|Tallgrass Prairie is the fair-haired child of the "carbon" crowd. The deep roots deposit carbon into the soil profile. In theory, it is possible to economically convert cellulose to ethanol. Tallgrass prairies can be ecologically diverse. |
"Farming is the only business where all inputs are purchased retail and all output is sold at wholesale" -Unknown
Q:"So, Zeb, whatchyer boy going to college for?"
A:"I am sending him to school to become a 'middle-man'."
At $6 a bushel, a $3.69, 20 oz loaf of whole-grain bread has approximately ten cents of wheat in it. That is roughly 6% of the cost of that loaf.
A $4.29 bag of Doritos has $0.035 of corn in it. that is about 0.8% or about 1 part in 125.
A $22 bottle of Tito's Handmade Vodka has $0.14 of corn in it. That is 0.6% or one part in 160.
The point is that prices farmers receive could quadruple (+300%) and the price of a loaf of bread would move up thirty cents or approximately +20%. That bag of Doritos would increase rise about 10 cents or by 2.5% and the bottle Tito's would rise by about half a dollar or by about 2%.
Suppose you were the Ghorka Gola Corporate Food company and were interested in investing farmland in Outer Midwestlandia. That is brain-dead at today's prices BUT has potential if legislation shrinks the acres in production by reverting substantial portions of it back to prairie to sequester carbon.
That would shrink supply.
Then, if Congress were to suddenly discover ethanol as a "carbon neutral fuel", then that would sink over-supply.
Ghorka Gola can easily absorb the increased cost in raw materials because they are such an inconsequential part of the total cost of putting product on the shelf. The pretty bag costs more than the grain and the advertising costs more than the grain and the bag combined. In the over-all scheme of things the price of corn and wheat are "noise" and rising crop prices can even be used to justify increasing prices of the finished product.
From Ghorka Gola's standpoint, a two-step process would be most desirable. First, the old farmers who are holding out for $15k an acre die off and land floods the market, depressing prices.
Then GG buys the land just before Congress passes legislation "blessing" ethanol and carpet bombing the sunny west with incentives/subsidies to install solar and sequester carbon.
The small farmer will get elbowed away from the feed-trough as the Ghorka Golas of the world have full-time legal staff to fill out paperwork.