We massively subsidize corn-based ethanol, even though sugar-based ethanol appears to be far more efficient and less costly.
"All of the candy on the market contains sugar and high-fructose corn syrup, a form of sugar that doesn't digest well in the body, " says Armand Hammer (no relation to the late industrialist), president and chief executive of privately held Innovative Candy Concepts .
He cited the U.S. subsidies for corn-based ethanol and tariffs on sugar cane-based ethanol from Brazil.
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No one has scientifically proven that high-fructose corn syrup--the cheap and supersweet concoction that has all but replaced sugar in most leading brands of soda and other foods--is the primary cause of the so-called obesity epidemic in the United States.
But corn kernels are a cheap and eco-friendly source of sugar--which is also a source of carbon.
All sugar from table sugar to HFCS (high-fructose corn syrup) to honey contains some mixture of fructose and glucose.
However, most policymakers agree that the industry must move beyond corn ethanol, which is less efficient than the sugar-derived stuff and pushes food prices upwards.
In commodities, crop prices rose sharply, with corn up more than 6% and sugar at a three-year high on fears of a poor harvest in some parts of the globe.
According to a JP Morgan report, commodities like corn, coffee, cotton and sugar are at their lowest stock-to-use ratios in decades.
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Corn and sugar, for example, are used extensively in biofuels - in the US, 40% of all corn production goes into making ethanol.
He admits that it is not simple to pull the sugars out of non-food material like pulp or wood waste, but says that even factoring in the extraction process, the final cost should be lower than using corn starch or sugar cane, both of which are much higher-priced commodities.
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It is nonsensical for the deficit-ridden U.S. government to subsidize corn-derived ethanol while imposing punitive tariffs on imports of Brazilian ethanol made from sugar cane.
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Right now cellulosic ethanol is potentially eight times more energy-efficient than corn-based ethanol, because you eliminate the middle step of converting it into sugar before you convert it into ethanol.
Sugar cane and beets are 6-8 times as productive for ethanol as corn.
When the case eventually goes to trial, both sides undoubtedly will have well-credentialed experts offering completely opposite opinions on the health risks of corn syrup vs. cane sugar.
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The recent surge in sugar prices comes after a bad harvest, that of corn after official warnings of a lower-than-expected crop.
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The note consists of futures of contracts of seven agricultural commodities (soybeans, corn, wheat, cotton, soybean oil, coffee and sugar) and tracks the return of the Dow Jones-UBS Agriculture Total Return Sub-Index.
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