Making fuel from ethanol based on corn consumes more energy than it produces
Remember ethanol-based fuel which was supposed to transform the lives of US consumers? The Bush administration pushed to achieve energy independence by subsidising production of alcohol from US-grown corn. Barack Obama took it even further, supported by venture capitalists. It would have made sense as a business, but scientists told policymakers that if all the upstream and downstream costs of making ethanol were included, the process consumes far more energy than it produces! Ethanol also demands large amounts of fresh water and water is a precious resource, warn some. Apparently, someday water will become more valuable than the oil that ethanol is supposed to replace.
How big has the US ethanol industry grown in a short period, based on the support of politicians and policymakers? Consumption of corn for ethanol has soared from 1.6 billion bushels in 2006 to about 4.3 billion bushels this year—an increase of almost 200% and the share of the total US corn crop utilised for the purpose has skyrocketed from 14% to 33%. Corn grown for ethanol now takes up 10% of the arable land in the US.
What has the impact of ethanol from corn been on food prices? Corn is trading at $6 translating into higher prices for food manufacturers and the cattle industry—and, in turn, for the poor. If there is a global food crisis, corn prices, thanks to diversion of corn for ethanol, would have played a role.
Can logic and reason come into play? Not when the politicians are involved. Iowa has an early primary in the US presidential elections, giving it a huge influence in selecting candidates; it has two crucial Senate seats as well. Obama needs Iowa even more than Bush. Iowa democrats are ahead 4-3 in the House, and have a tie in the Senate (1-1), so the ethanol programme prospers.
Indeed, the ethanol industry in the US may have become so big that it now can unleash an army of lobbyists to retain the subsidies and tax-breaks that various agricultural committees are recommending.
“Indications are that investment demand is softening as a result of a combination of factors, including monetary tightening, hindrances to project execution and deteriorating business confidence,” the RBI said in its Macroeconomic and Monetary Developments Report released yesterday
Mumbai: The Reserve Bank of India (RBI) on Monday said a slew of factors, including its own policy of monetary tightening and “perceived governance issues” are impacting investments, and warned it can have an adverse effect on growth in FY12-13, reports PTI.
“Indications are that investment demand is softening as a result of a combination of factors, including monetary tightening, hindrances to project execution and deteriorating business confidence,” the central bank said in its Macroeconomic and Monetary Developments Report released on the eve of mid-year policy announcement.
The business confidence has been dented by an array of factors, including “the perceived governance issues”. A slowdown in both the domestic as well as global economies and the impact of volatile equity markets on wealth are having an ill-effect on investments, it maintained.
Further, it warned of a greater impact of the slowdown, saying, “...the pipeline of investment is likely to shrink, putting 2012-13 growth at risk.”
“Information from the corporate sector, the banking system’s capex funding, housing transactions as well as falling construction activities suggest that investment has been adversely impacted,” the report said.
Data collected from 33 major lenders indicate a sharp decline in investment intentions during the April-June quarter, RBI said.
During the first three months of FY11-12, only 135 projects were sanctioned funding assistance, amounting to Rs80,300 crore, as against 195 projects and Rs1,42,800 crore in the corresponding quarter previous fiscal, it said.
Defending its tough anti-inflationary stance, which has seen 12 straight hikes in the last 19 months, the report said though the softening was anticipated, a combination of “non-monetary factors” has aggravated the investment climate.
The factors, including hindrances to execution and uncertainty about the global economy, appear to have significantly impacted investment climate, the report said.
“Persistent high inflation, weakening demand, lower availability of credit and prevailing global uncertainties appear to be affecting the business sentiments of companies,” it added.
The RBI said the current foodgrain stocks was ‘sufficient’ to meet the demand for various welfare schemes under the public distribution system (PDS), but pointed out that the requirement would increase with implementation of the proposed Food Security Act
Mumbai: The Reserve Bank of India (RBI) on Monday said growth in foodgrain production has been achieved on the back of increased productivity but asserted that the momentum needs to be sustained to ensure food security, reports PTI.
The central bank also pointed out the country needs to attain self-sufficiency in pulses and oilseeds.
“The increased agricultural production in recent years has been mainly due to improvement in productivity, while the area under cultivation has remained more or less constant for major crops.
“With a view to ensuring food security to the growing population, productivity gains need to be consolidated and sustained,” the RBI said in its Second Quarter Review for 2011-12.
The apex bank emphasised that the country’s needs to produce surplus food for long-term food security.
It said the current foodgrain stocks was ‘sufficient’ to meet the demand for various welfare schemes under the public distribution system (PDS), but pointed out that the requirement would increase with implementation of the proposed Food Security Act.
“...larger coverage and enhanced entitlement under the PDS, as envisaged under the proposed National Food Security Bill, may necessitate additional procurement. This would require creation of additional storage facilities,” it said.
Quoting the National Sample Survey Office (NSSO) survey, the RBI said there has been a structural change in food consumption pattern towards protein-rich food items, both in rural and urban areas. Simultaneously, the share of cereals in food has declined.
“A situation when the demand for high value items such as meat and fish, eggs, fruit and vegetables is rising faster than supply, calls for an overhaul of the entire supply chain mechanism,” it said.
The development of vegetable clusters and terminal market complexes under the public-private partnership model is a significant step which holds immense potential for better post-harvest management and price discovery.
The apex bank said effective implementation of the model Act was necessary for developing a nation-wide agricultural market.
“The model Agriculture Produce Market Committee (APMC) Act allows for contract farming and markets in private/cooperative sectors. So far, 17 states/union territories have amended their APMC Acts and the rest are in the process of doing so.”