Frederick L. Kirschenmann On Ethanol

Note: Fred Kirschenmann is Dirctor of the Leopold Center for Sustainable Agriculture and a Professor of Religion and Philosophy at Iowa State University. A Commentary web site reader referred me to him, and I then asked him to respond to my essay on farm subsidies in Winnebago County as well as the letters from Jim Lemmer and Harmon Seaver. Professor Kirschenmann's e-mail address is leopold1@iastate.edu

Dear Tony:

First I think the comments by the two commentators below [note: he is referring to Lemmer and Seaver] are on target.

The problem with farmers forming coops to build and operate ethanol plants, when they already own and operate grain elevators IN THE SAME REGION, is that they will essentially be in competition with themselves. Consequently the more successful the ethanol plant is the more vulnerable their grain elevators become---and probably vice versa. This doesn't seem like a win-win situation for the farmers. Then, if the demand for ethanol increases to the point where such farmer owned cooperatives could truly be profitable, the cost of energy from this source begins to be prohibitive---especially given fuel prices in the near future. Then add the likelihood that energy sources with a much higher energy conversion ratio such as wind energy, solar, hydrogen---and the many other sources of energy that are likely to increase exponentially---and ethanol from corn will be at a competitive disadvantage. Add to this scenario the fact that ADM owns 50% of the ethanol business, we can readily imagine a scenario where ADM has the power to position itself to buy up smaller enterprises built by the farmers at 10 cents on the dollar.

Please understand, this does not mean that farmers shouldn't invest in these ventures. It does mean that they should consider a lot more factors than they seem to be taking into account. We should all understand that farmers are in such dire straights that almost anything looks better than what they are presently doing, so it is very tempting to jump into anything that looks like it might be better. We should all be urging them to consider ALL the factors, and weigh the issues VERY carefully, before they write out their checks. Seems to me like this is a good place for Extension [note: the professor is referring to the UW Extension, a research arm of the UW System] to use computer modelling that could anticipate various outcomes based and various scenarios that are entirely likely---like those I suggest above. I'm sure there are many others that should be plugged in as well. Then let the farmers decide based on full information, and a full understanding of the risks. What farmers DON'T need, right now, is to make bad investments.

Fred

Return to Commentary