Undoing America’s Ethanol Mistake – Barbados Gets Off Lucky

The Nobel Prize-winning economist Milton Friedman once said, “One of the great mistakes is to judge policies and programs by their intentions rather than their results.”

Texas Senator Kay Bailey Hutchison on the US Ethanol Programme…

“This was a well-intentioned measure, but it was also impractical. Nearly all our domestic corn and grain supply is needed to meet this mandate, robbing the world of one of its most important sources of food.

We are already seeing the ill effects of this measure. Last year, 25% of America’s corn crop was diverted to produce ethanol. In 2008, that number will grow to 30%-35%, and it will soar even higher in the years to come.”

… read an excellent article by Senator Kay Bailey Hutchison. She’s the womany between the cowboys (link here)

Meanwhile In Barbados…

Thank the Lord that one of the first things the DLP did upon assuming power was to kill the plan for ethanol in Barbados.

WE were given millions by the EU to spend on our cane industry. I wonder if we shall ever learn what happened to all that money?

Further Reading

Keltruth Blog: Rice Rationing… in America!

BFP: Barbados Government Kills Sugar Cane Ethanol Scam – “Thank You Barbados Free Press. Without Your Revelations…”

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27 Comments

Filed under Agriculture, Barbados, Environment

27 responses to “Undoing America’s Ethanol Mistake – Barbados Gets Off Lucky

  1. Adrian Hinds

    BFP the article you point to by the Lady Senator does not conclusively put the blame on biofuels, and if it is corn that is being diverted, what is contributing to the increase in Wheat which is higher than corn?

    ++++++++++++++++++++++++
    A response to a Economist article

    The article clearly suggests two reasons for the impending global food crisis 1) Asians are getting wealthier and hence eating more 2) The World is aggressively switching to Biofuels. In the same breath the article goes to point out the problem is with the demand and not the supply.

    So what solutions does this leave us with? Stop the Asians getting wealthier and hungrier? Stop switching to Biofuels and resort back to fossil fuels? Or start switching fully to ‘high protein’ foods (read ‘meat’). Are we reading into theories by pro-fossil fuel group, or the anti-carb-foods, who are happy watching the struggling Asian economies. The article is no more more than a sophisticated version of fear-mongering and ‘I told you so…’ for switching to Biofuels.

    We all grew up in food scarce situations and knew to patiently stand in queues with a ration card. The modern day generation may well be aware of that and learn to be patient while solutions are developed. As for Biofuels being the root cause, there are different ways to generate the same biofuels without destroying the biodiversity. Also, we haven’t still counted in wind and solar.

    A response from a Natarajan Ganesan to the following article.

    http://www.economist.com/world/international/displaystory.cfm?story_id=11049284&CFID=3802186&CFTOKEN=62727056&mode=comment&intent=readBottom

  2. Adrian Hinds

    Here is another opinion to concider giving the thrust of your argument.

    LHSG wrote:
    April 18, 2008 10:38
    Just to make it clear, Brazilian biofuels are produced from sugar cane, definately not a vital item on our tables. Unless rises on sugar and alcoholic drinks prices are the biggest issue, Brazilian production of biofuels cannot be held responsible for all the problem. Even because biofuels have been produced in the country since the 1980s. Biofuels are not new, its technology was just improved, that’s why the world has just started to pay attention to it. So it is probably not correct to associate directly the rise of biofuels and the rise of food prices.

  3. Bajanboy

    I guess the sugar industry in Barbados is finally going to die, then.

  4. reality check

    Adrian,

    a movement of 25% corn to ethanol in the US and rising is huge by any standard of measurement. It may not be the only factor such as the huge increase in potash and other fertilizers but in terms of food production redirection it is a staggering change by any measurement.

    The World must go to alternative cleaner energies including nuclear for a whole host of reasons not to mention stringent recycling, reduction of consumption and increased efficiencies.

    This mantra must be preached and practised by every politician worth his or her salt so that the next generation learns and lives a new way of life.

  5. 57

    Let’s get it straight bloggers, yeah we are in serious doo-doo here on an insignificant rock stuck out in the Atlantic.

    There are silver linings we can exploit,.

    Hot Mud we give away by the lorryload from our sugar factories can make economical ethanol.

    But who’s going to buy the sugar when transport cots are prohibitive.

  6. reality check

    Anonymous

    Hot mud is also an excellent fertilizer.

    What is the direct and indirect cost of converting this mud to make ethanol and what is the minimum quantity or scale required ( capital wise ) to justify such a conversion? My recollection was that Barbados has too small a land mass and cane production to justify an ethanol plant without more world subsidies.

  7. Waterboy

    Ethanol and Water

    Extract from Economist.com

    http://www.economist.com/world/na/displaystory.cfm?story_id=10766882

    “There are doubts about how green ethanol really is (some say the production process uses almost as much energy as it produces). Some argue that using farmland for ethanol pushes up food prices internationally (world wheat prices rose 25% this week alone, perhaps as a side-effect of America’s ethanol programme). But one of the least-known but biggest worries is ethanol’s extravagant use of water.

    A typical ethanol factory producing 50m gallons of biofuels a year needs about 500 gallons of water a minute. Most of that goes into the boiling and cooling process, which is similar to making beer. Some water is lost through evaporation in the cooling tower and in waste discharge. All this is putting a heavy burden on aquifers in some corn-growing areas.”

  8. Johnnie Too Bad

    It seems to me that a lesson that we the non white peoples of the world seem not to have learnt is this.To use the man’s words as a frame of reference to prove our points fall far short of reality, unless we know all the facts..
    Shortage of staple foods across the world stage has more to do with money than anything else. Please consider this:-
    * The rapidly falling value of the dollar.
    * The Sub prime mortgages and the financial crisis in the world.
    * The greater price paid for biofuels/ethanol crops.
    * Higher price paid for oil on the basis that there maybe a war with Iran.
    * The value of forward buying of futures and in particular commodities prices over the next year.
    * The reason Vietnam, India and several other countries have closed their exporting of rice (is part of the deferred gratification approach) why take a price now of a weak dollar, when we can wait and possibly get a much higher price in the future, maybe as much as 50% to 75% more in six to twelve months time.
    * When viewed through such a prism, the artifical scarcity goes a long way to explaining the mind of the gamblers on Wall Street. After all they must recover some of the huge sums they dropped in the financial crisis. And guess what folks, yet again the poor folks of the world must pay for it all and fund the recovery.
    Now Adrian, there you have it. Forget the Economist, after all it is the mouthpiece of the very people who want to hoodwink the rest of the world.
    Johnnietoobad.

  9. So Long

    Johnnie Too Bad

    “The rapidly falling value of the dollar”
    And there you have it folks. Finally we have gotten around to the most important issue affecting the whole world.
    Not African immigration, not journalist on a free ride, not even integrity in politics, but the US dollar, the reason why soooo many people (particularly Arabs) have lost their lives over past few years.

    The falling price of the US dollar…. To what? Let’s see, GOLD you nitwits look at the chart and you will see what all the Arabs and the Chinese and the EU’s and the Indians have been seeing for the past eight years. In the 70’s it was pegged $35.00 to an ounce of gold until there was a run on their gold supplies and they dropped the idea and insisted that all oil transactions are carried out in US currency (actually a deal was swung with the Kings). Now the whole f**king world is convinced that after all the war games, printing of money and straight up teafery, the United States cannot pay its debts. Now this is big, real f**king BIG.

    Thnx JTB

  10. Adrian Hinds

    JTB: Thanks for your views, I was going to get around to where you have place the debate. It is the right context in which to view today’s world. I just wanted to spend sometime on BFP’s continued fixation that converting sugar cane to ethanol production in Barbados is a bad thing, and to further combat this strange belief that corn to ethanol is the cause or one of the causes of high food prices. I will not forget the Economist magazine, nor the NYTIMES, for they both gives me good view points of European and American liberal and corporate ideas, opinions, and intent. The blog responses to these two online media outlets i relish the most.

  11. John

    I heard Professor Suzuki on CBC last night speak on “Peak Oil”.

    Never heard of it before so did some googling.

    Here is one of many links.

    http://www.lifeaftertheoilcrash.net/

    Even found it in Wikipedia.

    Maybe it is all scare tactics.

  12. Adrian Hinds

    “an oil based economy such as ours doesn’t need to deplete its entire reserve of oil before it begins to collapse. A shortfall between demand and supply as little as 10 to 15 percent is enough to wholly shatter an oil-dependent economy and reduce its citizenry to poverty.”
    ==================================

    When this website deals with the continuation of oil field finds then i can give some merit to their opinions.

    1: there is no scarcity of oil that we know of
    2:We are no where near having to tap the Strategic oil reserves, as a result of the non-availibility of oil
    3: We have not yet started to drill in Alaska.

    4: Brazil just found more oil off it’s coast.

    There is no convincing proof that the rising cost of oil is the result of true scarcity, and if scarcity can be substantiated it most likely will be the result of drilling capacity, delivery capacity etc.

    I find the statement above similar to accounting methods that ignore rainy day funds, and other types of emergency savings when faced with a cash crunch.

  13. John

    Water is a renewable resource but still, it is finite.

    The sea has in plenty yet to make it potable requires enormous amounts of energy. Natural processes do it for us in the Hydrologic cycle and we tap into the cycle to extract the ground water we use here in Barbados.

    If the price of oil does as is predicted, then Desalination becomes an unusable option to overcome the supply problems we face.

    What natural process makes oil renewable? How did it get there in the first place? Until I can find an explanation of how it renews itself I’ll keep thinking that ultimately any find will eventually be depleted.

    Replace the depleted find with another find and back through the process we go, until we stop finding oil.

    The same problems we see with water on the tiny scale that Barbados is, also apply to oil, …. but water is renewable.

    I am not sold either way just came across this other way of thinking which also seems logical and put it up for what it is worth.

    I should also say that I have seen a prediction that oil will rise to $150 a barrell this year and then start to reduce in price.

    I’ll keep thinking and reading and do what I can on the premise that oil is finite because no one seems to know for sure!!

  14. peltdownman

    John
    Surely oil is the product of decomposition of organic matter millions of years ago, and which has become buried by natural erosion, tectonic activity and other physical factors. Oil is not renewable simply because the existence of man has removed much of the organic matter from which oil is formed. We don’t have millions of years for the process to complete itself in sufficient quantities to become a renewable resource. Basically, we are digging into the savings. Big time.

  15. John

    peltdownman

    It is as simple as that.

    … but some folks believe oil is renewable and who am I to say different. I just don’t know what is going on a few miles under my feet.

    … but I can see the sea, and the rain, and the rivers and the streams and the clouds and I have been a couple of hundred feet underground and watched part of the hidden part of the hydrologic process in action!!

  16. Adrian Hinds

    Oil not being renewable does not translate into it being scarce to date only that at some point it can be. What proof is there that the process that results in oil is completely dead today?

  17. John

    Adrian

    My point exactly.

    To argue for the scarcity of oil requires that the rate at which it is being produced underground by whatever process is less than the rate at which it is being extracted.

    To argue against it requires the opposite to be the case.

    Nobody on the outside of Oil companies knows and there is not enough evidence for me to apply the duck test.

    The best that can be done is to divine that because a well was shut down it has run “dry”. Only the Oil Company knows why the well was closed. Maybe one day it can be reactivated and there will be oil.

    It is simple to appreciate the fact that water is renewable because much of the hydrologic process is visible and explicable.

    Until recently I would have said that water is also finite but I have read a Japanese “scientist” who watches ice crystals form and who believes water is not finite but that it is being added to constantly from space, not extraterrestrials, but meteors of ice. I cannot fault his logic, I just never though that thought before.

    It is difficult to envision a process by which gasoline once burnt somehow returns to the “sea” of oil miles beneath our feet, but who knows, it might.

    It is thus logical to think that oil is not renewable.

    Water is really amazing.

    No wonder so many religions view it with such reverence. It can both kill and give life, and it regenerates itself naturally.

  18. Hants

    Oil production costs vary in different countries and the price and availability is manipulated to maximise profits.

    Governments as in Canada and the USA like higher prices so they have more tax revenue.

    We are treated as “Profit centres” with an insatiable appetite for big fancy vehicles.

    We the consuming public will have to change our energy wasting habits as the price is “manipulated” upwards.

    So how many of you are stocking up on rice? Food for thought….pun intended

  19. Straight talk

    Adrian Hinds:

    “What proof is there that the process that results in oil is completely dead today?”

    As I understand it, there has been identified only two periods of intense global warming in pre-history that caused massive algae blooms in the oceans and it is the die off and sedimentation of this algae in only these two periods which has provided our oil reserves.

    As for self-renewal of oil, it is only OPEC members whose proven reserves have stayed constant for years whilst they are pumping at max that gives rise to such beliefs.

    There is either a magic genie under their sand or the reserves are falsified arbitrarily to allow them to maximise extraction quotas.

    Personally I don’t believe in genies, so I think we are being deluded, and so do the majority of industry analysts.

    Output is flat-out and flatline.

    Demand is still increasing.

    Why is this if there is spare capacity available?

    For a beginners guide to what is really happening read any one of the excellent primers in the right hand column of the definitive website of what is really happening with energy http://www.theoildrum.com

  20. Sam Gamgee

    I read that stuff on that site ST. Eye opener it was.

  21. So Long

    Hey Guys, I am a double Phd in something.. guess what. The last three contribs (before ST, na you too) have made me sleepy. Now you have a purpose in life. Keep it up, I can use you.

  22. Johnnie Too Bad

    Adrian, I have no trouble with you reading the Economist, NYtimes or any other of these tracts you set so much store by.
    What clearly cannot be contested is that the leaders, no, the political carpetbaggers in our society have no vision. Politicians of either party have over the last 30 years or so shown themselves to be nothing more than mere followers of expediency, worshipping at the altar of the next election.
    Even at its most simplistic, someone would have told them that with a growing population and around 500,000 visitors a year, if the Tourist Authorities are to be believed that our food import bill would one day reach abnormal proportions. Each party has encouraged flight from the land and agriculture while allowing ‘Cow’ to plant even more concrete.
    Whatever is said, our leaders have been total failures. Government is suppose to lead and in this respect all parties have failed.
    From scholarships in agriculture, to taxation of idle lands and incentives for agriculture, we have failed.
    Should we now be surprised that we are likely to catch our royal. I remember hearing our political idiots all praising the WTO . None of them could see that it was about securing markets for the more developed economies.The quinessential elements of capitalism are about securing new markets or at least maintaining old ones. So why would the WTO not be part of that good old scam of the developed world?
    It is about time that we make our politicians mean what they say and say what they mean.We must learn from the recession that is about to engulf the world, We must be more self sufficient than we have been before. When you have to buy all the food you eat, the day you don’t have money, you will suely starve.
    Johnnietoobad.

  23. The rising cost of food may be connected to the subsidized production in the US of ethanol from corn, but not ethanol production from sugarcane. If the US simply dropped its subsidies to corn-based ethanol and its very high import tariff on Brazilian sugarcane-based ethanol, this contributing factor to food prices would be taken care of and Americans would have plentiful ethanol supplies. But it won’t happen — not any time soon, at least. Too politically unpopular with Midwestern farmers.

    The fast-rising cost of fuel used in transporting grains and foods — diesel in trucks, bunker in ships, jet fuel for cargo planes — is also a huge contributing factor often overlooked or under-emphasized in journalistic accounts of food prices. This does not look like it will get better any time soon.

    Commodity speculation is huge right now, and most journalists and politicians don’t talk about it either. Right now, investors and hedge funds face a volitle stock market, a depressed bond market and a dangerous real estate market, so where do they put their money? Commodities — grains and crude oil. This drives up prices of both categories, and both in turn drive up food prices.

    And of course there is the aforementioned shifts in demand.

    So I agree, the rush to place so much of the blame for food prices and scarcity on biofuel production is way overblown.

    BTW Adrian, Brazil has been making ethanol from sugarcane since the 1930s, not the 1980s (the latter period is simply when they went large-scale). That’s a big part of why they have such a cost and technology advantage over everyone else.

    Regards,
    Keith R

    *******************

    BFP says,

    Hi Keith,

    Our problem with ethanol production here is threefold… lack of water, lack of waste disposal options and pure corruption in the bidding process! Not to mention that we only have so much land to grow cane and none of it is in the large tracts like brazil enjoys.

  24. John

    ioman01
    May 1, 2008 at 1:35 pm
    The rising cost of food may be connected to the subsidized production in the US of ethanol from corn, but not ethanol production from sugarcane. If the US simply dropped its subsidies to corn-based ethanol and its very high import tariff on Brazilian sugarcane-based ethanol, this contributing factor to food prices would be taken care of and Americans would have plentiful ethanol supplies. But it won’t happen — not any time soon, at least. Too politically unpopular with Midwestern farmers.
    ++++++++++++++++++++++++++++++++

    Wonder what will happen when Brazilian Ethanol has a final step of processing added in Barbados and gets shipped to the US to benefit from the import duty concesions I understand Barbados enjoys

    Understand that is what the new Goddard’s JV is set to do but I may have it wrong.

  25. John,
    as I understand it, Brazil is working with several Caribbean and Central American nations to do final processing steps there in order to take advantage of duty quotas under the Caribbean Basin Initiative (CBI) and/or DR-CAFTA. But note the use of the word “quota” — there usually is a cap on how much these countries can export to the US before tariffs jump up to the levels currently imposed on Brazilian ethanol imports.

    Brazil is also working with many of these countries to help get their own sugarcane-based ethanol programs going (often offering subsidized tech transfer and tech assistance), on the long-term view that creating lots of production allies will help Brazil crack more export markets.

  26. John

    Everyday I learn something new. Thank heavens for the blogs.

  27. JTB seven star reasons for the high cost of food today continues to be very valid.

    Johnnie Too Bad seven star reasons: :d

    Please consider this:-
    * The rapidly falling value of the dollar.
    * The Sub prime mortgages and the financial crisis in the world.
    * The greater price paid for biofuels/ethanol crops.
    * Higher price paid for oil on the basis that there maybe a war with Iran.
    * The value of forward buying of futures and in particular commodities prices over the next year.
    * The reason Vietnam, India and several other countries have closed their exporting of rice (is part of the deferred gratification approach) why take a price now of a weak dollar, when we can wait and possibly get a much higher price in the future, maybe as much as 50% to 75% more in six to twelve months time.
    * When viewed through such a prism, the artifical scarcity goes a long way to explaining the mind of the gamblers on Wall Street. After all they must recover some of the huge sums they dropped in the financial crisis. And guess what folks, yet again the poor folks of the world must pay for it all and fund the recovery.

    =============================

    The following article pretty much agrees with JTB while shattering the myth of corn-to-ethanol=highfood cost. In addition to giving us a context in which we can view Brazil assistance to the caribbean nations with sugarcane-to-ethanol production.
    ++++++++++++++++++++++++++

    To help poor, we’ve got to diversify fuel sources

    By Clifford D. May | Thursday, May 1, 2008 | http://www.bostonherald.com | Op-Ed

    There’s an old joke about a giant meteor heading toward Earth, and the Washington Post running the headline: “World To End; Minorities and Poor To Suffer Most.” Well, on Sunday the front page of the Post read: “The New Economics of Hunger.” In the subhead: “The world’s poor suffer most.”

    First, it is not clear that the economics of hunger are any different now than they have been in the past. There is still supply and demand. And there still are no free lunches.

    Second, if you happen to be a poor farmer, increasing prices for crops should not make you “suffer most.”

    The Post asserts that corn prices have “been climbing for months on the back of booming government-subsidized ethanol programs.” This has quickly become the conventional wisdom. But while free market types (like me) are skeptical about both subsidies and tariffs, there is actually no evidence that these market manipulations have been a major factor behind rising prices for corn or other grains. Researchers Robert Zubrin and Gal Luft point out that the total U.S. corn crop has increased 45 percent since 2002. The amount of corn available for food and feed has increased 34 percent – after the part used for ethanol has been taken out.

    But haven’t those farmers cut back on other crops – soy and wheat, for example – to plant more corn and hasn’t that led to increases in the prices of those grains? Apparently not. As Zubrin and Luft also note, U.S. soy plantings are expected to be up 18 percent, wheat plantings 6 percent and overall, U.S farm exports are up 23 percent. American farmers are rational businessmen. When the prices crops command rise, they produce more. That requires more investments but it brings more return on those investments.

    The Post also blames higher prices on global warming. But there is no solid evidence to suggest that whatever global climate change we have experienced has reduced food production. In fact, a warmer climate should mean a longer growing season allowing for more food production.

    So what is really driving up the cost of food? For one, some of the world’s poor are not as poor as they once were. People in India and China, for example, have more money to buy more and better food. But that change has been gradual. What’s sudden is the spike in oil prices – 40 percent this year alone, with oil now priced at well over $100 a barrel.

    That makes it expensive to operate a tractor, to get crops from farms to factories, and to transport the products to the stores. Oil does not operate within a free market. The OPEC oil cartel can – and will – manipulate supply. And our transit system has been built so that oil has a virtual monopoly as a transit fuel.

    These challenges will not be solved by declaring a “new economics.” What is needed is to get back to basics: Increase supplies of food and fuels, and prices will come down.

    By all means, send food aid to those who are starving. But over the longer run, Third World farmers need to be helped to grow more of their own food.

    As for transportation fuel, of course drill more oil (e.g. in Alaska and offshore) but also give petroleum competition by making cars that can use a variety of fuels. The technology for flexible-fuel cars already exists, and the added cost is hardly more than it takes to fill the tank of an SUV with $4 per gallon gasoline.

    Do that, and an array of alcohol-based fuels soon will be available. They will be made not just from domestic corn and imported sugar cane but also from weeds and crop residues, biomass, coal and even urban trash.

    Some of these fuels would be made in the U.S. Others could be produced by those poor Third World farmers. With increased supply and a competitive market, fuel prices will fall and the dollars you do spend can lift African farmers from poverty. The alternative is to continue sending trillions to sheiks and mullahs who openly declare that their mission is to kill your children. Is this really such a tough call?

    Article URL: http://www.bostonherald.com/news/opinion/op_ed/view.bg?articleid=1090842