Tuesday, March 18, 2008

Barilla Condemns

It must be true, because I finally read the words of Guido Barilla himself. He’s the Chairman of the 130-year-old Parma, Italy-based company that happens to be the world’s largest producer of pasta. And if I get him in trouble with the US side of the firm and its ad agencies, hard wheat.

Referring to a box of the company’s penne – and responding to an immense outcry among the Italian people over the in-store price jump of pasta throughout the country – he noted that one of the reasons that prices are going up is because of the growing use of agricultural crops to make…ethanol. “Agriculture for energy is an extremely stupid thing.” (You can read more about the outrage in Fortune.)

Here’s total disclosure: I work for clients in both the hydrocarbon and ethanol sectors. But having a wide variety of resources available for review, I have to say that using American corn to produce ethanol for our vehicles is precisely what Barilla says it is.

Our food prices are going up. And every bushel of corn that’s diverted from our food chain to make ethanol means that our food is going to cost more. Yep – it’s very admirable that the gas pumps in Bellaire, TX, dispense E85, the “magic” mixture of hydrocarbon-based gasoline and corn-based ethanol. Yep – it’s terrific that there’s an entire energy sector out there in the heartland, represented by blenders like POET LLC that have devoted themselves to alternative energy.

Ethanol is a poor energy source – it doesn’t come close to providing the power of hydrocarbons. And even though it burns poorly, it consumes other natural resources really well. An ethanol production factory requires huge amounts of water; a new one being planned for Tampa, FL, is on record requesting the use of 400,000 gallons of city water per day.

Ethanol is only an alternative energy source only because you and I are paying for it through the nose.

My colleague Rob Schoenbeck is preparing an area51 insight – I’ll let you know when it’s up. He notes: Follow the money. Huge subsidies, huge profits, lots of votes. The politicians (Dems & Republicans alike) are all for it. They’re doing the math. In 2006, the Feds paid ethanol blenders $2.5 billion and ethanol corn farmers $0.9 billion. We paid an extra $3.6 billion at the pump. The total was $2.21 extra per gallon of gasoline replaced. Of all that, $5.4 billion went for windfall profits, creating what USDA’s chief economist called ethanol euphoria.

I have been marketing in the energy sector for years; It is difficult to make any kind of case for food-based alternative fuels.

Some industry marketers have suggested that a balanced approach to future energy sufficiency is critical. I agree. But not perched on the back of everyone who benefits from our food chain – and that would be...everyone. No matter how much of a glow you get from the ethanol alternative fuel concept, I’m on Signor Barilla’s side: Pasta to the People!

1 comment:

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