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We’re now in the middle of summer, and I hope you have been able to sneak out to the lake to drop a line in the water and have a good fish story to tell. Fishing is not only a great way to relax, but also a great metaphor for life. To be successful, you need to be at the right place at the right time. You need to use the right strategies, equipment and bait. And, in fishing, as it is in life, it’s a lot more fun if you’re with the right people.
For the past several months, the ethanol industry has been in rough waters, fishing for the right way to fight the unfair attacks being waged on our industry. As you’re aware, there is a lot of media and political attention being given to higher food and commodity prices. Our opposition has succeeded in using scare tactics to pit food against fuel. And unfortunately, while energy costs continue to go through the roof, ethanol has been the convenient scapegoat for everything from high food prices to male pattern baldness.
Along with record oil prices, which several recent studies have pointed out is the major cost for increased food prices, food demand is growing throughout the world at unprecedented rates, the dollar continues to be weak, there has been record speculation in the commodities markets and droughts have shorted the world’s wheat supply. These things have created a “perfect storm” for higher food prices.
Although it is ridiculous to point the finger at our relatively small industry, I’m not so sure the higher commodity prices is the catastrophic situation some people make it out to be. Perhaps these prices are exactly what our world needs to expand agricultural production for food, feed and fuel.
Now, for the first time in decades, the market for agriculture commodities is above the cost of production. This not only allows the American farmer to sell the “fruits of his labors” at a profit, but it also creates the opportunity for farmers throughout the world to do the same. If free markets are allowed to exist, I believe this will create a worldwide explosion in agriculture not seen since the day Mr. Deere invented the plow.
Thanks to these conditions, we should now see farmers in Africa, Asia and South America taking advantage of these markets to grow more crops for food and fuel. With more than a billion acres of farmland in the world not being used productively, we will see other thirdworld nations become less dependent on the American taxpayer for cheap food and become more self-reliant on their own agricultural production. Other parts of the world will also embrace new technologies because it will be economically feasible to do so.
The old American food policy was about “giving a man a fish.” This has been a short-term solution to a very long-term problem and has literally fed people “for a day.” But now, with attractive market conditions for farmers around the world, we can “teach a man to fish” and satisfy the world’s appetite for food and fuel for generations to come.
