The Midwest is the new Middle East. We have talked about farming before and even mentioned how the farm bill helped ethanol to the tune of billions. In 2008, sugar farmers become players in ethanol. Here is the long, complicated story. First, sugar as an ethanol feedstock in America. You might have heard countries like Brazil use it but it does not make economic sense here. The price comes to about 2.15 compared with 1.50 for corn.

Why? The sugar program controls the price of sugar in part by keeping out imports. That changes January 1st 2008. Thanks to... NAFTA! The North American Free Trade Agreement means cane sugar, sugar beets and all that sweet stuff is coming across the Mexican border. So, free market prevails and the sugar program is dead? Yeah, right. The 2007 farm bill includes a sugar to ethanol program.

Uncle Sam will buy the extra sugar expected to flood the market. Then sell it to companies making ethanol from sugars. So if you have an ethanol-making machine that runs on sugar in the garage, dust it off. Estimates of $300 M a year is coming your way. American sugar farmers are now players in ethanol.

If there are no changes to the Farm Bill anyway. It goes to the Senate after the August recess. We will keep you updated on the debate.

[Source: Washington Post]

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