The Financial Times devoted yesterday's In depth report to ethanol. It included a couple of articles on the tough times the industry is facing (like it's the only one) and the political support for the ethanol industry. But it also includes a slide show pictorial on POET Biorefining - Laddonia, an ethanol production facility near Laddonia, Mo. (Although I'm not sure why it's titled "Ethanol Fever." If anyone has a theory, please let me know).
Anyway, the slide show is worth watching and shows how important these plants are to the communities where they are located.
On balance, it was pretty accurate and very well done. But there were a few issues that need to be clarified. First of all, it's not accurate to say that ethanol has "cost taxpayers billions." Take last year. The tax credit for ethanol blenders cost the federal treasury $3.3 billion dollars. That same year, ethanol led to $4.6 billion in federal taxes and saved the government $8 billion in farm bill subsidies because of higher commodity prices. For the math challenged, that's a net gain of $9.3 billion. And that doesn't count the billions of dollars ethanol has saved consumers at the pump and the thousands of jobs the industry has created.
The FT reporter also does something that more and more reporters are doing these days: mentioning the high price of corn and its supposed impact on food prices without giving recent context. Here's the context: corn is now trading at $3.85 per bushel on the CBOT. That's less than half of it's high of about three months ago. That collapse in corn prices came as ethanol production capacity increased. And at the same time, food prices continue to increase. To recap: ethanol volume up, corn price down, food price up.
One thing the report gets spot on: the ethanol industry has brought significant economic development to rural communities across the Midwest. In the case of Laddonia, the ethanol production facility was the largest investment in the community in a century. If that's a fever, I don't wanna be cured.
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