This leads us into the topic of our post, corn for ethanol. In a politically charged year, and in a state where this subject is also politically charged, I put myself into the path of the train by saying anything at all about the subject. But I can’t resist.

I try to listen to Bob Brinker’s Moneytalk program every chance I get, and not because I need to learn market timing strategies or because I have a big old jar of money I need to invest, but because I typically find his guests informative.

Today, Bob’s main guest was John Zogby, the pollster. Before letting us hear the polling guru, though, Bob tackled this issue of corn for ethanol, making the statement that has oft been made in the news lately that the ethanol industry is responsible for dramatic increases in food costs. His proposition was that instead of using corn for ethanol we ought to be pushing for more and better nuclear power.

Bob is using a technique that frequently is used by politicians, and creating a question around an issue that is hard to challenge or disagree with. Obviously, we can understand the basic economics of using a commodity that is chiefly a livestock ration as a source of fuel alcohol. For livestock feeders, supply goes down and price goes up. Fine, no disagreement. The issue of nuclear power is a bit more touchy, but again, it is hard to argue with the idea of using a clean source of power for which the production technology has largely been mastered by U.S. and international industry.

The ideas that I can challenge, though, are the premises for the argument. Bob Brinker’s statements about ethanol and nuclear power stem from two main points. The first is the notion that we need to keep the cost of food down, at least as low as it has been and maybe lower. The second is a direct challenge to biofuel production as a viable alternative to foreign petroleum, by painting the whole industry with a single “ethanol” brush. I want to examine the food production part today, and take the energy issue into consideration in a future post.

Do you agree with the idea that our food costs are already too high? I don’t. I know that many people have much too much ‘stuff’ already, so much so that “decluttering” has become an industry unto itself. This points to the idea that our disposable income is such that more food costs can be absorbed by the average family, while perhaps displacing spending on some of this unneeded “stuff”. It is really a matter of examining what we define as “needs” and how they differ from “wants”.

If we value a high-quality, low-risk food supply, then we must be willing to pay a fair price for it. Someone has to produce that food, and to my way of thinking, we get only what we pay for. We ought to have the very best food production system in the world. Hands down, the best. And we shouldn’t sacrifice quality for price in this area.

The people who produce, prepare, and deliver food should be able to live comfortably on the income from their operations. This is equally as vital as the service a doctor provides. Additionally, growing corn is capital intensive, it requires investment in land, machinery, and seed – all before any return is realized by the farmer. It is hard work in often harsh conditions. And it is a huge risk (many things can ruin a crop, and the farmer won’t know until harvest time if he has a harvest or what his yield will be).

Food production is something we ought not try to cheapen just because some people don’t want to spend more money for the pizza or steak that they eat. It is something we certainly shouldn’t outsource to other countries. I take this position partly due to the recent history of quality control we have seen from certain foreign nations, and partly due to what I consider another real cause of food cost increases: transportation cost, especially related to the increase in fuel cost.

Despite a growing awareness that we ought to eat more local foods, both for economical and ecological reasons, we don’t actually do it: look at your potatoes, I bet that unless you live in Idaho, they aren’t very local; look at your apples, and then look toward Washington state; take a look at your oranges, and send thanks to California and Florida. I could go on, but you get the idea.
Our food production cost requires attention, and although corn is a legitimate input cost in many consumer goods, until we attempt to deal with 300% to 500% increases in basic fuel costs, it will not really matter. We still will need to process the food, to store and often refrigerate the food, and to get the food to the consumer (including the cost of trucking the food to stores and the cost of shoppers driving to the stores).

This is where we will pick up next time: fuel cost, energy, and transportation and how they all relate.

Give your thoughts, I’m anxious to hear!

Part 1 of 2: Squanto would be proud… is a post from: shannonehlers.com