Thursday, November 06, 2008

About the Economics of the Ethanol Business

HBS Cases: Economics of the Ethanol Business — HBS Working Knowledge:
"What happens when a group of Missouri corn farmers gets into the energy business? With consumers paying more than double for gasoline than they did a year ago, turning crops into fuel, not food, seems like a good way to go—but not so fast.

In 'Mid-Missouri Energy,' HBS professor Forest Reinhardt, with Senior Researcher James Weber and Agribusiness Program Director Mary Shelman (HBS MBA '87), examines the complex political and economic underpinnings of the ethanol industry and the dilemma facing the farmers of Mid-Missouri Energy (MME)."


Reinhardt has taught the case in his Energy course in the second-year MBA elective curriculum, as well as the Agribusiness course in the MBA and Executive Education programs.

"One objective of the case is a greater understanding of the way materials and energy flow in the modern American agricultural system. As our economy becomes more information-driven, it's good to remind ourselves that we still need to eat cornflakes, or chickens that ate cornflakes, and that we still need to get around," he notes. "When commodity prices are kept low, we have a tendency to think these things are unimportant and uninteresting, but that's never been true."

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