The blue agave cactus--a plant that takes many years to mature to make good tequila--is being ripped out and replaced with corn to make ethanol. You’ve heard that the cost of food is going up because land is being used for ethanol crops instead of food crops, but hey, now the biofuels policy is messing with my dear friend, tequila. As it is, a decent bottle already costs more than a bottle of aged single malt scotch. I fear the pending $288 billion federal farm bill may have the same perverse effect--although California is attempting to tweak it to favor technology to turn crops less dear than agave and corn into biofuels. Just the energy portion of the bill--touted as an energy security measure--as of late last week has the following subsidies: -$120 million for five years to the Biomass Crop Transition Program to support growing biofuels feedstocks like switchgrass. -$300 million in grants and loan guarantees for biorefinery pilot plants and repowering existing corn-based ethanol plants to switch to cellulosic biomass. -$245 million for purchasing biofuels feedstocks. -$140 million for research and crop experiments. “I predict that within five years we are going to see cellulosic biofuel refineries sprouting like mushrooms all across the country,” stated Tom Harkin (D-IA), chair of the U.S. Senate Committee on Agriculture. In a November 5 letter to Harken, Governor Arnold Schwarzenegger asked the committee to increase the use of biomass resources for alternative energy. “These resources remain largely untapped because investments in technologies to harness green waste have not been available.” He specifically asked that the bill address cellulosic ethanol from agricultural wastes, as well as biofuels processing facilities. The governor also urged an additional $150 million program to increase funding for farmers in “non-attainment” areas (highly polluted areas like Kern County) to have farmers adopt technology to reduce air pollution. That could mean switching from diesel pumps for irrigation to alternative fuels. The state also wants a $50 million annual subsidy for forest biomass-to-energy research. Under the last farm bill in 2002, California received $4.9 million for biomass research and development, according to state records. The state itself funded another $25 million. That’s the straight-forward policy stuff. Here’s where it gets complicated: natural gas commodity trading and the interplay of the Leiberman/Warner global warming bill. Let’s start with last summer’s demise of the Amaranth Hedge Fund. It lost $3 billion in natural gas contracting. Under the farm bill, some federal lawmakers want to take oversight of natural gas commodities from what they see as a lax Commodity Futures Trading Commission and move it to a different agency, such as the Federal Energy Regulatory Commission. Another alternative is to simply clamp down on what are basically unregulated hedge funds. Senator Dianne Feinstein (D-CA) wants to keep regulatory authority at the CFTC. But, she wants natural gas commodity funds to report their exchanges--so if regulators see any funny business they can keep a single entity from impacting natural gas prices and/or setting off a financial meltdown. At press time, the farm bill was mired in partisan bickering. In addition, it’s possible that an energy bill would take over some of the biofuels, but not the commodity trading oversight and subsidies. The big problem isn’t pork--an appropriate metaphor in a farm bill--although those voting have a state snout in the money trough. The problem is the enormity of the pork. There are subsidies galore--including a $15/acre payment for farmers whether or not they grow anything. California has its own place at the trough, but it seems to pale against corn-growing states, which seem to have Senators by the bushel to fight for their corn farmers. There will be perverse effects of such massive changes in the states’ and nation’s agriculture/energy sector. Yes, we can create more biofuels and depend less on fossil-based ones. But then, the crops may be grown farther and farther away from the populace. That, in turn, means that more fuel will be needed to transport the food to hungry mouths. And that, in turn, will cost consumers more money in an increasingly stressed economy. It also means the nutritional value of the food that we eat decreases with the lack of freshness and growing methods that will perversely depend more on bio or fossil fuels as they are concentrated in factory farms. I’m not saying we, as a nation, should not invest in biofuels. But we need to beware of unintended consequences, especially when they are so close to our health and welfare. If the massive change to biofuels is going to put my dear friend tequila out of economic reach, perhaps Harkin is right. We should start sprouting mushrooms.
