Transcript Corn - Aspen High School

Sum of All Ears
Supply and
Demand
Corn: The proto-capitalist plant

Food


Valuable as means of subsistence
Commodity

Dried kernels made it easy to accumulate


Easy to store, easy to transport, indestructible
Dual Identity


Currency used by slave traders
Food upon which the slaves subsisted during their
passage to America
What is the primary Factor of
Production for food in the U.S?





Oil?
Water?
Corn?
Fertile Soil?
Fertilizer?
Corn


All factors of production, including oil,
water, fertilizer, and fertile soil are very
important to our continued supply of food
Currently, the primary commodity, or
factor of production, for our food supply is
corn
Argument

Actually, you might argue water is most
important



Corn can’t grow without it
Without water, there is no corn
ceteris paribus, or all things being as they
are or all things being equal

corn moves to number one because corn
drives the manufacture of most of our food
Historical highlights

1000 (or before)


1493



Native American Indians cultivating corn all over
North American Continent
Columbus describes the peculiar plant known as
maize to Queen Isabella’s court
First time seen outside Americas
1621

Squanto teaches Pilgrims how to plant corn

They discovered no other plant could produce as much food
on so little ground



Wheat yielded about 50 kernels of wheat to 1 seed
Corn yielded more than !50:1, sometimes as high as 300:1
Pilgrims gave this grain the name “corn”, a generic English
term for any kind of grain, including salt

“Corned Beef”

1856

Chicago Board of Trade instituted a grading system

Commodity Grain




No reason for anyone to care where corn came from or who
grew it
1909

Jewish German scientist Fritz Haber
discovered/invented ammonium nitrate


Derived from oil
First used in explosives by Germans in WWI


All Corn was #2 corn
Any grain of corn was considered to be equivalent of any other
Also invented the ammonium and chlorine gases used in WWI
and Zykon B used in Hitler’s concentration camps
May 1926

Henry A. Wallace + eight associates created the HiBred Corn Company, later known as Pioneer Seed.

the first company to develop, produce and sell hybrid corn

Farmer must buy new seed each year

1947

Munitions plant in Muscle Shoals Alabama
Tons of surplus ammonium nitrate at conclusion of
WWII
 Turned that surplus into inexpensive nitrogen
fertilizer for America’s farmers


1980

Coca Cola switches to HFCS from cane and
beet sugar to sweeten its soda
In 1979, Coca Cola used 128 lbs of sugar per
person in U.S. to sweeten its drinks
 In 2005, it used 158 lbs of HFCS per person for its
soft drinks

Corn Prices and Subsidies







It costs about $2.50/bushel to grow corn
2005 price was about $1.45 a bushel
2007 price was about $4.00 a bushel
2008 price was $5.28 a bushel
2010 price is $5.05
Farmers get a check from the grain
cooperative at the market/bushel price
Subsidy for corn is about $5 billion per
year

Subsidy primarily encourages ethanol production
2009 harvest

12.938 billion bushels
1 bushel is 56 lbs.
2.4 billion larger than the 2006 crop
1.131 billion larger than the previous record crop of
2004



Corn production in 1970 was 4 Billion bushels
Using less land than ever before




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due to erosion, housing, etc
Accomplished through greater use of nitrate fertilizer and hybrid corn
seeds
Growing corn causes more erosion than any other farm product
Observations

So in our market/capitalist system, we
have government intervention

State directed capitalism exists in the form of
incentives and subsidies for
Corn producers
 Milk producers
 Ethanol producers

Subsidies

Aim to change relative prices



Usually given to the producer
Used to help re-distribute income
Used to help firms compete

examples – state benefits, free school meals,
working tax credits, agriculture, transport, regional
development, housing, employment, education.
Impact of subsidies



Shifts supply curve to right
Reduces price to consumer
Increases output


Long term effects on market


depends who gets the subsidy and how it is used!
Welfare effects:


distorts price signals
Who benefits?


market failure can be a lack of output
cost of the subsidy to the taxpayer minus the value of the
benefits received
Impact on relative consumer and producer surplus
Price
Subsidies and Taxation
S
£14
£10
S + Subsidy
Total
Cost of the Subsidy
Amount of subsidy per unit (£4)
The amount of the subsidy is
The
First
effect
we look
ofdistance
the
at the
subsidy
market
is to
the
vertical
between
The
subsidy
will
encourage
reduce
before
the subsidy
and
increase the
the
two prices
supply
curves
suppliers
to
offer
more
forwhat
sale
amount available – but at
at every price
cost?
£7
D
500
700
Quantity Bought and Sold
What is the problem with this system?
It encourages the farmer to grow
absolutely as much corn as possible
 As they produce more, the supply
increases, and the price drops
 The only way to get more revenue is
to produce more corn

This then pushes the price down
 It is a vicious cycle, and the farmer is
the loser.

Supply and Demand

Using economic tools to explain the
market
Demand

All of the firms and households who are
willing and able to buy a product at a
given price

Price affects quantity demanded at a specific
time and specific price
“Demand” = entire curve or table
P
Price
Qd
1.00
1
0.75
3
0.50
5
0.25
7
1.00
“Quantity demanded” =
single point on a curve
0.75
0.50
D
0.25
1
3
5
7
Quantity
P
Price
Qd
1.00
1
0.75
3
0.50
5
0.25
7
An increase in P
causes a decrease in
“quantity demanded”
1.00
0.75
0.50
D
0.25
1
3
5
7
Quantity
What Causes an Increase in “Demand”?

Tastes and preferences for the good
 season
of year
 health
 Advertising/induced
demand
Income
 Population
 Price of substitutes

 Beef
or chicken or pork
 Ethanol from corn or gasoline from oil

Price of complements
 Diesel
fuel and tractor
Price
Q1
Q2
P
1.00
An increase in demand
0.75
1.00
1
2
0.75
3
6
0.50
5
10
0.25
7
14
0.50
D2
D1
0.25
1
3
5
7
9
Quantity
Supply

Quantity sellers are willing and able to
supply at any given price

depends on MC of production:
if P (or MB) > MC, then do X.
 if P (or MB) < MC, then do not do X.


note: “given price” suggests that firm is a
“price taker”


“perfect competition” where the market determines the
price
Agriculture is only industry that is possibly perfectly
competitive
What Causes an Increase in “Supply”?

Marginal cost of production falls
 Wages
drop
 Raw materials prices fall
 Technological change (e.g., robotics)

Number of firms increases
 high

profits results in entry to new firms
Price of substitute product in production
falls
 Wheat
farmer anticipates price of corn
rising, therefore, shifts to corn production
“Supply” = entire curve
Price
Price
Qs
150
10.00
88
120
7.50
120
66
90
5.00
4
90
4
60
2
2.50
2
S
150
“quantity supplied” =
single point on curve
60
1
3
5
7
9 11
Quantity
An increase in P causes an
increase in “quantity supplied”
Price
Price
Qs
10.00
8
150
7.50
S
150
120
8
6
120
5.00
64
2.50
90
2
4
60
2
90
60
1
3
5
7
9 11
Quantity
Price
Q1 Q2
Price
S1
S2
150
150
8
11
120
120
10.00
68
9
7.50
90
6
4
7
90
5.00
4
60
2.50
22
5
60
Increase in Supply
1
3
5
7
9 11
Quantity
D & S Together: Market
Price
S
P
D
Qd
Qs
“surplus” = (Qs – Qd)
Quantity
D & S Together: Market
Price
S
P
D
Qs
Qd
“shortage” = (Qd – Qs)
Quantity
Market Equilibrium
Price
S
Pe
D
Qe
Quantity
Pioneer Corn Seed
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Hybrid corn seed

Improved per acre yield

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Put rows closer and closer together
Also provided annual revenue stream for
Pioneer
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Corn seed genetically engineered to be used
only once

Corn taken from Pioneer F-1 seed could not be
planted
Improved Yields over time

One Bushel = 56 lbs corn kernels

That is about 73,000 kernels


1920

20 bushels per acre



Hybrid seed comes to market

Yields rise to 40 bushels per acre
1950

80 bushels per acre


Roughly the same as Pilgrims
Crop rotation to get natural nitrogen replenishment
1934
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About 800 kernels per ear of corn
With help of nitrogen fertilizer
2005
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180 bushel per acre

10,000 pounds of corn per acre
Ammonium Nitrate

Used in manufacture of explosives

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US Dept of Agriculture discovered that the
product could be used to fertilize plants

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Primary ingredient in most IED and suicide bombs in
Iraq
Until then, only nitrogen occurred naturally
At first, USDA wanted to spread the
surplus on the national forests to make
them grow faster
Instead, USDA decided to give it to
farmers at subsidized price


Industrial fertilizer which transformed agriculture
First effort by government to transform war machine
to peacetime purposes
Corn Consumption

125,000 sq miles of U.S. land is in corn


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about 250 million bushels is eaten ‘directly’

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Corn on the cob
Tostitos corn chips and salsa
Corn flakes and Frosted flakes cereal
3+ billion bushels go into food additives and
corn syrup


80 million acres
>10 billion bushels of corn come from that land
530 million bushels of corn end up as 17.5 billion
pounds of corn syrup
The rest is cattle feed
Unit 2.3b
Production Costs and curves
Economies of Scale

Increase in efficiency of production as the
number of goods being produced
increases.

a company that achieves economies of scale
lowers the average cost per unit through
increased production


fixed costs are shared over an increased number of
goods.
Size does have its limits

After a point, an increase in size (output)
actually causes an increase in production costs.
This is called "diseconomies of scale".
Economies of Scale

External economies scale


the cost per unit depends on the size of the
industry, not the firm.
economies made outside the firm as a result of
its location and occur when:





A local skilled labor force is available.
Specialist local back-up forms can supply parts or
services.
An area has a good transport network.
An area has an excellent reputation for producing a
particular good. For example, Sheffield is associated
with steel.
Internal economies of scale

the cost per unit depends on size of the
individual firm.
Survival of the Small Firm

Small firms are able to compete with large
firms because:

Some products cannot be mass produced


Some products have only a limited demand


horse shows or vinyl recordings.
Some products require little capital


Hand painted clogs
window cleaning or house cleaning.
Small firms receive grants and subsidies from
the government.
Studebaker and Economies of Scale


Small auto manufacturer struggles to
compete
C:\Documents and Settings\dconarroe\My
Documents\My Videos\the firm 2
studebaker.mpg
A Firm’s Long-Run
Average Cost Curve
Cost per unit
Long-run
average cost
0
A
B
Output per period
Economies
Constant Diseconomies
of scale
average cost
of scale
Diminishing Returns

When variable inputs are increased beyond a
certain point

the marginal (incremental) quantity produced starts to
decrease


Starting from a very low level of production



Diminishing returns
firms usually will benefit from increasing efficiency at
first
gains dissipate and production becomes less efficient
when the size capacity of the firm is over-utilized
If there are too many waiters and/or too many
cooks in Con’s Kitchen they will start to bump into
each other spilling the meal
Total product (tons/day)
The Total Product
15
Total
product
10
5
0
1
3
5
7
10
Workers per day
Marginal product (tons/day)
The Marginal Product
5
Increasing
marginal
returns
Diminishing but
positive
marginal returns
Negative
marginal
returns
4
3
2
Marginal
product
1
0
1
3
5
7
10
Workers per day
Costs of Production





Total
Fixed
Variable
Average
Marginal
Coca Cola and Costs

C:\Documents and Settings\dconarroe\My
Documents\My Videos\the firm 1 soft
drinks.mpg
Total Costs

Total cost is the sum of all costs:


fixed costs plus variable costs
The total cost curve is up-sloping curve
costs increase as output volume increases.
The total costs of Con’s Kitchen increase as the number of
meals served increases
When Con’s Kitchen becomes overcrowded and the law of
diminishing returns sets in, the total cost increases quickly




employees become less efficient as they get busier
Total Cost Curve for Con’s Kitchen
$1,000
Total dollars
Total
cost
Variable
cost
500
Fixed
cost
Fixed
cost
200
0
3
6
9
12
15
Tons per day
Average Fixed Cost

total fixed cost by the quantity produced



AFC=TFC/Q
Average fixed cost curve is represented
graphically as an ever decreasing curve
asymptotic to the horizontal axis.
For example:


rent paid by Con’s Kitchen is divided (or
allocated), among more and more meals as the
volume of production increases.
average cost per meals attributable to the fixed
rent decreases as the number of meals increases.
Average Variable Cost


calculated by dividing total variable cost by
quantity produced
AVC = TVC / Q


The average variable cost curve is graphically represented by
a U shaped curve reflecting the increasing efficiency
followed by decreasing efficiency in production as volume
changes.
Starting from a few meals and customers, Con’s
Kitchen can improve its efficiency and decrease its
average variable cost per meal as it increases its
volume (product).

But, if we expand too much, the average variable cost starts
to rise as more employees start to get in each other’s way
Average Total Cost


calculated by dividing total cost by the
quantity produced
ATC=TC/Q.

The average total cost curve is represented
graphically as a U shaped curve with a steep
decreasing portion and a mildly increasing portion.


These are attributable to the fixed and variable cost
patterns.
The pattern of the average total cost at Con’s Kitchen
is a combination of the pattern of average fixed costs
and average variable costs.

As output increases, average total cost decreases then
increases with diminishing returns.
Marginal Cost

calculated by dividing the change in total cost by
the change in quantity.

MC=(change in TC)/(change in Q).


represented graphically by a U shaped curve
reflecting the increasing then decreasing efficiency as
volume increases.
The marginal, or additional, cost per meal at Con’s
Kitchen changes more than the average total cost for
each meal. The cost of one additional meal start to
increase before average total cost does.
Marginal Cost Curve on Graph

The shape of the marginal cost curve can
be explained by the pattern of total cost:


it is due to the law of diminishing returns.
The trough (or minimum) of the marginal
cost curve corresponds to the point of
diminishing returns.
Cost per ton
Marginal Cost Curve for Con’s Kitchen
$100
50
Marginal
cost
25
0
3
6
9
12
Tons per day
Minimum average total cost


Marginal cost curve intersects the average
total cost curve at its minimum (or trough).
This is true by observing



if marginal cost is below average cost, average
cost decreases
if marginal cost is above average cost, average
cost increases
Average cost remains the same only if marginal
cost is neither above nor below.
Average and Marginal Cost Curves
for Con’s Kitchen
$150
Cost per ton
125
Marginal cost
100
75
Average total cost
50
Average variable cost
25
Average fixed cost
0
5
10
15
Tons per day
Marginal Revenue
Total Revenue is area under
demand curve

From the demand
curve, we can obtain
total revenue.
Total Revenue

If people will buy 100 units of a product when its
price is $10.00, as the picture on the slide
illustrates, total revenue for sellers will be $1000.


Simple geometry tells us that the area of the rectangle
formed under the demand curve in the picture is found
by multiplying the height of the rectangle by its width.
Because the height is price and the width is quantity,
and since price multiplied by quantity is total revenue,
the area is total revenue.

The fact that area on supply and demand graphs measures
total revenue is a key idea used repeatedly in microeconomics.
Marginal Revenue

is the additional revenue added by an additional
unit of output, or in terms of a formula:


Marginal Revenue = (Change in total revenue)
divided by (Change in sales)
According to the picture, people will not buy
more than 100 units at a price of $10.00. To sell
more, price must drop. Suppose that to sell the
101st unit, the price must drop to $9.95. What
will the marginal revenue of the 101st unit be?

in other words, by how much will total revenue
increase when the 101st unit is sold?
The Math of MR


There is a temptation to answer this question by
replying, "$9.95." But this is incorrect.
Marginal is the amount of revenue from the next
unit sold


Total revenue when 100 are sold is $1000.
When 101 are sold, total revenue is (101) x ($9.95) =
$1004.95.

The marginal revenue of the 101st unit is only $4.95.
Marginal revenue and the
downward sloping demand curve


To see why the marginal revenue is less than
price, one must understand the importance of
the downward-sloping demand curve.
To sell another unit, sellers must lower price on
all units.

They received an extra $9.95 for the 101st unit, but
on average, they lost $.05 on the 100 that they were
previously selling.

There is a another way to see why marginal
revenue will be less than price when a demand
curve slopes downward:

Price is average revenue.


If the firm sells 100 for $10.00, the average revenue for each
unit is $10.00.
But as sellers sell more, the average revenue (or price)
drops, and this can only happen if the marginal revenue is
below price, pulling the average down.


If one knows marginal revenue, one can tell
what happens to total revenue if sales change.
If selling another unit increases total revenue,
the marginal revenue must be greater than zero.



If marginal revenue is less than zero, then selling
another unit takes away from total revenue.
If marginal revenue is zero, than selling another does
not change total revenue.
This relationship exists because marginal
revenue measures the slope of the total revenue
curve.
Profit Maximization

Profit maximization for business
production occurs where the MC curve
crosses the MR curve.
Profit Maximization graph for
Perfect Competition
Profit Maximization for Imperfect
Competition: Con’s Kitchen
CAFO: Attempting to improve
economies of scale

6 billion bushels of corn
each year end up at the
industrial farm

CAFO



Confined animal feed
operations
Animal feed lots
Enables cheap protein from
meat


Lowest price in the history of
the world
Externalities

Negatative:


Water pollution, air pollution,
toxic waste, eColi and
salmonella bacteria
Positive:

Economies of scale

Lower prices
The Role of the Government


Provide for legal system
 Make and enforce laws to protect private property
rights, including intellectual property
Provide public goods


Correct market failures



Externalities, external costs, unintended external benefits and
costs
Maintain competition by regulating monopolies and oligopolies
Redistribute income


Things/stuff we need that individuals or private business would or
could not profitably provide otherwise
Tax those with higher incomes, help those in need
Stabilize the economy





Unemployment at about 5%
Inflation at about 2%
Economic growth at about 3%
Trade Balanced
Budget deficits minimized
Public Goods



Small private benefits
Massive positive externalities
Would barely be produced at all in purely market economy



Or price would be much higher than current
Paid for by taxes
Public goods








airports
Rio Grande trail from Aspen to Glenwood
flu vaccine
defense
Libraries
Highway 82, Interstate 70, etc
street lights
Passenger/commuter trains
Private goods

Rivalry

Use by one person prevents use by another

My computer is rivalrous


You cannot use it when I have it
Excludability

Easy to identify and control who uses the
good
Public and Private Goods Compared


Pure Private goods
Excludable AND rival




Food
Car
house
Partly Private
Excludable but non
rival





Mostly Public
Non excludable AND
rival


Fish in the ocean
air


Cable television
bridge
highway
Pure public goods
Non excludable AND
non rival


Lighthouse
National defense
Rival goods are goods whose consumption by one consumer prevents simultaneous
consumption by others
Market Failure

Inability of markets to efficiently allocate
resources


Environment degradation
Negative externalities





Forcing a third party, which is not part of the original
transaction, to pay for all or part of the costs of the
transaction
Demerit goods
Inequality in distribution of income and wealth
Monopoly power
Market system does not provide for merit or
public goods
Failure of the Market

Market works correctly, but outcome is not
acceptable to society



Illegal drugs
Sex industry
Market works correctly, but people who
need a product cannot participate

Income distribution/efficiency problem

Aids drugs in Africa
Illustrating Negative externality
Illustrating positive externality
Nefits)
Externalities

Effect of consumption or production not taken into
account by the consumer or producer




Producers do not pay for pollution
Drivers of autos do not pay for global warming
Owner of farmland near DIA indirectly receives benefit from
building of DIA
The market does not ‘pay for’ externalities

It takes into account



Only the private benefits
Only the costs of those who participate in market
If neither the utility nor the consumer pay for the pollution
(externality), the cost of energy transmitted is lower than its
true market price

This reduces cost to producer and consumer



increases the utility’s profits
Reduces consumer’s price
Increases cost to society

Illness, lost productivity due to illness, medical care expenses rise,
insurance costs rise
Merit Goods



Goods with social benefits enjoyed by other
people
Private goods with positive externalities
Tend to be UNDER provided in the market


Profits are generally lower
A market provides a private optimum level while
under-providing a socially optimum level

Government then responds to this under-provision



Education
Medicare/health care
Social security
Government Incentivizes
Merit Goods by

Advertising and promotion

Induce the private demand for product

Shift demand curve to the right


Subsidies


Increases both quantity supply and demand
Reduce the cost of production
Direct provision


If merit good has massive externalities
Govt has ability to abandon markets and provide good
directly at below market prices


Medicine and dental care in developing countries
Ration with price or coupons
Demerit Goods

Private goods with negative externalities

Net social costs borne by others than
producer or consumer
Tobacco
 Alcohol

Government methods to decrease
provision of demerit goods


Advertising
Taxes

Tax the producer


Tax the consumer


Shift the supply curve up and to the left
Best solution might be to tax the producer then pass the
revenue directly to the people who suffer the negative
externality
Law

Prohibit possession of handguns, alcohol, tobacco,
drugs
Control the environmental
externalities


Modify market by taxing the activity which
causes the externality
Extend property rights to internalise the
externality


Force the offending company to pay for the costs
Legislate

National v international



International Economic Development summit
Kyoto Treaty
Others
Industrial farming relies on oil


20% of American oil
consumption is for food
production and
transportation
Average steer consumes
25 lbs of corn a day for
16 months

During that time, the steer
indirectly consumes about
35 gallons (1 barrel) of oil
Factors of Production for basic fast
food breakfast sandwich









Refrigerated trucks
Flavoring company in NJ
Cargill Grain refinery
Petroleum refinery
Grain elevators
Food science labs at
McDonald’s HQ
Bakeries
Meat packing plant
McDonald’s kitchen
capital investment
Factors of Production, Cont’d











Warehouses
Factory chicken farms
Factory dairy farms
Factory pig farms
Wheat farms
Corn farms
Farm equipment
Fertilizer
Seed
Labor
Transportation infrastructure to
transport the commodities
Corn as Food

7 lbs of corn required for 1 lb of weight
gain in the steer



½ lb of that weight gain is edible
So a Quarter pound hamburger requires
about 2 lbs of corn
32 oz. soda has 86 grams of corn syrup

This requires about ½ lb of corn
McD’s: What % of a McDonald’s
item is corn?

Of the 60 items on the McDonald’s menu, 45
contain HFCS








Even the buns have corn in them, directly or indirectly
Soda, 99%
Milk Shake, 78%
Salad dressing, 65%
Chicken McNuggets, 56%
Cheeseburger 52%
Egg McMuffin 48%
French Fries, 23%

Source: Todd Dawson, Biologist, UC Berkley, as reported in
Omnivore’s Dilemma
Food for Thought


When you eat corn directly, you get ALL of the
corn’s energy to use in your body
When you feed it to an animal, then eat the
animal, you get 10% of the corn’s energy
potential


90% of the corn’s energy is lost in the conversion to
meat.
So the one Egg McMuffin you are eating
today could actually feed over 100 people
if they were to get the corn directly.
Sum of All Ears:
Will ethanol solve our problem?

President Bush’s 2007 State of the Union
called for a huge increase in alternative
fuels such as enthanol
(rather than a plan for conservation)
Alternative Fuels

Government definition of alternative fuel:


Ethanol
Earlier this year, legislation calling for the
huge increase in ethanol production was
introduced by five senators, including 4
Democrats

This is clearly a bipartisan effort
Why not conservation?


Conservation does not have any political “juice”
There is a visible, highly organized, powerful
constituency in support of ethanol


Including corn growers, ethanol producers, and giant
food processor Archer Daniels Midland
Conservation does not have the same support

Where is the powerful, organized constituency for
tougher fuel standards, higher gasoline taxes, carbon
dioxide emissions trade system?
What is the problem with ethanol?
1. Converting the entire USA corn crop
“The Sum of All Ears”
into ethanol would replace only 12% of our gasoline
2.
Cost/Benefit Analysis
Visible or Seen Costs:
According to the CBO, achieving
the same result by expanding
ethanol production as proposed by
our senators would cost $10 billion
per year or more, based on current
corn subsidies paid to our farmers
and ethanol producers
Invisible or Unseen costs:
Net savings of the one gallon of ethanol
replacing one gallon of gasoline is only ¼
gallon of fuel, because of the energy used
to grow, transport, process, and turn the
corn into ethanol is still fossil fuel,
including diesel at the farm, and coal for
the electricity and natural gas for the
fermentation.
Water use is very high in ethanol production:
5 to 11 gallons of water per gallon of
ethanol. This does not include the water
required to grow the corn
Corn for Fuel?

It would take 85% of our current corn
production to replace just 10% of our
gasoline demand. (Business Week,
August 14, 2006, pg 56)
Research from Cornell University


An acre of U.S. corn yields about 7,110
pounds of corn for processing into 328
gallons of ethanol.
Planting, growing and harvesting that
much corn requires about 140 gallons of
fossil fuels and costs $347 per acre
131,000 BTUs are needed to make 1 gallon of
ethanol.
One gallon of ethanol has an energy value of only
77,000 BTU.
Ethanol from corn costs about $1.74 per gallon to
produce, compared with about 95 cents to produce a
gallon of gasoline.
852 gallons of the corn-based fuel is required to
move a car 15,000 miles.
It would take 11 acres to grow corn to make this
much ethanol
This is the same amount of cropland required
to feed seven Americans.
How much would conservation
cost?
The Congressional Budget Office
estimates that reducing gasoline
consumption by 10% through an
increase in government imposed
fuel standards or an increase in
fuel tax at the pump would cost
American consumers $3.6 billion
Food or Fuel?

If corn is used for fuel rather than food,
what happens to the cost of our food?
Works Utilized



Business Week, Aug 14, 2006, pg 56
Pollan, Michael, Omnivore’s Dilemma, New
York: Penguin Press, 2006.
http://www.news.cornell.edu/releases/Aug
01/corn-basedethanol.hrs.html