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Remember, Being a Savage Republican is not where you are from, but what you believe.

Tuesday, February 26, 2008

Canary time

In my four decades in business I've made many contacts. A few have been employed by Cargill, the Minnesota grain and commodities giant. Someone once said that if you wanted to know how much Cargill made, you took the total world sales of corn, wheat, salt and soybeans, subtract what the the other four top grain sellers did and the remainder is what Cargill sold. In the late 80's I was working to put together a few grain deals going to Russia. Someone at the Minneapolis Grain exchange told me that for decades when the U.S. Government wanted to know what the wheat harvest would be in the old Soviet Union, the Feds went and asked Cargill. They knew and knew fairly accurately. They had their own satellite it was said. Cargill employs the best and expects the best. And now Cargill is making a statement that every single ethanol supporter needs to hear: Cargill has suspended indefinitely the construction of a new ethanol plant outside Topeka, KS . According to the Cargill spokesman Bill Brady "The economics are not at a point where we see fit to move forward.The economics are not where they were a year and a half ago ". Two factors contribute to the decision: the cost to build a plant has doubled in five years coupled with the price of corn is now hovering around $5.00/bu. And nothing here should surprise anyone who has even a passing familiarity with basic economics. You always get more of what you subsidize, less of what you tax. Ethanol on its own is not profitable. Its profit comes only from its subsidies. And now even that's not enough to ensure profitability:"Jay O'Neil, senior agricultural economist with the International Grains Program at Kansas State University, said the $5 per bushel corn is putting a squeeze on ethanol plant profit margins.

If the high corn prices continue, he said, margins will be negative."The ethanol industry has fallen on more competitive and difficult times," O'Neil said. "They are going to struggle. You will see a consolidation in this process. Some will go out of business." " Lands! Even with massive government subsidies for the plants, ethanol, farm price supports and then having heavy mandates forcing you and me to put this crap in our cars and trucks these plants STILL can't make money! And anyone hear any lefty, anywhere say "Time to admit this ain't working!"? Nope. The house will burn down before they admit there's a fire. Oh, and here is an excellent article that that old "unintended consequences" of "bio-fuels" heavily contributes to "global warming/climate change" or whatever they're calling it now. Plus the study shows that bio-fuels really do create Man Made Global Warming. And will heavily contribute to global hunger and increased prices all the way around. The solution: drill. ANWR, the coastal shelf . Get government out of the way. End CAFE standards that kill us and do nothing except let politicians feel they "doing something". End all ethanol subsidies-now!

Save us, Oh Lord, from politicians and their good intentions!


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