596 = total received of $1,088 … actually more than the projected original revenue. That said this is still 20% below what the original 160 acres would have returned at the $8.50 harvest price (= $1360 per acre).
Regardless – in any event it seems pretty clear – while there may be insurance payments in some areas, looking at the whole crop (below), with the bushels harvested down 18.94% this would be below most insurance coverage caps. More important it seems are the other numbers – if I calculated right, based on a $5.68 pre-season projected price for this crop and an if the actual harvest price was $8.50 – the value of the 19% smaller than projected harvested crop would still be almost 50% higher than the VALUE of the original projected crop harvest.
Last – it seems troubling, unless I misunderstand the program – that a farmer can make more than their original projected revenue. It would seem we should not be insuring, especially with subsidies, the speculative benefit/risk of price appreciation.
96,410,000…. ac planted
166….yield
16,004,060,000….bushels
$5.68….projected price
$90,903,060,800….projected value
….
88,850,000…. ac harvested….-7.84%
146….yield….-12.05%
12,972,100,000 …. bushels….-18.94%
$8.50…. proj price ….49.65%
$110,262,850,000 ….proj value….21.30%

Today (July 30, 2012), in the newspaper “Le Soir” (Belgium) I read the striking statement of Olivier De Schutter, United Nations Special Rapporteur on the Right to Food. (own translation from French)
“I am very upset about this subject [biofuels]. An irresponsable policy is being established. In the USA, 40% of the maize crop was used to produce ethanol! And the European Union continues to plan to impose the figured objectives for the year 2020 concerning biofuels. Since 4 years one is shouting his hoarse to explain that biofuels are a significant part of the problem concerning the right to food but nothing changes.
Obviously there are interests to one cannot run counter, neither in the United States – and still less in this election year – nor in Europe!”
I fully agree with his view. It’s really a shame!