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Summary:

Growth Energy, a new trade organization for corn ethanol companies, is lashing out against critics of corn ethanol by buying ad space in the New York Times and issuing “policy briefs” (bulky pdf files peppered with Excel graphs).

America’s corn-ethanol companies are tired of being kicked around. Maligned for using corn as fuel while the world goes hungry, beaten down in the financial markets, threatened by falling gas prices — now, they are fighting back.

How? By forming a “moral purpose organization.”

That’s how Jeff Broin, CEO of ethanol producer POET, described a new trade organization called Growth Energy to the Des Moines Register. Growth Energy is lashing out against critics of corn ethanol by buying ad space in the New York Times and issuing “policy briefs” (bulky pdf files peppered with Excel graphs).

In other words, it’s a full-on PR offensive. Which might have had some impact if public relations hadn’t been all but dashed as the ethanol industry’s problems have come to light. An aggressive PR front might have helped corn ethanol a year ago. Now the realities facing it are much more substantial, and much more daunting.

The latest evidence of that came from Pacific Ethanol, perhaps best known for being embraced and then rejected by Bill Gates’ retirement fund. Only a week after ethanol giant VeraSun declared bankruptcy, Pacific Ethanol saw its stock drop below $1 a share on a larger-than-expected loss.

If you had any money invested in either of those companies, you are probably not moved by the mutual mudslinging that has erupted between Growth Energy and the Grocery Manufacturers Association over whether corn is best used as a child-obesity formula or a costly and inefficient substitute for $2.50 a gallon gas. That may be the core concern for Growth Energy, but few others share it.

Growth Energy is advocating for more ethanol to be blended into gasoline — as much as 20 percent from the current ratio of 10 percent. That idea might win over supporters in Washington, providing some support for ethanol makers in what is shaping up to be a tougher year in 2009.

But it won’t go very far in addressing the deeper problems facing corn ethanol: Slack long-term demand and an unforgiving financial climate for capital-intensive industries. Not to mention the fact that cellulose is a more compelling source of ethanol — financially and socially — than corn. Transitioning to cellulose offers ethanol a more persuasive moral purpose than a simple PR offensive.

By Kevin Kelleher

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  1. ETHANOL BETWEEN ALL FEDERAL AND STATE SUBSIDIES FROM GROWING TO MARKETING TO PRODUCTION LAST YEAR EQUALED 33 MILLION TO MAKE 7 MILLION GALLONS THAT IS $4.71 FOR EVERY GALLON OF THIS JUNK ON TOP OF THE FACT THAT WE STILL HAVE TO PAY FOR THIS CRAP.

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  2. This year, exports of corn increased by 20% after being flat for years. Corn farmers would export more if they could. There is no shortage of corn. Recently, the cost of a bushel of corn doubled, rising along with numerous other commodities being bought and sold by speculators, including rice, wheat, sugar and soybeans. The escalating cost of transportation fuels to ship corn was a much bigger factor in food prices than the 5 cents per pound that was added to the corn itself. Ship a ton of corn from Iowa to China and see what happens to the price. Now the price of corn is back down to where it was a year ago, but did food prices drop? No, because the raw materials in processed foods represent only a small fraction of the huge overhead cost of foods sold in supermarkets.

    Almost all the corn we export is Not for human consumption. It is feed corn. Used to produce meat, dairy, and animal products in foreign countries gaining affluence, like China and India. This year, the value of dry distillers grains, a byproduct of corn ethanol, increased dramatically, as foreign demand increased and exports doubled. Again, high protein distillers grains, produced by ethanol refineries, is a feed product that goes toward the production of food. Ten to fifteen percent distillers grains added to the feed of dairy cows increases their milk production by 10 lbs per cow per week. It also puts 10% to 12% more meat on livestock. We produce all the corn suitable for human consumption that the world can stand, and we could produce much more, if the demand was there.

    The ethanol industry removes the starch from 25% of the feed corn crop to make ethanol. That’s no great loss in the realm of feeding livestock, because cows are designed to eat grass and do not digest the starch very well anyway. So the industry is taking low value corn starch and converting it into a high value fuel product. And what we have leftover is the more digestible portion of the corn kernel, as animal feed, in the form of high protein distillers grains. Corn oil is another byproduct of ethanol refineries, extracted into food grade or fuel grade value added products.

    Ignorant corn ethanol critics make the false assumption that people are starving, because starch is being extracted from feed corn to make ethanol. When in reality, the corn ethanol industry makes a superior feed product that produces more meat, dairy, poultry, fish, and pork, in addition to corn oil and a renewable domestic fuel.

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  3. They can form a “moral purpose organization” when they get off the public dole. Until then everyone should treat anything they have to say as pure propaganda.

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  4. Public Dole? Are you kidding me? Look who gets the actual tax credits for blending it with their gasoline. Hello Exxon and BP. Food vs. fuel is the oil industry billion dollar propaganda. People are so ignorant about ethanol it is scary. Every valid argument about ethanol is an argument with industrial agriculture and not with the fuel. It is still a much better option than Nuclear or coal power plug-in hybrids and hydrogen.

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  5. Seems that very few people think about what they are paying for… as for ethanol, on which many others earns big amount of money but on our backs. Agree with everything that Paul said, very clever and explicit said.

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