Ice-cream makers frozen out as corn price rises (ethanol demand)

[TexasLawyer]

Source: http://business.timesonline.co.uk/tol/business/markets/united_states/article2080599.ece

From The Times July 16, 2007

Ice-cream makers frozen out as corn price rises
Suzy Jagger and Carl Mortished

What’s the connection between ethanol, the biofuel produced from corn, and a cherry vanilla ice-cream? Answer: the first is responsible for pushing up the price of the other.

This month, the price of milk in the United States surged to a near-record in part because of the increasing costs of feeding a dairy herd. The corn feed used to feed cattle has almost doubled in price in a year as demand has grown for the grain to produce ethanol.

Christina Seid, whose family have been making ice-cream at the Chinatown Ice Cream Factory for 28 years, said yesterday that she expected to have to raise her prices, along with all competitors in the short term. “We are holding out as long as we can, but prices will rise,” Ms Seid said.

<snip>

The squeeze on ice-cream makers, chocolate manufacturers and pizza companies – all of whom use dairy produce as a raw material – is set to tighten as the price of a gallon of milk in the US – up 55 per cent in the past 12 months in some American states – is now the same as a gallon of petrol, with dairy prices accelerating faster than the cost of fuel.

<snip>


Read more: Times/ UK

[Dora]

1. Where is the demand for ethanol?

Is it a real demand (from the marketplace) or is it a demand that's been created by ethanol manufacturers (in hope that the ethanol they make will someday be used)?

I ask because I really don't know.

[shadowrider]

6. People demanding "Green"

Fuel alternatives got what they asked for. With the "alternate" fuel ethanol, it comes from corn, not oil. There is a price to be paid for everything, nothing is ever free. In this case, the price is corn shortages that occur because although more corn is being grown, it's being grown for fuel, not consumption.

Call it the Law of Unintended Consequences.

And yes, silos on farms hold "field corn" to be used as food by cows, horses, etc..it is part of their diet in addition to grass and so on. It's why Kobe beef is so expensive..they are fed corn and only corn.

[Dora]

15. That doesn't quite answer it for me.

I live in a notably green city, and let me tell you that I just don't see ethanol being marketed here. I also just spent five days in Iowa, where the farmer's co-op was selling ethanol at their pumps but I didn't see anybody lining up for it.

My gut tells me that the demand for this isn't at the consumer level.

[shadowrider]

17. You're correct

The demand isn't there primarily because it takes more energy to manufacture than is returned by its use as a fuel, AND it reduces miles per gallon by some estimates as much as 10-15%.

[Dora]

27. Okay - I'm seeing it now. Joe Consumer uses it in blended gas.

Sheesh, I should remember this - I grew up in Phoenix and they use a blended fuel in the winter to reduce emissions.

I'd heard about that about the negative returns on ethanol. It just seems such a shame to me that we're using valuable foodstuff to literally burn, while the price of food is rising.

Hell, on that note, I'm now using a kitty litter for my cats that's made out of wheat - WHEAT! That's crazy, but I do it.

[sabbat hunter]

30. if cars are designed

from the beginning to use ethanol the MPG would be similar, but because they are just adapting gasoline engines to use ethanol in the flex fuel cars the MPG drops.

[Chemical Bill]

38. That is incorrect...

>...it takes more energy to manufacture than is returned by its use as a fuel....

This from the DOE:

The production of ethanol is energy efficient as it yields almost 25 percent more energy than is used in growing the corn, harvesting it, and distilling it into ethanol. The most recent findings show that corn ethanol fuel is energy efficient and yields an energy output:input ratio of 1.6.

http://www.eere.energy.gov/afdc/altfuel/eth_energy_bal.html

The only people who say that ethanol takes more energy than it returns are an oil company paid researcher (Patzek) and a professor of insects (Pimentel). They do not submit their research for peer review, and use assumptions such as counting the workers lunch.

Bill

[shadowrider]

45. Which is more than offset

By reduced MPG resulting in 10-15% more fuel required to travel the same distance. Over the course of 1000 miles without ethanol, let's say your car gets 25 mpg freeway..1000/25 = 40 gallons..a reduction of 10% means 22.5 mpg..1000/22.5 = 44.4 gallons required. ethanol use just cost you $13.20 more to travel the same distance (assuming gas is $3 per gallon). I assure you, that's more than it cost to produce the product. It is further offset by increased prices elsewhere in the form of foodstuffs.

While you and I disagree, I do appreciate a reasoned debate..:-)

[ryanmuegge]

42. Plus it's corrosive.

Ethanol's a fucking joke; a handout to the agribusiness lobby.

[underpants]

49. Iowa caucuses + ADM profit = sudden Ethanol trend

About a year ago there was much discussion as to the benefits of ethanol. As soon as the eco crowd stated the obvious-that it wasn't a good idea as it takes more energy to make it than it saves well suddenly no one was talking about it. Then about 2 months later everyone loved the idea and they rammed it down our throats but no eco's were allowed back on to say that THEY didn't like it this implying that they did.

Cato Institute (yes Cato) determined that for every $1 of profit to Archer Daniels Midland it cost taxpayers ....... wait for it....................... $30. Seriously.
http://www.cato.org/pubs/pas/pa-241.html

The Archer Daniels Midland Corporation (ADM) has been the most prominent recipient of corporate welfare in recent U.S. history. ADM and its chairman Dwayne Andreas have lavishly fertilized both political parties with millions of dollars in handouts and in return have reaped billion-dollar windfalls from taxpayers and consumers. Thanks to federal protection of the domestic sugar industry, ethanol subsidies, subsidized grain exports, and various other programs, ADM has cost the American economy billions of dollars since 1980 and has indirectly cost Americans tens of billions of dollars in higher prices and higher taxes over that same period. At least 43 percent of ADM's annual profits are from products heavily subsidized or protected by the American government. Moreover, every $1 of profits earned by ADM's corn sweetener operation costs consumers $10, and every $1 of profits earned by its ethanol operation costs taxpayers $30.



When did ETHANOL become such a good idea?
http://journals.democraticunderground.com/underpants/44

[TexasLawyer]

21. Many refiners use it in their refined gasoline mix

to meet environmental standards:

Gasoline containing ten percent ethanol - E10 - is used in many urban areas that don't meet clean air standards. Some states promote more widespread use of E10. Minnesota, for example, requires almost all gasoline sold in the state to contain 10 percent ethanol. Over 99 percent of the ethanol produced in the United States is mixed with gasoline to make E-10.


http://www.eia.doe.gov/kids/energyfacts/sources/renewable/ethanol.html

[Dora]

28. OK. That makes more sense to me. Thanks for clearing it up. n/t

[Dickster]

25. you bet there is demand

I live in Minnesota and hold shares in a medium sized, stockholder owned ethanol plant. There is huge demand right now for our product. Most of it is blended with gasoline in a 10% blend. Most of it is shipped out of state. In Minnesota, we also have 65% of all the E85 pumps in the country. I own a flex fuel vehicle and in 2 1/2 years have only put two tanks of gasoline in the thing when I drove out of state and could not fine E85. My car runs just fine on E85. It feels great every time I fill up, knowing that I'm not contributing to Middle Eastern terrorist.

[NashVegas]

37. Commodities Markets

Speculating the increased demand.

[RantinRavin]

52. Ethanol is being used to replace MTBE

as an octane increaser in gasoline.

[Tesha]

54. Archer-Daniels-Midland owns a number of midwest Congressmen and Senators.

Archer-Daniels-Midland owns a number of midwest Congressmen
and Senators.

As a result, all of our gasoline now contains ethanol
(alcohol) that is mostly refined from food-grade corn.

The ethanol itself isn't a bad idea (because, as the poster
above me points out, it replaces the pretty awful MTBE), but
we could derive it from cources other than food-grade corn
except for the problem of ADM's bought-and-paid-for Congresscritters.

Tesha

[Why Syzygy]

2. Is corn

a natural diet for a cow? I've never seen them grazing in the corn field. Feed them something else!
sheesh .. 21st century my foot.

[TomInTib]

5. If you are going to eat beef, demand grass-fed beef.

Corn is for the feedlot stock, the kind you find in grocery stores lying on styrofoam trays and wrapped in plastic.

Cows aren't supposed to drink crude oil, either. But by the time a feedlot cow goes to slaughter, they consume around four gallons of oil which is used as a binding agent for their food pellets.

The feedlot pork and beef business consumes over half the antibiotics consumed in this country.

So, do you want fries with that?

[Why Syzygy]

10. I do

eat meat but buy it all from Wild Oats. Except those burgers .. hmm Thanks for the reminders.

[Mnpaul]

26. Correct

Cows are intended to eat grass. They aren't designed to be pumped full of corn. It makes them grow faster. The fact is that they can't digest all that starch, they produce more methane. It has been proven that the cows can be fed the leftover biomass from the ethanol process and grow just as fast. Feed the cows grass, make fuel from the corn and start using sugar instead of high frutcose corn syrup, which is very good for us to begin with. The reason food is going up is because of higher fuel prices.

[Bluzmann57]

7. I grew up in farm country

and as long as I can remember, cows have been eating corn. The farmers around here actually grow corn specifically for livestock, or at least some of them do.

[Why Syzygy]

8. Oh.

I grew up in ranch country and have only seen them grazing.

[Deep13]

3. We need more farm land! Bulldoze the new Walmart!

This may be bad for consumers, but in rural areas it has two benefits. Farmers are getting good prices and the demand has made farmland valuable. Perhaps that second point will at least halt suburban sprawl.

[TX-RAT]

24. Don't need more land.

Just need to stop the CRP Programs.

[maxsolomon]

4. this is madness

when they mess with my ice cream, they've GONE TOO FAR!

this what the future is going to look like: no more cheap industrial foods. re-learn to make it from scratch, 'murka.

[RaleighNCDUer]

The dairy connection isn't the whole of it, either --

since virtually every food produced these days includes high fructose CORN syrup -- ice cream, chocolate, even the dough in the pizza, mentioned above, all sweetened by HFCS. Maybe it will actually make it scarcer, and send the manufacturers back to plain old sugar.

[jberryhill]

22. That's not bad news...

...since maybe then we can drop the high sugar tariff in time for Cuban democratization.

[seafan]

9. Guess who is pushing behind the scenes for ethanol.... Jeb Bush. Anyone surprised?

But Jeb asserts that ethanol production won't threaten food supplies and claims tariffs to be slashed...
April 22, 2007

Asia Times: What drives biofuel Bush? (Jeb Bush, in particular)
March 13, 2007

L'il Jebbie's been hard at work behind the scenes on the ethanol push.
March 8, 2007

[rodeodance]

11. GRASSLEY from Iowa-----did you see them grin from ear to ear when bush

mentioned ethanol during the sothu address?

[rodeodance]

12. I have notices that milk has really shot up ltely

[rodeodance]

13. Morningstar Analyst - All Food Up 4%, Milk Up 10%, Eggs Up 30%, Thanks To Corn/Biofuels Effects

one problem leads to another problem!!

Forum Name Environment/Energy
Topic subject Morningstar Analyst - All Food Up 4%, Milk Up 10%, Eggs Up 30%, Thanks To Corn/Biofuels Effects
Topic URL http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=115x103466#103466
103466, Morningstar Analyst - All Food Up 4%, Milk Up 10%, Eggs Up 30%, Thanks To Corn/Biofuels Effects
Posted by hatrack on Sat Jul-14-07 10:05 AM

EDIT

With the cost of staples such as eggs (up nearly 30 percent in the past year), milk and bread escalating, some consumers say they are adjusting their spending habits.

Susan McCranie said she can no longer afford to splurge on ice cream and other types of "junk food" to stay within her biweekly $125 grocery budget for two. The Winter Garden resident said she has become more of bargain hunter, scanning grocers' circulars for two-for-one specials and other deals. "You have to watch your pennies," said McCranie, 61, after a shopping trip at a Publix on South Orange Avenue in Orlando.

So what's causing the jumping prices? Corn. Ethanol producers have driven up demand for the grain, which is used to make ethanol blends. That has caused the cost of a bushel of corn to nearly double since spring of last year.

That price jump has led to rising costs for other foods and meats, because corn is an essential part of the U.S. food-supply chain. Farmers use the grain to feed dairy cattle, poultry and other livestock.

EDIT

[Purveyor]

16. But by god, "inflation is under control" the feds keep proclaiming... eom

[AllegroRondo]

43. food and fuel arent counted in inflation numbers

because they're too "volatile".

[Algorem]

14. big giant fat asses gonna shrink?

[Nunyabiz]

18. This is total BS

It is just a ploy by Big Oil to blame EVERYTHING on alternative fuel.
In fact the main reason prices are going up as anyone with 2 brain cells to rub together knows is because that everything runs on OIL, cost more to transport the feed, more to transport the meat & produce, more to produce the crops because most farm equipment runs on OIL etc.

Trying to blame rising prices on Corn/Ethanol is utter bullshit and I hope no one falls for it (Well except for avid Faux Noise watchers of course because those 28%ers are dumb as a stick)

[benld74]

19. This is only a beginning folks,

Currently there is NO WAY to ship the ethanol, except for tanker trucks because ethanol will RUST OUT gasoline pipelines beacuse of the WATER it contains. SO either more pipelines are put in OR more trucks will be on the roads delivering the stuff.

[Dickster]

23. only partly true

The reason ethanol is not sent through existing pipelines is not because it contains any water. In fact fuel ethanol is anhydrous, which means it does not contain any water. Gasoline and other oil products are sent through pipelines, separated by slugs of water. The water keeps the different oil products separated. Since oil and water do not mix, it works just fine. A little bit of water that is separated out at the terminal. Ethanol, on the other hand is a universal solvent. It mixes with both oil and water. So unless the pipeline is dedicated to only ethanol, it cannot be sent down a pipeline with a slug of water separating it from the next batch of gasoline, because the ethanol will absorb the water, and then mix with the gasoline. Besides, virtually every pipeline in existence is owned by the oil companies. They are not going to allow their competition to use their pipelines.

[Theduckno2]

33. Your post was very enlightening.

Welcome to the DU! :hi:

I just wonder how much efficiency would be improved by locating ethanol plants alongside rail lines?

This country used to have numerous grain elevators track-side and rolling tank farms could move sizable quantities of ethanol significant distances.

[Skink]

20. You don't want to see me till I've had my morning corn syrup.

[Tandalayo_Scheisskopf]

29. The real cause of all this...

Is the hedge funds manipulating the markets.

[razzleberry]

31. $3.40 bu/ corn, is unreasonable? .n/t

[Demeter]

32. Real Ice Cream Needs NO Corn

and it's about time that Cuba was allowed to import cane sugar to the US.

[Sgent]

34. Huh?

This is talking about the price of corn increasing the cost of milk (most dairy cows eat corn).

[Demeter]

36. Dairy cows don't need corn, either

[NickB79]

47. Corn allows you to raise more cattle per acre than alfalfa

Corn and soybeans are a high-density crop, much more so than alfalfa. For example, my dad farms 100 acres of land and raises cattle. He can sustain far more cattle over the winter by growing corn and soybeans in the fields instead of primarily alfalfa (he does graze them from May-Oct, though). You're right that dairy cows don't necessarily need corn to produce milk, but farmers use corn to produce MORE milk per cow.

Increasing corn costs cut farmers twice. First, it costs more for dairy farmers to buy feed, but if they cut back on the feed to save money they lose milk production. Even adding more alfalfa to their diets and accepting the drop in milk production costs more, because increasing fuel costs make it more expensive to bale hay as well.

[NickB79]

48. Delete

Double post.

[olddad56]

35. this is gonna push the price of corndogs through the roof.

[BrotherBuzz]

44. Sustenance on a stick is gonna go up? Noooooooo!

[Javaman]

39. Let the riots commence! Junk food prices are going up!!! nt

[Acadia Blue]

40. Bryers uses only sugar in most flavors. High fructose corn syrup is

very unhealthy. It makes people fat and is bad for anyone with type 2 diabetes. The regular corn syrup is not as bad.
I don't buy anything with HFCS in it.

[BadgerKid]

46. HFCS tastes funny besides

I can taste the difference between HFCS and sugar when either comprises a large amount of the particular food.

Table sugar is 50/50 glucose/fructose.
Regular corn syrup is glucose.
Corn sugar (used by homebrewers) is glucose.

[Doctor_J]

41. Our local ice cream stand just raised their prices 10%

across the board.

[TexasBushwhacker]

50. And corn is subsidized!!!

That's the thing that chaps my hide. We've been paying agribusinesses like ADM billions of dollars in subsidies for years so that we could make cheap high fructose corn syrup and cheap cattle feed. I hope that the subsidy handouts will go down now that prices are up, but somehow, I don't think they will.

[Raine]

51. Why not use real cane sugar in ice cream

instead of crappy corn syrup that is so bad for people. :puke:

[SpiralHawk]

53. "Let them eat gelato." - Your Royal Highness, Commander AWOL

"Please don't trouble me with these problems of the little people. Me and my cabal of corrupt republicon cronies are Hard at Work (smirk, smirk, smirk)."

- Royal Commander George AWOL Bush