The global food price crisis. How much are biofuels to blame in Haiti?

There a lot of talk these days about the global food crisis. I spent several days this week researching all the different contributing factors, including biofuels, climate change, fertilizer prices, the emerging economies of China and India etc.

Despite all the finger pointing at ethanol and biodiesel, no-one really knows how much they are to blame. There are several other factors that must be taken into consideration. In Haiti's recent food riots, for example, the real culprits are trade policies that have decimated Haitian agriculture and a catastrophic drought half a world away in Australia that has pushed up the price of rice on global markets.

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(I had to make a lot of cuts for space reasons, so here is some of the edited material that was edited out)

Biofuels defenders say the world's energy system is in transition and that farming technology and productivity will eventually catch up with the increased demands for crops, both for food and fuel.
"This takes a while to work it's way through the system and for farmers to produce correspondingly," said Reid Detchon, director of the Energy Future Coalition. "The system does respond to higher production when prices go up."
This will be achieved with a combination of new technology as well as modern production methods to increase yields and reduce dependency on expensive fossil fuel fertilizers. "There is so much slack in the system that can be made up with improved production and yield that there's no doubt in my mind this can be addressed," said Detchon.

Others predict that the days of self-correcting cycles of supply and demand may be over, due to new factors such as climate change, demand from emerging markets and higher energy prices.
"The increases in grain prices are not caused by short-term supply disruptions, as is the normal case, and it will likely take several years for supplies to increase to rebuild stocks and allow prices to fall," according to Don Mitchell, lead economist in the World Bank's Development Prospects Group.
Some argue the case for biofuels may have suffered irreparable damage from the food price shock.
"If you do it irresponsibly it deserves to get bashed," said Mario Fernandez, a south Florida ethanol advocate who helped advise former Governor Jeb Bush's pro-ethanol policy. He blamed the U.S. government and major grain producers and ethanol blenders for relying too heavily on corn as a raw material for ethanol, rather than looking overseas at sugar-producing countries such as Brazil.
"You have to accept that it doesn't have to be 'made in the USA,''' he said.
Fernandez tried to explain the risks of using food crops to senior State Department officials two years ago as the Bush administration was preparing to unveil its new biofuels strategy. "I said you have to be very responsible about how you do this," he said. "They didn't get it."

The ethanol industry points to one study which found that only four percent of the rise in food prices could be attributed to corn, while another study found that a $1 rise in the price of a barrel of oil had twice the impact of a $1 rise in the price of a bushel of corn.
Instead, the ethanol industry says U.S. oil consumption is set to drop this year for the first time in years, partly thanks to ethanol. The 6.5 billion gallons of ethanol blended last year displaced 228 million barrels of oil, worth more than $26 billion at today's prices.

While the demand for ethanol has diverted corn to the production of fuel, there has been little lost overall production of corn for food. Last year U.S. farmers harvested a record crop. Even so, making ethanol a substitute for gasoline, sold mostly as E10 (10 percent ethanol blended gasoline), this has caused the price of corn to rise.
"By using ethanol as a substitute, that bids up the price of corn," said Bruce Babcock with the Center for Agricultural and Rural Development, at Iowa State University. "It creates a whole new demand."
Because U.S. exports account for 70-75 per cent of world trade in corn, this has had a knock on effect on world prices. "The U.S. (corn) price is the world price," said Babcock.
Even so, ethanol only accounts for 25 per cent of the U.S. corn crop. Of that, biofuels production only uses the starch in corn, leaving the protein, fibre and other nutrients to be turned into dehydrated animal feed, known as distillers dried grains, or DDG.

- David Adams

Comments

[StockPromoter07]

We found an interesting article about the problems with Ethanol on ConsumerReports.org:

http://blogs.consumerreports.org/cars/2008/03/ethanol-e85.html

"But there are some problems with increasing ethanol blends. Ethanol contains less energy than gasoline, so increasing the amount of ethanol in gasoline will likely result in lower fuel economy. Increasing standard fuel blends from zero to 10 percent ethanol, as is happening today, has little or no impact on fuel economy. In tests, the differences occur within the margin of error, about 0.5 percent. Further increasing ethanol levels to 20 percent reduces fuel economy between 1 and 3 percent, according to testing by the DOE and General Motors. Evaluations are underway to determine if E20 will burn effectively in today's engines without impacting reliability and longevity, and also assessing potential impact on fuel economy."

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