Driving County Roads

An on line journal sharing my views. The content reflects my background as a rural person employed in agriculture and as a retired elected official of local government.

Wednesday, April 16, 2008


The news is full of it. There is talk of the carbon footprint, eliminating carbon, applying a carbon tax and buying carbon credits. If someone wants to buy some, I have some for sale. Well, I guess I can’t do the deal personally, but my “aggrater” can. Farmers and others can sign up to sell carbon credits on the Chicago Climate Exchange. I have been accepted to sell credits through my “broker”, AgraGate. AgraGate is a subsidiary of the Iowa Farm Bureau. I am selling credits from two acres of grass and one fourth of an acre of trees. Farmers who practice minimum tillage can also sell credits. Our farm does not qualify because the deep injection of hog manure on our crop acres disturbs the soil too much. My first payments for the credits sold should come in July. I know it will not be a very large payment, but it is the principle of the program that is important. Everyone can do a little and the result will be a lot. end

The general topic of conversation recently is the price of food and it’s increase. Someone a lot smarter than I made the statement, “its all in your perspective”. Let us not forget that American’s have enjoyed the cheapest food in all of the world. We spend a minuscule portion of our earned income on food. So, of course, when the price of milk or eggs increases, it kind of hits us like a hammer. It is not what we are accustomed to.

Most of the blabbermouths like to blame the increase in the price of food on the increased use of corn for ethanol. Again, most of these people don’t know the whole picture. I am not sure any of us know the complete picture. Even C. Ford Runge, University of Minnesota Economist said, “it is extremely difficult to disentangle” the effect of biofuels on food costs.

Two different policy groups: the International Food Policy Research Institute and the Food and Agriculture Organization of the United Nations indicate that biofuel accounts for one third to one quarter OR a ten to fifteen percent increase of the food price increase.

What do we know for sure? We know that world droughts have caused prices to increase. We know that third world people are rising quickly to middle class status and want to “eat higher off the hog” i.e. more protein in their diets. Hence more demand and hence higher prices. We know that the price of fuel plays a huge part of the price increase of our food. Those semi trucks that are passing me on the highway are hauling products to stores for me to buy and many of them are food stuffs to grocery stores.

The energy costs also add up because most of our diet these days is processed food, pre-cooked, ready to eat, packaged so tight you can’t get at it, and in containers you can put in the micro-wave and then toss. All of this convenience means increased use of energy (those costs have gone up) to bring us the convenience and those production cost increases have added a lot to the increase in the price of food.
We also know that if you shop the specials, there are bargains to be had. Last week end, many bargains at the local supermarket showed cereal for under $2.00 a box, baked beans for $1.09 a can, oranges for $.77 a pound, cabbage for $.59 a pound and a head of cauliflower for $2.50. Food doesn’t cost so much if you stay home and cook it yourself. And, it is better for you.

What else do we know? We know that foreign countries have experienced even higher increases than we have and they are more concerned with the prices of rice and wheat. (Neither of which are used for biofuels.) We know that some of the reason for this is because the World Bank and many of the governments in these countries have not supported the development of agriculture in their countries for the past two decades. These countries are unable to meet increased demand from their citizens who are moving up on the economic scale. We also know that most of the conditions I mentioned above are ones that there is little control over. Basically, we can’t do anything about them. We can’t control the weather, or third world economies, but we can pull the plug on ethanol. That is why there is all the fuss and fury. It is easy to pick on ethanol. It is a young industry. Soon, other products will be used to make ethanol. Some of us who have been around for awhile know that what goes up, also comes down. Corn prices will come down again. end


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