Unintended consequences...

[Okla-homey]

The Ethanol craze is resulting in higher corn prices.

That means tortillas are getting too expensive for some.


Thick, doughy tortillas roll hot off the conveyor belt all day at Aurora Rosales's little shop in this congested city built on a dry lake bed east of Mexico City.

But these are not good days, and sometimes hours pass without any customers.

Mexico is in the grip of the worst tortilla crisis in its modern history. Dramatically rising international corn prices, spurred by demand for the grain-based fuel ethanol, have led to expensive tortillas. That, in turn, has led to lower sales for vendors such as Rosales and angry protests by consumers.

The uproar is exposing this country's outsize dependence on tortillas in its diet -- especially among the poor -- and testing the acumen of the new president, Felipe Calderón. It is also raising questions about the powerful businesses that dominate the Mexican corn market and are suspected by some lawmakers and regulators of unfair speculation and monopoly practices.

Tortilla prices have tripled or quadrupled in some parts of Mexico since last summer. On Jan. 18, Calderón announced an agreement with business leaders capping tortilla prices at 78 cents per kilogram, or 2.2 pounds, less than half the highest reported prices. The president's move was a throwback to a previous era when Mexico controlled prices -- the government subsidized tortillas until 1999, at which point cheap corn imports were rising under the NAFTA trade agreement. It was also a surprise given his carefully crafted image as an avowed supporter of free trade.

"There are certainly some contradictions in Calderón's positions here," said Arturo Puente, an economist at the National Institute for Forestry, Agriculture and Livestock Research in Mexico City.

Calderón's administration portrayed the cap as a get-tough measure that, coupled with his earlier approval of new corn imports from the United States and other countries, would stem the crisis. In an interview two days before the price-cap announcement, Calderón's undersecretary of industry and commerce, Rocio Ruíz Chávez, boasted that Mexico's tortilla problems would stabilize in "one to two weeks."

But Calderón's price cap does not carry the force of law. It is "a gentleman's agreement," said Laura Tamayo, a spokeswoman for the Mexico division of Cargill, a Minneapolis-based company that signed the pact and is a major player in the Mexican corn market.

A study this week by the lower house of Mexico's National Congress showed that many tortilla makers are ignoring Calderón's edict. The average price of tortillas is 6 cents higher than the cap, and some shops are charging between 59 cents and $1.04 above the government threshold.

"Going ahead, it looks very good for high corn prices," said William Edwards, an agricultural economist at Iowa State University.

In another place, a rise in the cost of a single food product might not set off a tidal wave of discontent. But Mexico is different.

With a minimum wage of $4.60 a day, Mexican families with one wage earner have been faced in recent months with the choice of having to spend as much as a third of their income on tortillas -- or eating less or switching to cheaper alternatives.

Many poor Mexicans, Gálvez said, have been substituting cheap instant noodles, which often sell for as little as 27 cents a cup and are loaded with less nutritious starch and sodium.

"In the short term, the people who can buy food are going to get fatter," she said. "For the poor, the effect is going to be hunger."

There is almost universal consensus in Mexico that higher demand for ethanol is at the root of price increases for corn and tortillas.

Ethanol, which has become more popular as an alternative fuel in the United States and elsewhere because of high oil prices, is generally made with yellow corn. But the price of white corn, which is used to make tortillas, is indexed in Mexico to the international price of yellow corn, said Puente, the Mexico City economist.

[OU-HSV]

Oh crap...next thing you know, they'll be selling corn by the barrell and we'll have to find an alternative to corn! ;)

[royalfan5]

My importantly than the people in Mexico, United States livestock producers are being tossed under the bus by this poorly thought out government rush to subsidize ethanol.

[BajaOklahoma]

Corn is a pretty common allergen.
I wonder what, if any, effect it is going to have on people allergic to corn.

[Mjcpr]

I think you just gave royalfan wood.

[TopDaugIn2000]

mmmmmmmm....tortillas......

[SoonerInKCMO]

Guess I'll have to start specifying flour tortillas when I go to Taco Bell.

[jacru]

Gov't subsidy=screw up the market

[Ike]

will this mean that my Dr. Peppers will become more expensive due to their reliance on high fructose corn syrup? Because I won't stand for that.


just kidding. If we really wanted to pursue ethanol seriously, we'd lower tariffs on sugar so that we can make ethanol from that instead. corn barely breaks even, energy wise, when converted to ethanol. Sugar is waaay more effective.

[royalfan5]

will this mean that my Dr. Peppers will become more expensive due to their reliance on high fructose corn syrup? Because I won't stand for that.


just kidding. If we really wanted to pursue ethanol seriously, we'd lower tariffs on sugar so that we can make ethanol from that instead. corn barely breaks even, energy wise, when converted to ethanol. Sugar is waaay more effective.
Dr. Peppers may shift to real sugar again because it's cheaper.

[SoonerInKCMO]

Gov't subsidy=screw up the market

[slight threadjack]At best it'll just screw up the market. I just finished reading "The Worst Hard Time" a few days ago (about the dust bowl) and the government's subsidy of wheat during WWI had a very big impact on the eventual ruination of the land in the dust bowl area. Good read. I bet Homey has read it.[/slight threadjack]

[SoonerInKCMO]

just kidding. If we really wanted to pursue ethanol seriously, we'd lower tariffs on sugar so that we can make ethanol from that instead. corn barely breaks even, energy wise, when converted to ethanol. Sugar is waaay more effective.

I've said it before and I'll say it again - the only answer is to go on a fossil fuel binge like the world has never seen before and amp up CO2 emissions so that global warming hits high gear and our gulf coast becomes hospitable to sugar cane cultivation. That way we cut out the sugar making middle men in S.A. :texan:

[Ike]

Dr. Peppers may shift to real sugar again because it's cheaper.
well, that will be a welcome change because sugary Dr. Pepper tastes better, but by then it will already be more expensive.

[royalfan5]

well, that will be a welcome change because sugary Dr. Pepper tastes better, but by then it will already be more expensive.
Speaking of the sugar bit, my advisor got an angry letter from the Nebraska Corn Board because he told a group of visiting Mexican dignitaries that he liked their coca-cola better.

[SicEmBaylor]

I prefer flour tortillas.

[Ike]

Speaking of the sugar bit, my advisor got an angry letter from the Nebraska Corn Board because he told a group of visiting Mexican dignitaries that he liked their coca-cola better.

yeah, I believe it. We'll have no corn bashing here in America dammit!

[Ike]

I prefer flour tortillas.

Heartless UnAmerican ******rocket.

[royalfan5]

yeah, I believe it. We'll have no corn bashing here in America dammit!
His predecessor wrote a paper in the 80's denouncing ethanol and the legislature refused to fund the University unless he was fired. Eventually a compromise was worked out, but the Ag Econ and corn people don't have the best of relationships.

[SoonerInKCMO]

His predecessor wrote a paper in the 80's denouncing ethanol and the legislature refused to fund the University unless he was fired. Eventually a compromise was worked out, but the Ag Econ and corn people don't have the best of relationships.

I oughta do some research on that situation so when someone tells me (again) that I'm too much of a cynic concerning relationships between government and business, I can counter with a good argument as to why they're just naive ******rockets.

[CORNholio]

Sugar is not the answer. Sadly I loves me sugars but the answer is finding a domestic renewable resource like corn to support our energy needs. The real problem is dependence on foriegn trade to support our very way of life. Those countries have us by the everpresent scrodal sack and too many difficulties result form this. All I know is that damned Nebraska is gonna turn into redneck Beverly Hills once the Corn shiat takes off. Hello Jed Clampet.

[RUSH LIMBAUGH is my clone!]

...If we really wanted to pursue ethanol seriously, we'd lower tariffs on sugar so that we can make ethanol from that instead. corn barely breaks even, energy wise, when converted to ethanol. Sugar is waaay more effective.Freakin' Fidelista!

[Half a Hundred]

I was in Mexico a couple of weeks ago, and every newspaper had headlines blaring "Tortillas $11 por kilo!" (That's pesos, btw). I was like, that's freakin' cheap, when I go home and get a pound for $3.50.

I miss cheap Mexican food/everything.

[Ike]

Sugar is not the answer. Sadly I loves me sugars but the answer is finding a domestic renewable resource like corn to support our energy needs. The real problem is dependence on foriegn trade to support our very way of life. Those countries have us by the everpresent scrodal sack and too many difficulties result form this. All I know is that damned Nebraska is gonna turn into redneck Beverly Hills once the Corn shiat takes off. Hello Jed Clampet.

sugar is also renewable. sugar yields far more energy than corn based ethanol (something like 6 times as much IIRC). buying it from other countries for energy would probably be better for us in the long run. (by better, I mean cheaper)

Corn is really a bad solution when it comes to ethanol. It takes nearly as much energy to create the ethanol in the first place as you can get out of the ethanol when you use corn. If we turn the entire US into a big effin corn field, we still won't have enough corn to supply our domestic energy needs. It's just a bad solution. Don't get me wrong, I like the idea, but the math just doesn't work out.

[Vaevictis]

Heh, without foreign trade, our way of life is unsustainable. The real issue isn't reliance on foreign trade, it's a lack of options and who we have to trade with to sustain it. We can't fill our need for oil without the Middle East.

What we need, really, is a combination of energy sources from many different sources, preferably heavily weighted towards countries with a Western heritage or with cultures that are highly compatible with our Western heritage, because those countries have interests which are much better aligned with ours compared with say, one dominated by Arabs.

[Okla-homey]

Maybe we should revert to steam powered cars. Them Stanley Steamers was the shiznit. And you could go all day on 5 gallons of kerosene.

http://img220.imageshack.us/img220/5237/llllllllllllllllllllllldi9.jpg
1922 Stanley Steamer. Seated 7.

[AlbqSooner]

Hydrogen fuel cells.

[Okla-homey]

Hydrogen fuel cells.

http://img207.imageshack.us/img207/9113/22222hindenburgns1.jpg

[oklaclarinet]

Could always try plutonium. :D

[Tear Down This Wall]

My wife's family has a ranch down in Guanajuato, one of her brothers came up to visit over the Christmas holidays. He related how NAFTA had undercut the Mexican farmer as well.

Look, it's no shock to anyone who is truly awake in this world - politicians of all stripes will do for their constituents regardless of the harm it causes a great many others!

Take the latest minimum wage hike, a feel good legislation for Democrats that amounts to a bird crapping into the ocean. Strangely, it applied to everyone - except those working on Nancy Pelos:

On Wednesday, the House voted to raise the minimum wage from $5.15 to $7.25 per hour.

The bill also extends for the first time the federal minimum wage to the U.S. territory of the Northern Mariana Islands. However, it exempts American Samoa, another Pacific island territory that would become the only U.S. territory not subject to federal minimum-wage laws.

One of the biggest opponents of the federal minimum wage in Samoa is StarKist Tuna, which owns one of the two packing plants that together employ more than 5,000 Samoans, or nearly 75 percent of the island's work force. StarKist's parent company, Del Monte Corp., has headquarters in San Francisco, which is represented by Mrs. Pelosi. The other plant belongs to California-based Chicken of the Sea.

The ethanol bit is no different than any other forced government program - they pander to one group of flailing morons to get them to shut up, then ignore the problems caused by their "solution" until it causes another crisis to arise.

Until a cheap, reliable alternative to oil is found, oil is the answer. And, the only way to make oil cheap and affordable again is to take OPEC out of the picture. The only way to take OPEC out of the picture is to drill more of our own. Cowards on both sides of the political isle oppose that - so, shut up and pay your higher food and gas prices. It's what you get for re-electing politicians who don't understand the energy markets.

[Vaevictis]

Hydrogen fuel cells.

Of course, then you have to solve the problem of producing the hydrogen.

Hydrogen is a decent way to store energy, and a good way to do it in a manner that doesn't release polluntants when used, but it's not a solution in and of itself.

[royalfan5]

Sugar is not the answer. Sadly I loves me sugars but the answer is finding a domestic renewable resource like corn to support our energy needs. The real problem is dependence on foriegn trade to support our very way of life. Those countries have us by the everpresent scrodal sack and too many difficulties result form this. All I know is that damned Nebraska is gonna turn into redneck Beverly Hills once the Corn shiat takes off. Hello Jed Clampet.
Their isn't anywhere near enough land for corn production to even make that remotely feasible.

[Bourbon St Sooner]

sugar is also renewable. sugar yields far more energy than corn based ethanol (something like 6 times as much IIRC). buying it from other countries for energy would probably be better for us in the long run. (by better, I mean cheaper)

Corn is really a bad solution when it comes to ethanol. It takes nearly as much energy to create the ethanol in the first place as you can get out of the ethanol when you use corn. If we turn the entire US into a big effin corn field, we still won't have enough corn to supply our domestic energy needs. It's just a bad solution. Don't get me wrong, I like the idea, but the math just doesn't work out.


Don't look for sugar to get the same billing as corn, because Iowa doesn't produce sugar. I think Iowa's overplaced responsibility in presidential politics needs to end.

[jacru]

How about unrestrained domestic oil production and refining on land and off-shore. It's not as if we have no oil.

[royalfan5]

Don't look for sugar to get the same billing as corn, because Iowa doesn't produce sugar. I think Iowa's overplaced responsibility in presidential politics needs to end.
Sugar production is far more subsidized and protected in the United States than Corn. You can thank the South for that. The white commodities (sugar, cotton, and rice) receive a disproportionant share of U.S. farm subsidies.

[Petro-Sooner]

go on a fossil fuel binge


I like your thinking. :texan:

[royalfan5]

http://journalstar.com/articles/2007/01/29/news/business/doc45be3f58b4fbd532835486.txt

More unintended consequences.

[Stoop Dawg]

Hydrogen fuel cells.


http://img207.imageshack.us/img207/9113/22222hindenburgns1.jpg

Cleaner fuel and population control in one. It doesn't get much better than that!

[mdklatt]

My importantly than the people in Mexico, United States livestock producers are being tossed under the bus by this poorly thought out government rush to subsidize ethanol.

Surely this is the first time that "poorly thought out" and "government" have ever been used in the same sentence. :texan:

[tbl]

Another unintended consequence:

Less corn in the poops.

[Tulsa_Fireman]

Release the corn-eyed brown snakes!

It's a plague unseen since Moses!

[achiro]

sugar is also renewable. sugar yields far more energy than corn based ethanol (something like 6 times as much IIRC). buying it from other countries for energy would probably be better for us in the long run. (by better, I mean cheaper)

Corn is really a bad solution when it comes to ethanol. It takes nearly as much energy to create the ethanol in the first place as you can get out of the ethanol when you use corn. If we turn the entire US into a big effin corn field, we still won't have enough corn to supply our domestic energy needs. It's just a bad solution. Don't get me wrong, I like the idea, but the math just doesn't work out.

I'd like to see the whole algae into bio-diesel thing take off. Talk about a CHEAP renewable resource.

[Ike]

I'd like to see the whole algae into bio-diesel thing take off. Talk about a CHEAP renewable resource.
yeah, but then you might get black helicopters over your house if you try to clean out your swimming pool ;)

[soonerboomer93]

I have some canned corn in the cubbord, can I sell it to someone and make lots of money?

[OU-HSV]

Another unintended consequence:

Less corn in the poops.
HAHA

:pop:

[tbl]

Will we have to start paying for these? :pop::pop::pop::pop: