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Is Ethanol the wave of the future in this country?
October 9, 2006 3:01 PM

Archer Daniels Midland, the giant agricultural company, has become the biggest ethanol producer in the country, and as such, has its future staked on whether the economy can make the switch. But is it a good bet? both for the company and for the country?

This article in the NY Times discusses in depth the future of both Ethanol and ADM:

A.D.M. spent nearly three decades pushing relentlessly for the use of ethanol in gasoline, lobbying Congress and the White House and rousing farmers. But only in the last few years, amid record-high oil prices and government mandates to use ethanol, has this clear, colorless fuel — a form of ethyl alcohol — finally begun to catch on, transforming it from a dream into almost a religion in the Midwestern states that produce corn.

So far, that capital is devoted to sustaining corn as the preferred crop for producing ethanol. While ethanol can be made more cheaply from sugar cane, as it is in Brazil, lobbying by A.D.M. and farm-state politicians has helped corn win out as the crop of choice for ethanol in the United States. It did not hurt that the powerful American sugar lobby helped to erect trade barriers keeping out cheaper imported sugar and cheaper imported ethanol.

A.D.M. is also the world’s largest producer of food and animal feed. The company, which adopted the slogan “Supermarket to the World” in the 1990’s, says it makes enough to feed 300 million people, as well as many millions of cows, chickens and pigs.

CRITICS, noting ethanol’s shortcomings like its lower energy content versus gasoline and the fact that it receives a 51-cent-a-gallon subsidy, say that while the marketing campaign has been good for the company, it has been bad for the country. “A.D.M.’s role in the ethanol debate has largely been to provide the narrative that the politicians need to justify the handouts they want to give to farmers anyway,” said Jerry Taylor, a senior fellow at the Cato Institute who has been critical of ethanol.

The fact is, Brazil, which just this year became independent of oil, makes ethanol fuel from sugar cane more efficiently and far cheaper then it is produced here.

Is this just a replay in this country of Big Oil controlling the politicians, and hence the market? Stay tuned....

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