Saturday, March 16, 2013

Corn, Ethanol, Farms, Food and the Logic of the Granary

I haven't said much political in a while. Moreover, amid all the talk of budget balancing and sequesters, I'd like to shift attention to a topic that may - at first sight - seem a bit wonkish and detached: farm subsidies.  In fact, they are an area where Blue America remains frightfully ignorant and where the flood of entitlement spending merits closer attention, in times of near bankruptcy.

Are we entering a new era of negotiation?

Amid the flux of rapid change, new alliances and alignments are being made, as we speak.   Some conservative pastors are reversing what had been standard dogma, speaking out for "creation-tending" and action on climate change. Meanwhile, the Sierra Club and other environmental groups are cautiously easing (even in the wake of Fukushima) their once-rigid opposition toward nuclear power. While Barack Obama and the democrats show flexibility toward cautious offshore drilling, a few Republican legislators showed a willingness to pursue more stringent gas mileage standards and cap-and-trade methods for curbing greenhouse gases.

Of course, in some of these cases, what we're seeing is another example of "leaders" following the public, rather than the other way around.  Still, after the century's first decade (the Nasty Oughts) featured intransigent Culture War,  is it possible we are witnessing a gradual return to the other, classic American pattern?  That of even-tempered pragmatism? Finally shaking off a bad case of Future Shock that swept America, along with that fearsome "2" in the millennium column.  I guess we'll find out, if (as predicted by my friend, the renowned business pundit John Mauldin) Democrats and republicans astonish everyone with a sensible compromise budget deal.

If so, it has to be only the beginning. After immigration reform and modest sensibility on assault weapons, there are some other sticky matters badly in need of a fresh look.

(Note: this posting is an updating of a "classic" that got a lot of buzz some years ago.)

The History and Common Sense of Farm Subsidies... and What Happened

Let's zero in on one area where logic and pragmatism have been in short supply -- the question of farm subsidies, and how they lately spurred a giant biofuels industry -- one that could have been set up sensibly, but for the simplemindedness of all sides, leaving in place little more than a wasteful scam.

image.axdFirst a little history, of the biblical kind. Remember Joseph? He of the technicolor coat, who wandered into Egypt and interpreted a Pharaoh's dream? Seven fat cows, followed by seven skinny ones.  These, Joseph announced, forecast a time of bumper harvests, followed by one of devastating famine. That is, unless sufficient stocks were bought and stored away. Which the forewarned Pharaoh did, whereupon he ultimately thanked Joseph for saving the nation.

Historians now verify that the Egyptian state used to do this sort of thing often, in a routine and simple way. Whenever crops grew abundant and grain prices were low, the government bought and stored grain, both assisting farmers hit by low prices and creating a stockpiled reserve. When supplies ran thin and prices ran high, the caches were opened and stores sold, softening price swings, letting both farmers and consumers have a little predictability in life. Any resulting profit to the government helped to maintain to the granaries. A simple system. Everyone benefited. Farmers weren't bankrupted by too-good harvest years. The people weren't starved and taken advantage of in lean times. Taxpayers got their money's worth. The state's useful role paid for itself.

Now, there were a few special circumstances that helped Pharoanic Egypt master this trick. The dry climate allowed grain storage for extended periods. Also, there are a few things that simple-minded kingdoms do really well, such as repeating the same working pattern, over and over. Pivotally, those ancient farmers did not have a powerful voting bloc, able to sway government policy and alter the arrangement in shortsighted ways -- a failure mode of later, more sophisticated nations.

dust1Take the U.S. Great Depression, a time when urban populations went hungry, while farmers poured excess milk into sewers, because the price was too low to be worth shipping. Under the New Deal, various methods were tried, for helping rural populations hard beset by market ructions... as well as dust bowls, foreclosures, bank failures, disease and bad land mismanagement. Some of the solutions -- e.g. roads, schools, electrification, farm-science and thousands of farm bureau offices, subsidized post, phone and internet -- seem proper tasks for government, even from a conservative perspective. (Now, that is; though all of these sensible measures were bitterly fought by the same shortsighted folks who today equate FDR with Satan.)

Notably, urban taxpayers never demanded payback for a cent of all that rural infrastructural support -- a tradition that continues today, as rivers of tax dollars continue to flow from Blue to Red. Nor should they. (Nor should rural folk brag about how "independent" they are.) We need each other. E pluribus unum.

How did Farm Policy Leave Common Sense Behind?

Infrastructure is an easy decision, but how to damp those pesky swings in market price? Of course, a direct approach for achieving rural assistance, and one that involves the most market-meddling, has been direct farm subsidy payments and price supports. And, way back in the 1930s, the first recourse looked pretty darn traditional. The government simply bought up extra food and gave it to poor people. Some of the grain and milk got turned into storable items, like flour and cheese, to serve as a national reserve before getting recycled through food stamps and school lunch programs. And, yes, the government bought grains when they were cheap and sold them later, when the price was high. All very logical. Almost Egyptian.

Food Politics cover smallOnly progress follows progress. With all that education and infrastructure and investment, farmers got a whole lot better at their business. There came a time when US agriculturalists could not be stopped from producing too much! Domestically, at least, there was no longer a "famine" side of the cycle, for the government to dump its stockpiles into. And sure, the government tried making this a win-win by sending massive amounts of food overseas, as foreign aid. But, while some of this was genuinely life-saving, we now know that another result was -- just as often -- to undermine local agricultural systems and wreck a developing nation's ability to feed itself. Beware of unforeseen consequences.

So the idea arose simply to pay farmers not to produce on some of their land. On occasion this has been done, in some countries, by purchasing some of the farmland outright, leaving it fallow or converting it to other uses, even parks. Farmers benefit from higher prices or collateral value for their land. Farmers also get higher income from their crops, since less land is in production overall. And taxpayers get something tangible, in return for this help. They get that land. It can be banked, just like that Egyptian grain. Only much better-preserved and with ecological benefits, too,

But then, we are a nation where political power was deliberately tilted, from the beginning, toward rural states. And, as one might expect, there came pressure for change. It began to occur to clever people that governments can be arm-twisted into giving, without getting anything in return. (After all, look at the dams and highways and schools.) So, polemical tricks were used. For government to buy land and surplus produce was "socialistic." On the other hand, simply paying farmers to keep their land, but not to grow anything on it, well, that somehow made sense and was not socialistic at all!

This is an old, old argument, and I am neither qualified, nor interested in getting down to the actual fight over farm supports, per se. Or the way giant agribusinesses now collect the lion's share of subsidies that were designed to preserve family farms. Or the way opponents of socialism nevertheless have managed to rationalize demanding that the taxpayers' government never get anything direct and tangible, in return! (Socializing and externalizing costs while privatizing profits -- that's the new version of "capitalism." And Adam Smith is spinning in his grave.)

Only let's get back to Joseph; note how the second half of the ancient cycle is now almost completely missing. When the government used to stabilize low prices by buying something material (grain or land) it acquired a palpable reserve that it could then use in emergencies, or sell when prices were high. But, today, there are no large federal stocks of food pouring forth to ease the skyrocketing supermarket prices, nor stocks of reserved land being nurtured in fallow-recovery, or else offered to young, suburban couples to try their hand, as new farming pioneers. Nor are the direct-payment subsidies being cut back, now that floods of profit are pouring into agribusiness.

It is no longer a matter of cycle balancing. It is an entitlement.  Indeed, one sees some very "non-egyptian" things going on... like a US government hurrying to fill the National Strategic Petroleum Reserve with high priced oil. The same government that (does anybody at all recall?) sold out of the reserve, years ago, when prices were low.  Buy high and sell low.  Very "non-egyptian," indeed.

(Note, that particular scandal happened under the George W. Bush Administration, when this article first posted. Nor was it alone.  The Bushes sold off most of the US helium reserve - to friends at low prices - and now a helium scarcity is growing dire. We all need to become better at detecting such scams.)

What Does Any Of This Have To Do With Biofeuls And Ethanol?

Good question. 
But first, let's have some more historical perspective, provided (in 2008) by economic analyst John Mauldin:

"North America has experienced great weather for the last 18 consecutive years, which, combined with other improvements in agriculture, has resulted in abundant crops. According to Donald Coxe, chief strategist of Harris Investment Management , you have to go back 800 years to find a period of such favorable weather for so long a time. Yet food stocks in corn, wheat, rice, etc. are dangerously low. We are just one bad weather season from a potential worldwide food disaster. And Dennis Gartman has been pointing out almost daily how far behind US farmers are in getting their corn crops planted, due to bad weather:" Further. “… the corn crop really is behind schedule. Corn is not like wheat. Wheat can survive drought; it can survive cold; wheat, as we were taught by our mentor, Mr. Melvin Ford, many years ago, is a weed. It is an amazing, resilient plant. But corn is temperamental; it needs rain when it needs rain; it needs dry conditions when it needs dry conditions. It needs to not be hit by early season frost, or it will suffer, and it needs a rather archly set number of days to grow. Each day lost at the front end of the planting/growing season puts pressure upon the corn plant to finish its job before the autumn frosts, and puts increased soybean acreage and decreased corn acreage before us. Meanwhile, ranchers are reducing their herds, as they cannot afford to feed them due to high grain prices.The same thing is happening with chickens. This means sometime this fall supplies of meat of all types are going to be reduced. Maybe someone will point out that using corn to produce ethanol has the unwanted and unintended consequence of driving up food prices all over the world."

As usual, economic wisdom from one of the best analysts in our generation. (Note that in the years since, our US grain belt has been struck by a devastating, multi-year drought.)

So, then, let's bring in ethanol.

In recent years, a heavy and generous federal subsidy has created a vast corn-to-ethanol industry whose effects are causing a lot of public debate. Environmentalists claim that it takes more than a gallon of imported oil to actually create a gallon of ethanol fuel. The greenhouse gas benefits are negligible and possibly negative. According to Mauldin, the price and energy balance would be much better if we imported Brazillian sugar cane, which seems made for ethanol production. But farmers in Idaho apparently have a veto over anything sensible like that.

Of course, never mind the blatant silliness of pouring food into our gas tanks, while poor people around the world riot over skyrocketing prices and we, here, feel a sharp pinch in the store.  Clearly, we are witnessing democracy at its almost-worst. (Wherein hypocritical oligarchs who keep citing the infamous "largesse" diss upon the common citizen, are by far the worst offenders.)

Today, the special interests are vast and well-entrenched, so don't expect them to enter into negotiations to find a logical way out of this mess. Indignant rationalizations abound, and every person seems convinced that their own version of government-suckling is not socialism. It is patriotism.

The Situation in 2013

As I updated this article, studies have revealed that much of the shine is coming off of America's love affair with ethanol.  (Well, the GOP's love affair, as ethanol allowed the party to offer an "alternative" that both sounded plausible and poured billions toward their friends.)

Now, things are changing, and not just because scientific studies show ethanol fuels to be at-best a breakeven proposition, doing nothing for energy independence or reduction of environmental damage.  Beyond that - according to a New York Times report, "Nearly 10 percent of the nation’s ethanol plants have stopped production over the past year, in part because the drought that has ravaged much of the nation’s crops pushed commodity prices so high that ethanol has become too expensive to produce. A dip in gasoline consumption has compounded the industry’s problem by reducing the demand for ethanol."  Advanced biofuels from waste like corn stalks and wood chips have also yet to reach commercial-level production as some had predicted they would by now.    

The Right Way to Apply Hard Liquor...

But now I plan to surprise you. I will speak up not only for government price intervention to help farmers, but also for subsidized biofuel alcohol!
Though not as it is being done today.

Perhaps it is time to take a look back at the Egyptians of old, and go back to the root of the problem, so to speak. Farmers (especially giant agribusinesses) do not deserve automatic subsidies as some kind of birthright. On the other hand, the ancients were onto something. We are all better off if farmers are cushioned from wild market swings and get the kind of predictability that can let them invest in what is, after all, a business vital to us all.

Back when the New Dealers and Great Society folks tried to balance the cycles by buying cheap-excess bumper crops and storing for lean days, they ran into a problem. A vast, continental nation can only store up so much grain and cheese. In part, the move to simple cash grants came out of despair over how to do the job effectively, the Egyptian way.

But here is where alcohol comes in! Because alcohol can be stored.

In fact, it can be stocked away indefinitely, cheaply and beautifully.What was done poorly under Lyndon Johnson... turning excess farm production into mountains of wasted cheese... can now be accomplished logically and efficiently.... if we make biofuel ethanol a seasonal or occasional way to absorb and store, and later use, surges in excess grain production.

What should we do?  Let the ethanol subsidy go away. It is an insane market interference, choosing a market winner and a dumb one, at that.The money could be far better used making up for years of deliberately-sabotaged research into energy independence. Stop the gasohol mandate now!  But don't shut down the gasohol plants completely.

The-Politics-of-Food-Supply-Winders-Bill-9780300139242Instead, let the taxpayers buy excess corn whenever its price is worrisomely low, convert the surplus into storable form, and sell the alcohol later, when the price seems right. That is the exact equivalent of the Pharaoh's storehouse. And let the government's profit go to maintaining this reserve capacity, when it is un-needed. 

We need to stop thinking of ethanol as an alternative to imported oil. That's just silly and a crutch for those diverting us from real solutions for energy independence. Nevertheless, ethanol can be viewed as a wonderful way to store the excess produce of America's fertile fields, in a form that will be easily convertible, at some future date, into fuel or money... and thus even back into food.

And yes, chuckle at the image that is brought to mind.  Nearly all of the American founders - especially George Washington - distilled their own moonshine. It often served as cash and currency for farmers, when money was scarce. Alcohol flows through our national blood, in a sense.  And if we view it properly, it can answer the modernized Riddle of Joseph, offering a way to damp the waste of fat years and help us prepare for the lean one that will surely come.


Alex Tolley said...

I do not see how storing ethanol from cheap grain makes any sense. If the argument is that the US cannot store grain (too much) then why would storing that grain as alcohol use any less storage space? The net result is still stored energy, but now only usable as fuel, and at a potential net energy loss (which doesn't go away because the raw material is cheap).

The basic problem, as in ancient Egypt, is food security. We need to store foods, but without the bias that results in unsustainably large reserves (at the EU's CAP produced). This requires more sensible subsidies to ensure overproduction when reserves are low, and removal of the subsidies when reserves are high. The size of subsidies to farms needn't be linear wrt to production either, thus supporting small farms more than larger ones.

W Caulfield said...

Thanks for this David. With politicians on both sides working so hard to preserve the Military budget (or increase it) nobody ever talks about the rest of the subsidies being doled out.

daedalus2u said...

The best use for all that "surplus" food is feeding it to children so the next generation won't have bodies and minds that are stunted from malnutrition.

Of course the Oligarchs want the poor to have stunted minds and bodies because they are then easier to control and can't compete with the children of the Oligarchs.

Anonymous said...

Actually, Alex Tolley, it does make some sense. It nicely handles the excess production/low price part of the problem. It admittedly doesn't directly handle the potential other side of the problem: occasional crop shortages and high prices. It does do that in the sense that it keeps production at a higher level which will be of some benefit in shortage years.

Brin's other point about stored alcohol is that is could sold and food purchased with the proceeds in times of crop shortage. One of the biggest reasons for the rapid decline in malnutrition in the modern world is trade allows excess resources to flow where needed. Improved transportation probably underlies the decline in grain stocks around the world. No country needs as much when each can draw from around the globe.

I grew up on a farm and live in Iowa. Yet, I think the greatest resistance would come from elected and un-elected leaders of agriculture, not primarily farmers themselves. It is a huge threat to their power. Expect fierce resistance. But I would love to see it happen anyway.

Tara Li said...

Alex: Alcohol can be stored without rotting - corn can't, at least not nearly as easily. Alcohol is useful for one major purpose that eases the *real* energy problem today - not harvesting/generation, but storage and transportation.

Michael K. Martin said...

Ethanol from corn will only ever be an "Overflow" solution. That said, when you convert corn to alcohol, you are only converting the sugars in the corn. The proteins still remain. That means the byproduct is still a valuable food for livestock, and is used in many feedlots today.

Every grain elevator in the US is allowed to write off 25% (!!!) of the excess corn they store over the season. This means that over a quarter of the grain that is stored is wasted. If you wanted to save more of that corn for feeding the hungry, it would be better to put part of the ethanol subsidy into developing better, low cost ways to store the corn.

Ian said...

1. The idea of restricting farm production dates back to the Agricultural Administration Act of 1933. Like it or not, it's simply incorrect to suggest it was a later addition to the original farm subsidy program.

2. The problem with using ethanol as a food storage strategy is two-fold. First, commercial ethanol plants can't simply start up and shut down in response to food prices. Second, you'd be paying for a bunch of infrastructure (flexfuel vehicles, E10 fuel pumps, lined underground storage tanks) that you'd only be using sporadically.

Until a couple of years ago I used to argue that corn ethanol served a couple of useful purposes: it increased fuel independence and diversified supply and it was a useful transitional fuel while non-food ethanol was being developed.

Two developments changed that calculation;

1. The US has a glut of natural gas thanks to fracking. A couple of Gas-to-Liquids plants would provide the same diversification benefits.

2. The development of hybrid and electric vehicles has outpaced the development of cellulytic ethanol.

Anonymous said...

I agree with Alex, it's food security that's needed, David points that out himself.

The USA has plenty of areas suitable for long term storage of grain without need of expensive climate control. Properly stored, grain can be kept for a decade. If at the end of that decade the grain isn't needed, or if sooner there is another bumper crop, then they could convert to alcohol. OR sugar, or wheat can be turned into protein powder that can be packaged and kept in bulk for a century. Or used in baking bread next week. The leftover bits such as chaff and hulls can be used in dozens of industries, including animal feed.

Zierot said...

Ethanol makes a relatively poor fuel for transportation, packing half the energy of hydrocarbons, but it is perfect as a heating fuel, because it poses little threat to the environment should it leak from underground tanks, is locally available across most of the US, and burns relatively cleanly. It is astonishing that with all the ethanol out there, no furnaces are made for it.

locumranch said...

DB's farm proposal is missing a few important items:

First, DB forgets that US agriculture has been in steady decline in terms of cultivated acreage for more than 30 years even though increased productivity/acre has compensated for this in part. Current stats now indicate that less than 1% of US population is directly involved in agricultural production.

Second, DB neglects to mention that US agriculture (in its current form) is fossil-fuel dependent, relying not only on costly diesel-powered machinery for both planting and harvest but also on fossil-fuel based chemical fertilizers to maintain productivity. Some wags even estimate that Modern Agriculture accounts for more than 30% of global fossil-fuel consumption.

Third, DB ignores the roles of suicide terminator-type seed manufacturers like Monsanto, commodity speculators, produce distributers, industry middle-men and commercial retailers who fix wholesale prices to farm producers at arbitrarily low levels while demanding a retail premium from consumers. US farmers make about 10 cents/lb for growing onions while consumers pay about 10X that retail.

Fourth, Climate Change. DB mentions how CC is adversely effecting US agricultural production but glosses over how this has led to record agricultural harvests in once frigid places like Siberia which (in turn) make agriculture even less profitable for US farmers. More importantly, reread Second item.

So, instead of creating an artificial shortage by turning grain into alcohol through fossil fueled boondoggle, why not just shovel our excess grain directly into industrial furnaces to keep the US economic engine running smoothly? Why not eliminate agricultural subsidies & food industry middle-men and allow agricultural production & prices to reach market driven equilibrium? Or maybe the nuclear option?

For the price of a few bullets, we could put our fossil-fuel dependent agricultural producers out of their collective misery and end climate change in the bargain. Not only is lead recyclable, but it possesses a lower carbon footprint than bread and it ends hunger permanently.


locumranch said...

Courtesy of my Alma Mater:

The Effect of the U.S. Ethanol Mandate on Corn Prices

David Brin said...

The notion that climate change will simply move agriculture into tundra zones of Canada and Siberia is sheer drivel. It will take thousands of years to develop topsoil up there to match what is being lost to desertification farther south. And the lost farming areas down south have(had) TWO growing seasons while arctic areas can have at-most one.

Above all, CC will result in tundra leaching and emitting vast amounts of now-frozen methane, turning climate "change" into climate catastrophe.

Ian said...

"this has led to record agricultural harvests in once frigid places like Siberia "

citation required.

A cousin of mine is an agronomist, as it happens, he ended up in Canada specializing in grain production in northern regions.

As he tells it, the main barriers to crop expansion are not temperatures: they're the short growing season (due to the limited daylight in spring and autumn)and the soils - not just the poor soil structure but the fact that most of it is extremely acidic as a result of thousands of years of conifer monoculture.

Ian said...

"Dry weather that has slashed world grain crops this year has taken a particularly heavy toll in Russia, where wheat production has fallen by almost one third. Russian flour prices are already more than twice as high as a year ago and are driving a rise in the price of bread.

A severe drought in eastern Europe and central Asia accounted for most of the decline in world grain production, down 5.5 per cent this year to 661m tonnes, according to the United Nations Food and Agriculture Organization.

In Russia, wheat production fell by an estimated 30.6 per cent to 39m tonnes in 2012 from 56.2m tonnes in 2011, the FAO said in its latest Food Outlook report. That’s even less than in 2010 when the Russian government imposed a blanket ban on grain exports after a record-breaking drought and heatwave devastated the country’s crops.

Other CIS countries that export grain from the Black Sea have suffered bad harvests this year. Wheat production has fallen by 33.5 per cent to 15.5m tonnes in Ukraine and by 52.4 per cent to 10.8m tonnes in Kazakhstan.

As Russian farmers gather the last of this year’s crops, independent analysts in Moscow are even more pessimistic than the FAO about the prospects for the 2012 harvest.

SovEcon, a Russian agricultural consultancy, estimates that grain production will total 38m tonnes this year, 3m tonnes less than in drought-stricken 2010."

Jim Baca said...

Then there is the whole thing of livestock grazing in the desert of the western U.S. Fees the government charges for grazing has not risen in decades. Cattle are ruining whole landscapes in a time of drought. This can't go on.

Jim Baca said...
This comment has been removed by the author.
Alex Tolley said...

@ Kevin "stored alcohol (...) could sold and food purchased with the proceeds in times of crop shortage"

How will that work for a global crop shortage? More importantly, because trade isn't delivering food but rather fuel, this would drive up global food prices.

No that doesn't work.

Alex Tolley said...

@Tara - if corn is not good for storage, then grow crops that are - wheat, etc. The US already grows far too much corn, mostly with huge energy inputs.

We don't have an energy storage problem. Fossil fuel energy is already conveniently stored - underground. If you are talking about storing alternative energy, then crops are a terrible way to do this - they are just about 2% efficient at capturing sunlight. We would be far better using algal biofuel farms for that purpose.

The food-fuel cycle DB proposes doesn't really make sense. There are better ways to alleviate the symptoms he describes.

locumranch said...

Loving this Climate Change hypocrisy which allows some to eat the bread and blame the baker:

We label Modern Agriculture as "Good" even though it accounts for more than 30% of global fossil-fuel consumption and greenhouse gas production which causes Climate Change while simultaneously labeling Climate Change as "Bad" because it interferes with a Modern Agriculture that releases greenhouse gases and causes Climate Change.

This hypocrisy verges on psychosis when we then try to prevent climate change by using a fossil-fuel dependent (climate changing) agricultural system to produce a less efficient fossil-fuel analog (ethanol) and further climate change. Kornbluth was right when he said that some people will buy anything for a quarter.

Thankfully, I've mastered the art of laughing and crying in a simultaneous fashion.


Jumper said...

Photosynthesis is a pretty inefficient energy producing mechanism; it's better suited to food.

A while back I learned to make masa from field corn. 20 lbs can be gathered just gleaning a few acres after harvest. I could make tortillas, but I'm not good at it so I make tamales. It's about 20 x cheaper than cornflakes and more nutritious. 20 lbs of corn is more than I could eat having tamales once a week. And the way I figure it, all the packaging and money spent on a box of cornflakes vs what the farmer makes for the corn, translates into pure CO2. (I'm pretty sure the carbon footprint of a dollar is not more than a dollar's worth of carbon fuel.)

Ian said...

"We label Modern Agriculture as "Good" even though it accounts for more than 30% of global fossil-fuel consumption...'

citation required.

Tim H. said...

If memory serves, ethanol was added to gasoline for emissions reasons in the beginning, the intersection of subsidies and agribusiness has kept it there. BTW, gasohol necessitated the repair of a couple of fuel tanks for me.

TheMadLibrarian said...

Locum, without some sort of modern agriculture, there is no way in H-E-double hockey sticks we can feed all the people currently living on the earth. If we eventually move to a vat-grown algae or synthetic food source as more effective than current methods, that remains to be done. Family farms and organic agriculture may be more desirable to some than our current farm system, and they are important, but the times when the food needs of a nation could be completely met by 40 acres and a mule have passed.

demesly: fake modesty

Damien Sullivan said...

Sorry David; I don't think storing ethanol makes sense as a primary plan. Maybe at a secondary tier, but for food safety in the face of drought or volcanic eruption ("year without summer") you need storied *food*, period. If it's "expensive", tough. I figure long-term planners would have at least 3 years on hand, maybe 10. If surpluses pile up after that, yeah you can go making ethanol...

Ethanol is a fine octane booster, BTW, which was apparently known from the beginning. Too cheap and unpatentable though, so tetraethyl lead got developed instead, and we spewed a known neurotoxin through the world's cities for decades, probably causing the 1960s rise in crime, and 1990s fall after we stopped.

Ian said...

Food production accounts for up to 29 per cent of man-made greenhouse gases, twice the amount the United Nations has estimated comes from farming, a study published on Wednesday said.

Looking at emissions across the food system - including forest clearance, fertiliser production and transport - rather than just farming itself - agriculture research organisation CGIAR said much more work was needed to cut climate change emissions from food.

Its report, "Climate Change and Food Systems", estimated food production was responsible for between 19 and 29 per cent of mankind's total greenhouse emissions, far above UN estimates of 14 per cent based on a narrower definition of farming.

"From a food point of view (the UN approach) doesn't make sense," said Bruce Campbell, who heads the CGIAR research programme on climate change, agriculture and food security.

Many countries could make big cost savings by cutting emissions, he said. "There are good economic reasons to improve efficiency in agriculture, not just to cut greenhouse gas emissions."

China, for instance, could sharply reduce emissions with more efficient manufacture of fertilisers. Britain could cut emissions by consuming lamb transported from more efficient farms in New Zealand rather than raising its own sheep.

Global changes in diet, shifting towards vegetarianism from meat, would also help. Growing crops to feed to cows, pigs or sheep takes up far more land and emits more greenhouse gases than producing crops for human consumption.

Read more:

Ian said...

Tim - David has sort-of answered your question.

Yes ethanol was initially used in the fuel industry as an additive.

But that was mostly ethanol manufactured from natural gas.

Fuel ethanol developed quite separately in imitation of the Brazilian sugar cane ethnol industry.

If the principal purpose of US fuel ethanol policy was to reduce CO2 emissions, you'd stop making it from corn and drop the tariffs on Brazilian (and Australian) sugar and ethanol.

Jumper said...

David, have you considered mixing that ethanol with 25% rye whiskey and storing it in charred wood barrels for ten years? I think the government might make out even better.

Acacia H. said...
This comment has been removed by the author.
Acacia H. said...

Dr. Brin? Another prediction just got checked off. Except I don't think we've had Water Wars. ^^;;

Lockheed Martin has designed a new carbon filter that uses 99% less power to desalinize water. And you know something? I bet it would work wonders for irrigation. Just filter the water before using it to irrigate... and all at once you stopped salting the soil you plant on.

Also, here's an article supporting my own pet theory that life itself may be rarer than anticipated. Yeah, I know you disagree. But hey, it's a valid argument. ;)

Rob H.

Damien Sullivan said...

I don't see any actual argument, the article just seems to say someone said "hey, life might be rare!"

Ian said...

As a species, we never had it so good.

"Some of the poorest people in the world are becoming significantly less poor, according to a groundbreaking academic study which has taken a new approach to measuring deprivation. The report, by Oxford University's poverty and human development initiative, predicts that countries among the most impoverished in the world could see acute poverty eradicated within 20 years if they continue at present rates.

It identifies "star performer" nations such as Rwanda, Nepal and Bangladesh as places where deprivation could disappear within the lifetime of present generations. Close on their heels with reductions in poverty levels were Ghana, Tanzania, Cambodia and Bolivia.

The study comes after the UN's latest development report published last week which stated that poverty reduction drives in the developing world were exceeding all expectations. It says: "The world is witnessing a epochal 'global rebalancing' with higher growth in at least 40 poor countries helping lift hundreds of millions out of poverty and into a new 'global middle class'. Never in history have the living conditions and prospects of so many people changed so dramatically and so fast."

The brighter global picture is the result of international and national aid and development projects investing in schools, health clinics, housing, infrastructure and improved access to water. The UN also pointed to trade as being a key factor which was improving conditions in Afghanistan, Ethiopia, Rwanda and Sierra Leone. These improvements have not been picked up in the past when poverty has been measured strictly in income terms without taking into account other factors – health, education and living standards.

The study of the world's poorest one billion people uses a new measure, the Multidimensional Poverty Index (MPI), which was just updated in the 2013 UN report. It includes ten indicators to calculate poverty – nutrition, child mortality, years of schooling and attendance, cooking fuel, water, sanitation, electricity assets and a covered floor."

Anonymous said...

Dr. Brin,

In your book "Existence" you mention revoering phosphorus from urinals due to a phasphate shortage. So you may be interested in this:

I don't believe in peak anything (especialy with the world's population growing grayer and declining the second half of this century). If we run short of phosphorus, we will learn how to find it and mine it off the sea bed floor. The increased cost due to a shortage of land extracted phosphorus will justify both the R&D and the sea bed mining itself. Soon will have a glut of phosphorus (like we now have a glut of methane due to fracking)

Anyways, the charts are interesting.

locumranch said...

Despite the seriousness of the above topics -- industrial food production, diminishing resources, the elimination of poverty, fossil fuel dependence, climate change & famine -- people like Ian have the self-possession to retell one of the oldest & funniest jokes in the human language: "If (things) continue at present rates... (aka "If circumstance continues in the present manner").

This is what the primitive hunter & gatherer, the average healthy adolescent, the 18th Century Whale Oil Merchant, the 21st Century Humanist, Napoleon before Waterloo & every individual who free-falls off a tall building (etc) have in common. They all KNOW that their future is bright, rosy & everlasting if only fortuitous circumstance continues "at present rates" or in the present manner.

Applying to all topics of tantamount importance including climate change AND fossil fuel dependent industrial farming, this ancient funny is gallows humour of the most juvenile type, deriving its emotional poignancy from tacit recognition that such things cannot and will not continue indefinitely, in the present manner or "at present rates". It is the spirit of Thomas Malthus come back to mock us.

We will most certainly eliminate all forms of human poverty, want or suffering ASSUMING that we are free from suffering, want and poverty forever. Ha ha ha.


gregory byshenk said...

Regarding phosporus, there is a test being done by a Dutch company of reclaiming phosphorus from sewerage.

Here is an article, in Dutch. Google translate does a poor job on it, but it gives the basic idea.

Jumper said...

We have a stockpile of bones in the graveyards to go to before it's all over.

Ian said...

At some point, I strongly suspect some bright spark will start treating the highly concentrated brine released from desalinization plants as a potential resource and start extracting all sorts of stuff from it.

Marino said...

OT about predictions: maybe we haven't had the Helvetian War (yet) , but the current mess in Cyprus, with banks full of Russian mafia capitals badly invested in high yeld/high risk investments in Greek bonds, and the Russian reaction on the purported tax /levy on bank accounts seem quite close to it.

Paul451 said...

I think there's been some confusion over David's proposal. It's not a literal replication of the Pharaonic system for food security. But a price stabilisation mechanism to replace the mindless every-year/good'n'bad subsidies, while still actually helping farmers.

In theory, the US govt could buy suitable grains during boom times, use them for bio-fuel (ideally bio-diesel, but I guess alcohol is more storable.) During times of low drought/etc, or extra high oil prices, the bio-fuel is made available to farmers at discount (or sold and the profits channelled to farmers as fuel subsidies). Counter-cycling price fluctuations, while creating and selling bio-fuel to the market when each is at its most respectively efficient.

(Problem is, since you can't use just any crop, bio-fuel crops will be over-produced, effectively turning the system into what it is now. Second problem, bio-fuel refineries can't be mothballed during non-production years at no cost.)


"I don't believe in peak anything (especialy with the world's population growing grayer and declining the second half of this century)."

Ah... so you believe in Peak Population? :)

[4966: 200th year of the Longtime War.]

Paul451 said...

Interesting article one:

US state politicians, both D & R, believe the US public is significantly to the right of the public's actual political position. In the case of some conservative R's, they believe the public are 20% to the right of reality. (Ie, 20% fewer people agree with them than they think.)

This might explain some of the crazy things that conservative Republicans say (not to mention Dem's cowardice), they really are living in an alternative reality where their opinions are "average American" and the Dems actually are part of the "extreme left" instead of the centre-right.

[Da82: 82nd year of the reign of The Lord and Most Sacred Da.]

Paul451 said...

Interesting article two:

In the 1970s, an entire Canadian community was put on a universal non-means-tested income, then monitored for five years. As an experiment in "minimum guaranteed income", aka "Mincome" (yech, stupid '70s.)

Result: drop in teen pregnancies, increased graduation rates, drop in both workplace and road deaths, drop in domestic violence (and a drop in hospital admissions in general). No changes in employment behaviour (people still worked), except amongst teens and recent mothers.

After five years the government changed, the study was killed and no final report was issued. Recently one of the researchers got access to her original work and wrote the long overdue paper.

[Anciall-101: An introduction to FTL communications.]

locumranch said...

Assuming that DB's ethanol proposal has more to do with food security in the face of CC-based desertification, then Minimax theory (popularized by Philip K Dick) would recommend more aggressive agricultural subsidies to encourage overproduction of food which would then aggravate agriculture-based CO2 production worsening climate change, requiring an ever-escalating agricultural effort while simultaneously encouraging human over-population by an over-availability of adequate nutrition -- etc etc -- which would then undermine food security on all fronts. It would therefore follow that the most logical solution to food insecurity is really no solution at all and would merely represent "kicking the can down the road" for future generations to deal with.


DavidTC said...

Anonymous said:
The USA has plenty of areas suitable for long term storage of grain without need of expensive climate control. Properly stored, grain can be kept for a decade. If at the end of that decade the grain isn't needed, or if sooner there is another bumper crop, then they could convert to alcohol.

That is exactly what I was thinking. I don't know what made Egypt so ideal to store grain (low humidity?), but there are places in the American southwest that are very Egypt-like. In fact, the US government already owns a _ton_ of that land, which it uses for all sorts of random things, like huge bombing ranges.

And the American southwest is not that far from the American midwest via train.

And if they can store grain for years without any climate control at all, surely we can come up with something to reduce the humidity _even more_ and store it longer. I mean, there's plenty of solar panels there, and we know how to make air-tight buildings...let's get on this.

Meanwhile, while we're talking about places that don't need climate control...what's the stuff we could freeze and have last a long time? Because, you know, we have a part of this country that is below freezing all year round...

Unrelated, DB talked about the scam of selling off our reserves when the prices were low. This is probably why we need some sort of automatic controls on those things, entirely outside the hands of the government. Have them only able to sell if the price gets to a certain amount, tied to inflation.

Frankly, with the Republican deliberately wrecking up the place every time they come in, we need a _lot more_ shit that just works regardless of what they do.

Alfred Differ said...

Malthus was himself guilty of projecting trends into the future, though I'm far more inclined to be moved by his than the blind optimists or pessimists. His trends were backed by a lot more supporting evidence.

The problem with Malthus, though, is that humans are animals who innovate. We do things like invent languages to help us communicate in our efforts to coordinate. We invent trade outside our family groups. Show me an animal that does that. We invent trade tokens like money, checks, and credit cards. We invent methods for farming our food instead of hunting and gathering it. We invent methods for harnessing coal, oil, uranium, and sand to extract old, stored energy and difficult to use sunlight to do what our muscles cannot. Did slavery end because we became more aware of the immorality of the institution or did it end because fossil fuels out-competed the slaves?

We also innovate small like lids that fit on any sized drink cups in fast food restaraunts, no-signature-needed small credit transactions at authorized POS sites, and tolerance of right turns on red lights at some US intersections.

Some innovations are slow, but some are blindingly fast. From a biological perspective, the only life forms that match our speed are the bacteria and viral parasites and we are working at getting faster than them too. The problem with invoking Malthus is that his analysis applies to slower innovation. Boom and bust cycles are a good description when the period of the cycle P is much shorter than the time constant T of the exponential function used to approximate the power innovation brings us. If P>>T we have what Malthus described for animal population cycles.

When P~T it is a different story. An optimist effectively believes that P is near or below T whether they say it that way or not. A singulatarian would probably argue the P<T while thinking they have proof. I'm skeptical of statements of proof, but I'm not skeptical that P ~ T since the dawn of the industrial revolution and maybe a little before it.

y(t) = exp(t/T) * sin(2pi*t/P)

Play with the curve awhile and you'll see Malthus and non-Malthus behaviors. Obviously, only an optimist would use an exponential function instead of another sinusoidal one, but we have a lot of useful evidence regarding our population numbers that Malthus didn't have. We've been growing in numbers for millenia and growing faster with each economic revolution. Innovation matters a lot.

Alfred Differ said...

sigh. oh for an edit function.

I messed up the P>>T thing. When T>>P you have the potential for a Malthusian situation. If no innovation occurs then T is infinite. If innovation relies on genetics, the T is dependent on the rate at which new animals are born and how long it takes them to mature.

Obviously I'm over-simplifying things mathematically. Populaton size in the absense of innovation isn't sinusoidal. I'm just playing with functions to point out the limits on the analysis Malthus provides.

Acacia H. said...

Looking at an article in the March 2013 issue of "Contemporary Accounting Research" about management efforts to fail to meet analysts predictions so to have a position of strength with collective bargaining agreements, I have to wonder: has any labor union ever offered a tiered contract where each year raises are based on the profitability of the company? In short, if profits don't rise to X level, no raises. If profits are from X to Y, then the contract stipulates AB level of raises. If profits are from Y to Z, then the contract stipulates BC levels of raises.

In short, this allows management to have a fallback position in that if profits aren't increasing and the company is doing poorly, then they won't be hit by the whammy of a labor contract that assumed higher level profits. But if the company DOES do better then the union isn't screwed because they accepted no raises due to the poor level of company profits... only to have the company take off and ignore its workers.

Rob H.

sociotard said...

Holy crap, check out Cyprus.

Situation as I understand it:
1. Russian oligarchs deposit lots of mony in banks in Cyprus
2. Cyprus banks have to invest it, so they put it all in Greek government bonds.
3. Greece does what it does.
4. Cyprus needs a bailout to pay back the oligarchs, but the EU doesn't like russian oligarchs, so they say cyprus has to do a lot of the bailing.
5. Cyprus is little. They can't do much.
6. They decide to take some money from all the bank accounts in cyprus, including the little guys, to balance the books.

I couldn't have written a boondoggle like this if I'd tried. Cyrpri delenda est.

tchofclas said...

What I don't understand, or maybe I should, since Govt is involved, is why anyone in their right mind would use corn to produce ethanol. One, it's a food source, nuff said, and 2, it robs the soil of more nutrients than any other crop, requires more fertilizer, and requires specific weather. 40 years ago they knew they could produce fuel from hybrid poplar, and it doesn't coat your motor with an almost impossible to remove syrup. And it didn't need to be mixed with petroleum fuel for use. Drawback? Engines don't carbon up, could run forever. but the lost jobs could be made up producing that fuel, and we wouldn't be dependent on other countries whims, we could be self sufficient. Oh, excuse me, what was I thinking, it makes sense!

TheMadLibrarian said...

Robert, I'm in a union, and your proposal sounds intriguing. There are three caveats I'd like to invoke:
1. Tie executive bonuses and golden parachutes to the same index. Ya don't get the megapayout if you run the company into the ground, then split.
2. Have a fallback if the company runs into a problem that makes them unprofitable for a while. Our union was offered a choice of layoffs or a 5% pay cut for everyone. We took the 5% cut.
3. What about the unions for nonprofits and government workers? They still need at least COLA/inflation raises, despite the fact that all the 'profits' are used inside the 'business'.

linkgro: I couldn't have picked a more apropos captcha...

Ian said...

1. Cypriot banks are bankrupt because Greece defaulted on its government bonds and forced a 50% writedown in the value of the debt. At the time, the same people decrying the bank tax were applauding this as a vicoryfor the common man over the greedy fat cat bankers.

2. Without an immediate cash injection, Cyprus' banks will go bankrupt. If this happens the average depositor will lose far more than the maximum 10% imposed in the levy.

3. The levy is being revised but in its original form, accounts with less than 100,000 Euroes in them were going ot be taxes at 6%. (This is now being revised to 3% on balances over E20,000.) 50% of Cypriots have less than E1,000 in the bank - meaning they'd be facing a maximum tax of E60. Another 40% have less than E10,000 meaning they were facing a maximum tax of E600.

4. The money has to come from somewhere. When Greece in similar circumstances cut government spending and raised taxes it was likened to the Nazi invasion of Greece, the Sack of Rome and described as a crime against humanity.

5. Oddly enough, those damn selfish Germans are getting tied of being called Nazi scum while simultaneously being ordered to fork over 10 of billions of Euroes.

Acacia H. said...

I say Cyprus should take a page from Iceland's book and let the banks default... and pay what they are legally meant to under the bank insurance funds. They should tell the other nations "we're sorry, but since you're telling us we have to pony up for your screw up with Greece? We're not playing your game anymore. And feel free to toss us out of the Eurozone... and see how long the Euro lasts after that."

You'll see the EU backpedaling so fast they'll invade Canada by accident.

Rob H.

Ian said...

Yes, because Cypriots really need to see their wages cut 30% like Icelanders.

What, Paul Krugman didn't mention that?

Did he mention that within a year the ban on moving capital out of Iceland expires and they'll likely be facing a whole new economic crisis?

Tim H. said...

My understanding is "The Cypriot haircut" is more of a creature of the ECB, and I'd expect it to surface in other countries as well.

Ian said...

As for the myth of the painless default:

If you stop repaying your debts people will stop lending to you.

If you're a government and you run a deficit and people stop lending to you, you immediately have to either raise taxes or cut spending enough to run a surplus or print money.

The economic impact of Greece or Cyprus doing that would be far, far worse than what they've endured to date.

But keep looking for that magic pot of leprechaun gold.

Ian said...

"And feel free to toss us out of the Eurozone... and see how long the Euro lasts after that."

The Eurozone wouldn't even notice Cyprus' departure.

Cyprus would, I think, notice the 50-80% fall in wages and GDP that would ensue.

Paul451 said...

Re: Iceland's "30% wage cut"

Iceland's currency fell in value against other currencies. Surely you can see the difference between that and in-currency deflation as is required throughout the Euro periphery?

[And yes, Krugman detailed, repeatedly, the effect of the Iceland default.]

Re: Germany being "sick of blame"
Then they should stop being arseholes. The recession is not a morality play about the noble German versus the lazy Latin.

Seriously, they milked an property boom in the periphery, ignored EU debt policy, then whined like spoiled brats when the bubble burst and they are asked to pay out to save the Euro.

This is what happens in common currencies. During recessions, money flows from low-unemployment areas to high-unemployment areas.

Ian said...

"Iceland's currency fell in value against other currencies. Surely you can see the difference between that and in-currency deflation as is required throughout the Euro periphery?"

Paul, Iceland is around the population of the Northern Territory (Americans, think Wyoming).

There's virtually no secondary industry of any sort and precious little primary industry other than fishing.

Virtually everything people buy has to be deported. so yes, the 30% devaluation (a pick-up from the early 60% devaluation) has had a massive impact on living standards.

Remember when the Aussie dollar fell below 50 US cents, multiply that a few times over.

Acacia H. said...

Ian, should ANY nation, no matter how small, leave the Euro... it sets a bad precedent. Suddenly it's no longer such an attractive deal. Because if you can be tossed out because other governments don't like what you're doing... why join? You're forced to obey the majority rule (or more specifically Germany's rule) and lose significant sovereignty.

If you (as a nation) keep your own currency then you're not forced to follow rules that you disagree with. In all likelihood that nation would be able to get free trade status anyway.

Rob H.

Ian said...

"Because if you can be tossed out because other governments don't like what you're doing... why join? "

There is no mechanism for countries ot be "tossed out' o the euro.

for that matter there's no mechanism for a country to voluntarily leave the Euro.

I'm astonished by the number of peopel who think that hyperinflation and a currency crash - the sort of thign that Weimar Germany went through in the 1920's and Zimbabwe went through in the last decade - is some magical panacea.

Ian said...

Cyprus runs a primary deficit (i.e. excluding interest on its public debt) of E700 million a year - or around E700/US$1,000 per person.

If Cyprus defaults on its debts and lets its banks go bankrupt, then taxes on every working Cypriot are going to have to go up by at least that much per year.

Anyone thinks that's a preferable option to a one-time tax that'll cost most Cypriots (as opposed to Mafiya bosses) a couple of hundred Euroes/

Ian said...

This is the source for Cyprus' primary deficit:

Of course that BEFORE the entire banking system collapses taking most of the private sector with it.

Paul451 said...

Re: Iceland.
Their choice isn't currency devaluation or everything's okay. It's wgae/price devaluation by currency devaluation or by in-currency deflation.

One of these is greatly preferable to the other.

And yes, I remember when the Aussie bought US50c. Now imagine that from wage/price deflation alone, with the AUD/US still fixed. (And the current return to USD parity by wage/price inflation alone.)

Of course, that wouldn't happen. Even with a "fixed" dollar, the government would have altered the exchange rate before they let things get that bad. Not enough, of course, but it would have softened the blow.

No Euro nation can alter their "exchange rate". So unlike Iceland, they will suffer through slow internal deflation and a suppressed economy until internal prices "normalise". [Then further suppressed until they recover from the cost of recovery.)

Re: Cyprus.
"One time tax"? I doubt that. This was another Euro band-aid.

Acacia H. said...

Ian: That's my point. There is currently no process for quitting or being tossed out of the Euro. So if Cyprus is forced out of the Eurozone? There is precedent. There is a groundwork that has been laid. And having tossed Cyprus... wouldn't it be so much easier to just toss Greece out next? Oh hey, and look at Italy, it's causing troubles so let's toss them... and Spain. You just eliminated all those trouble-maker economies... but what about France? It's not doing so well... where do you stop?

Precedent in this case could result in the Eurozone falling apart. Because if a nation is removed because it's doing poorly... then other nations can be removed as well. And no nation wants to join an organization where you're tossed out when you're a pauper.

Rob H.

Damien Sullivan said...

"2. Without an immediate cash injection, Cyprus' banks will go bankrupt. If this happens the average depositor will lose far more than the maximum 10% imposed in the levy."

Why? The average depositor has an account fully insured by a sovereign government, the entire purpose of which is to protect ordinary people against bank bankruptcy. Are you saying we should throw out the notion fo sovereign deposit insurance?

"You'll see the EU backpedaling so fast they'll invade Canada by accident."

I don't know, I get the impression the bigger obstacle is Cyprus trying to protect its cushy status as a tax haven.

"Cyprus would, I think, notice the 50-80% fall in wages and GDP that would ensue. "

Source for those numbers?

Yglesias suggests that Cyprus/EU sell recognition of Turkish Northern Cyprus for the $5-10 billion needed.

gregory byshenk said...

2. Without an immediate cash injection, Cyprus' banks will go bankrupt. If this happens the average depositor will lose far more than the maximum 10% imposed in the levy.

Why? The average depositor has an account fully insured by a sovereign government, the entire purpose of which is to protect ordinary people against bank bankruptcy. Are you saying we should throw out the notion of sovereign deposit insurance?

There are two issues, here. First, there is the matter of the "average" depositor. I recall reading that something close to one-half of all deposits in Cyprus's banks are in accounts above the EUR 100K guarantee level. I don't know the breakdown by bank, but I suspect that those accounts are overrepresented at Laiki and Bank of Cyprus, which are the two most troubled banks. What this means is that, even given insurance, the average loss could be very large, and indeed much more than 10%.

Second is the matter of "sovereign deposit insurance" when the sovereign is also bust. Remember that the larger issue here is the question of providing loans to Cyprus so that they can keep paying their bills.

Ian said...

"Are you saying we should throw out the notion of sovereign deposit insurance?'

No, I'm saying that in this instance the sovereign insurer would also be bankrupt with a significant deficiency.

Ian said...

"Source for those numbers?"

having been a professional economist, having followed in detail multiple other currency crisis.

Hence the qualifier "I think".