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Should the Ethanol Bubble Burst?
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[quote user="Murphy Siding"][quote user="RRKen"] <p> No one is substituting food for fuel. Corn goes in, gets hammered, becomes mash, is distilled, the solids come out, are dried, and sold as Animal feed (The water is recycled back through the process hundreds of times)(Ethanol is anhydrous, no water). That animal feed replaces corn, and allows better weight gain on cattle. Cheaper than Corn. </p><p>[/quote]There is a boom of contruction of dairy barns in eastern S.D., due to the abundance of animal feed from ethanol plants, which is more cost effective than feeding cows corn.[/quote]</p><p>Are we all in agreement that food prices are rising faster than the average rate of inflation for other goods and services? I have heard a thousand times on news reports that it is due to ethanol production that is driving up the price of corn, which is in turn is broadly driving up food prices because corn is a wide basis of food production.</p><p>But are you two saying that ethanol production is actually working to drive down the cost of food production because it creates animal feed that is more cost effective than corn? I am not saying you are wrong, but it is the first time I have heard it. It sure flies the face of popular wisdom.</p><p>If it is not ethanol production that is raising food prices via raising corn prices, what is the cause of the food price increase? I can think of two other factors besides ethanol:</p><p>1) The rising price of fuel.</p><p>2) The accelerating development in China, India, and other third world countries. </p><p>But, in any case, if we can establish that ethanol is not playing a part in rising food prices, that ought to be a banner headline.</p>
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