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March 2011 Archive for John Block Reports from Washington

RSS By: John Block, AgWeb.com

John Block has dedicated his professional career to the fields of agriculture, food and health.

Rising Food Prices? Can't Blame Ethanol

Mar 31, 2011

 

With food prices rising worldwide, some self-styled authorities on agriculture are claiming that producing ethanol in the Midwest causes food riots in the Middle East.
 
Their story is simple: Biofuels are gobbling up the grains that would otherwise be used to feed the world's poor. Just limit the production and use of ethanol and — presto! — food will be abundant, affordable and available all across the globe.
 
But this theory of food-versus-fuel flies in the face of four facts:
 
First, U.S. ethanol production uses only about 3 percent of the world's grain supply. Moreover, that 3 percent consists of feed grains, largely corn for livestock. The food grains that people actually eat — mostly rice and wheat — aren't affected by biofuels production.
 
Second, about a third of the corn used for ethanol becomes a co-product: livestock feed for cattle, poultry and hogs. Last year alone, the U.S. exported 9 million metric tons of these distillers grains, corn gluten feed and corn gluten meal to nations around the world, including Egypt.
 
Third, volatile energy costs are the real drivers of all consumer prices including for food. Energy impacts every facet of food production from growing the crops to processing the food to transporting it to market. These factors explained why food prices soared in 2008 and are rising right now. Imagine where oil and gasoline prices might be were it not for ethanol comprising 10 percent of the gasoline market today.
 
Fourth — and most important — American farmers are increasing their productivity. Ethanol's demand for corn has grown dramatically during the past decade. But so has the crop of corn produced by American farmers.
 
Because of productivity improvements, American farmers are growing more corn that ever, with the highest average yield per acre anywhere in the world, at any time in human history. From 1977 through 2007, U.S. corn acreage increased slightly, to 93.6 million from 84.3 million. But corn production more than doubled, to 13.1 billion bushels from 6.5 billion. In fact, crop yields have increased so spectacularly that the majority of the corn used for ethanol comes from gains in efficiency and growth — not from cropland expansion.
 
Even last year, in spite of adverse weather conditions, American farmers produced the third largest corn crop in history. Meanwhile, the U.S. ethanol industry produced a record 13 billion gallons of the biofuel, replacing some 445 million barrels of imported oil and supporting more than 400,000 jobs that can't be outsourced.
 
In large measure, American agriculture's increased productivity results from ethanol production. In addition to promoting energy security, one reason for developing a domestic ethanol industry was to provide farmers with more income from the private marketplace and fewer subsidies from the federal government.
 
Now that corn is no longer priced below the cost of production, farmers are developing more efficient ways to grow more grain at lower costs.
 
In tandem with advances in agriculture, the ethanol industry keeps developing new ways to use less water and energy and produce more livestock feed as a byproduct of biofuels.
 
Far from biofuels stealing food from hungry humanity, the world's food crisis would be much worse were it not for the innovations that the ethanol industry has encouraged in American agriculture. Continuing these innovations, U.S. biofuels companies are developing new ways to produce fuels from feedstocks ranging from grasses and corn stalks to wood waste, municipal solid waste and algae.
 
That's why, when it comes to feeding and fueling the world, ethanol is part of the solution, not the source of the problem.
 

War With Qaddafi

Mar 24, 2011

I wasn’t going to do a radio commentary on this issue, but I can’t help myself.

Why in the world are we getting into another war? Why have we joined the French and British in bombing Muammar Qaddafi’s troops in Libya? I don’t like the guy any more than anyone else. He is a murdering dictator. His tyrannical conduct goes back as far as my days working for President Reagan. I can’t stand the guy. However, there are dictators in many other countries that oppress their citizens. President Reagan dropped a bomb or two on Qaddafi to let him know that we wouldn’t tolerate his murderous ways when it comes to U.S. citizens. However, now we have jumped into the middle of a Libyan civil war. We have attacked Libya.
 
I understand that sometimes we must exert military muscle when our national interests are threatened. What national interest do we have in Libya? Yes, they have some oil but we don’t need their oil. It isn’t enough to care about.
 
Here we are with two wars on our hands now – Iraq and Afghanistan. We are deep in debt. And now, we take on another obligation which will cost billions. Where will this lead us? I know the President says we won’t put troops on the ground, but this kind of intervention tends to get out of hand.
 
We have seen thousands of our young men and women in the military killed in Iraq and Afghanistan, not to mention the thousands that have lost their arms and legs and have all kinds of lifelong injuries. I do believe in defending our homeland and vital interests. However, I don’t see the necessity here.
 
If intervention in Libya is so vital, where were we when millions were slaughtered in Mozambique and other African countries? Are we going to jump into the rest of the Middle East countries as the rebellions grow there?
 
I don’t know where this reckless military adventure will lead. Maybe it will turn out alright. However, intervening in someone else’s civil war usually does not have a good outcome historically.
 
The time has come to reassess our role in the world. The cost of serving as policeman to the world and the role of nation-building is just too much.
 
In closing, I would encourage you to access my website which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com.
 
Until next week, I am John Block in Washington.

Ag Day: Providing Agriculture Recognition

Mar 18, 2011

This past week was National “Ag-Week” and Tuesday was “Ag-Day” here in Washington, D.C. AgriPulse had a big event down at the Capitol where Kansas Senator Pat Roberts spoke, reminding us of the remarkable contribution that the U.S. ag industry makes to not only this country but the world. The atrium at the Department of Agriculture was the perfect site for another big reception and dinner honoring the Jaycee Outstanding Young Farmers, 4-H members, FFA leaders, and agriculture leaders representing pork, beef, rice, cotton, corn, soybeans – you name it! Adding to the celebration was John Deere, Monsanto, and a host of other leading agribusiness companies.

I cannot remember a more appropriate time to give the ag industry the kind of recognition that it deserves. Think about it. Eighty years ago a third of Americans were farmers. Today, less than 2 percent are farmers. Today, we produce an abundance unimagined eighty years ago. The American family spends only 8 percent of the family income on food. In Europe, families will spend 15 percent and in Africa, they will spend 40 percent.
 
This is a new day. We have bigger farms and fewer farmers. Much more efficient – using “precision farming” with GPS, genetic engineering, the best seeds and crop protection.
 
Take a drive across the heartland of this country. Farm after farm will pass your windshield. Corn, wheat, soybeans, hogs, and cattle – all family farms. Today’s farms are capital-intensive, not labor-intensive. That releases millions of our citizens to do other things. They can build cars, flat-screen TVs, computers – all kinds of gadgets.
 
We have the good life in abundance, certainly in part because of the American farmer and rancher, tractor manufacturer, food processor, and all the members of the food team.
 
Spring is here. Let’s work together and make this a great year.
 
In closing, I would encourage you to access my website which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com.
 
Until next week, I am John Block in Washington.

Trade with Mexico

Mar 10, 2011

It’s about time! After 17 years, the United States seems to be moving to implement the cross-border trucking provision which is specified in the North American Free Trade Agreement.

Here is the disgraceful history of our refusal to live up to the trucking agreement with Mexico.
 
The agreement specifies that our trucks can cross the border with goods from the U.S. and deliver to Mexico City or wherever in Mexico. By the same token, Mexican trucks are permitted to deliver produce, as an example, across the border in the U.S., perhaps to Chicago.
 
However, before that cross-border provision was implemented, President Clinton stopped the Mexican trucks at our border at the request of the Teamsters Union. They had to be unloaded and reloaded into our trucks to go on to Chicago.
 
In 2001, a NAFTA panel authorized Mexico to retaliate by imposing tariffs on our exports to Mexico. In the interest of living up to our NAFTA obligation in 2007, President Bush began a pilot program opening up the trucking. The safety of Mexican trucks was compared to our own safety. Amazing – Mexican trucks delivered a better safety record than our trucks.
 
It looked like we were on the road to solving the dispute, but along comes President Obama in 2009 and, at the request of the Teamsters Union, he puts the brakes on Mexican trucks into the U.S.
 
Mexico imposes 2.4 billion dollars in punitive tariffs on U.S. exports to Mexico. Since the tariffs were imposed, our exports of the products targeted have dropped by 81%. Pork on the taxed list has suffered more than most. That is especially costly since Mexico is our second largest pork export market.
 
O.K. I said it appears that maybe President Obama has come to realize that if he has any hope of “doubling exports in 5 years,” he needs to do something.
 
This week, I was at a luncheon with Jose Luis Vega, Mexican Government Minister/Representative, Trade and NAFTA Office. He spoke to our group and was optimistic that a deal is in the works. Hopefully, by some time this summer or fall, the tariffs will be lifted and the trucks rolling. We shall see.
 
In closing, I would encourage you to access my website which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com.
 
Until next week, I am John Block in Washington.

Attacks On Ethanol

Mar 04, 2011

It seems to becoming the “in thing” for big city newspapers and big city commentators to blame ethanol for rising food prices. Even former President Bill Clinton has joined the party. Also, we have the budget hawks pointing their fingers at ethanol subsidies. 

I think we can all agree that the U.S. needs to have a policy of energy security. Our heavy dependence on Middle East oil is not good. To me, that means “drill baby drill” for our own oil, mine our own coal, wind, solar, and – yes, ethanol.
 
It’s too soon to throw any of these possibilities overboard. With oil prices going up and turmoil throughout the Middle East, what do you think gasoline prices would be if ethanol (10% of our auto fuel) was taken away – maybe $5 per gallon.
 
If they want to take away ethanol subsidies, take away the billions of dollars subsidizing oil. Take away the government subsidies for wind and solar. Ethanol is every bit as cost effective as the other sources of energy, and it is cleaner.
 
Let’s get this picture into perspective. In the whole world, the amount of grain that is used for ethanol is less than 3%, and after processing, 1/3 of that ethanol grain is available as livestock feed. That means that only about 2% of the world’s grain is used for fuel.
 
And our critics want to blame rising food prices on ethanol? I don’t think so. It doesn’t compute.
 
Now, I don’t support this next idea, but if the answer to feeding the world is that good farm land should be reserved exclusively for food production, then I suggest that the millions of acres growing cotton should be shifted to corn. Clothing need not be made out of cotton. I know that’s a crazy suggestion, but no more crazy than to say you can’t make fuel out of corn.
 
I think the persistent attacks on ethanol are unjustified and arbitrary.
 
In closing, I would encourage you to access my website which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com.
 
Until next week, I am John Block in Washington.
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