Now here is a rare commodity - an article about high food prices that doesn’t mention ethanol or biofuels even once!
The story is from the Catholic News Service and the author is Barbara Fraser. She mentions drought, high oil prices and increased demand as causing higher prices - but not production of biofuels. But rather than dwelling on the blame game, the article talks about what needs to be done to address the problem.
The focus of the article is the need to help the poor in other countries with long-term policies that include “increased investment in agriculture and development and more consistent international trade policies.”
Lisa Kuennen, director of the public resource group at Catholic Relief Services, said developing countries also must connect small farmers with markets, help people diversify their sources of income so they are not as vulnerable to volatile food prices, and implement land reform.
One of the benefits of the Internet is that traditional media can use it for projects that just don’t technologically fit with their format. Here’s a fascinating example from the New York Times, especially when we’re looking at this debate over food prices.
You can drill down into each piece of this pie chart, wherein you learn that fuel prices have increased much more dramatically between 2007 and 2008 than food prices. And the chart itself says … “The high price of oil is a factor that has made food prices rise quickly.”
The development of alternative feedstocks for ethanol doesn’t mean that corn ethanol will be thrown under the bus, according to Agriculture Secretary Ed Schafer.
Speaking to farm broadcasters in Washington on Tuesday, Schafer talked about the importance of ethanol today. “We’ve passed Renewable Fuels Standards in this country that are important,” he said. “We cannot meet those demands with (only) corn-driven ethanol as a feed stock,” But, he says corn ethanol is a “stepping stone” to get to alternative feed stocks. “If we pull it back, we can do all the research in the world and come up with new ideas for alternative feed stocks and you won’t be able to do anything with them. So we need to make sure that we continue to develop the ethanol industry based on a corn feed stock.”
Does that mean we throw corn ethanol under the bus after the cellulosic ethanol comes on line?
“Absolutely not,” Schafer says. “What happens then is you have alternative feed stocks, the market place chooses the feed stock, the market place sets the price, that’s what made this country great.”
The World Bank report released earlier this month has gotten quite a bit of media attention lately, especially regarding its concern about biofuels production.
During a press conference with President Bush Tuesday, a reporter said, “The World Bank says about 85 percent of the increase in corn price since 2002 is due to biofuel — increased demand for biofuels.”
Near as I can tell, the World Bank report does not say that. What it does say is, “Only a relatively small share of the increase in food production prices (around 15%) is due directly to higher energy and fertilizer costs.” It does not attribute a percentage to biofuels production.
What it does say is, “Almost all of the increase in global maize production from 2004 to 2007 (the period when grain prices rose sharply) went for biofuels production in the U.S., while existing stocks were depleted by an increase in global consumption for other uses.” What that means is that, as Agriculture Secretary Ed Schafer told farm broadcasters Tuesday, “Only about 25 percent of the corn crop goes into ethanol today and we have been able to stay ahead of that by yield increases.” In other words, our yield increases in the United States have offset the increased demand for corn to make ethanol.
It’s also critical to note that in the World Bank report graph showing expected world food price percentage increases for 2008 compared to 2004 - the biggest increases are in wheat (119%) and rice (101%) - not corn. Rice seems to be a major focus of the world food crisis, yet there appears to be no direct connection between the price of rice and biofuels production.
The World Bank does say that increased bio-fuel production has contributed to the rise in food prices. No one denies that. No doubt that increased corn prices have had an effect on increasing food prices. However, no one seems to know exactly how much. It is nearly impossible to sort out the impact of so many different factors coming to bear on food prices.
In announcing a food crisis task force on Tuesday, United Nations Secretary-General Ban Ki-moon blamed the escalating prices on a range of factors — high oil prices, growing demand, bad trade policies, bad weather, panic buying and speculation, as well as, “the new craze of biofuels derived from food products.”
“In addition to increasing food prices, we see at the same time farmers in developing countries planting less, producing less, due to the escalating cost of fertilizer and energy,” he said. “We must make every effort to support those farmers so that in the coming year we do not see even more severe food shortages.”
That is key to the whole food crisis right there. Supporting farmers in other countries so they can produce their own food. President Bush noted in his press conference today that the US is “deeply concerned about people who don’t have food abroad” and will continue to be generous in food donations. He also suggested a “creative policy - is if we would buy food from local farmers as a way to help deal with scarcity, but also as a way to put in place an infrastructure so that nations can be self-sustaining and self-supporting.”
President Bush noted that the high price of gasoline is going to spur more investment in ethanol as an alternative to gasoline. “And the truth of the matter is it’s in our national interests that our farmers grow energy, as opposed to us purchasing energy from parts of the world that are unstable or may not like us,” he added.
Regarding food price inflation, one reporter said, “The World Bank says about 85 percent of the increase in corn price since 2002 is due to biofuel — increased demand for biofuels. And your Secretary of State said that — indicated yesterday that she thought that might be part of the problem. Do you agree with that?”
Bush responded, “Actually, I have a little different take: I thought it was 85 percent of the world’s food prices are caused by weather, increased demand and energy prices — just the cost of growing product — and that 15 percent has been caused by ethanol, the arrival of ethanol.”
The president said the United States is concerned about the scarcity of food in poorer countries and will continue to be generous in food donations abroad.
Nothing stirs the juices of resentment more than success. Clearly the success of corn ethanol has gotten to Ann Monroe, columnist for MSN Money. Describing corn ethanol as a practical, moral and environmental problem, Monroe threw all the punches she could muster in her column “Ethanol Reality Check.”
Anyone half-heartedly following the ethanol industry knows corn will account for 15 billion gallons of the 35 billion gallon renewable fuels standard called for in the 2007 energy bill. The rest will be produced through advanced biofuels such as cellulosic ethanol.
Blaming rising food prices on corn-ethanol production also shows Monroe failed to do her homework. Economists tell us that when the price of gasoline goes up by $1 per gallon, your $100 food bill goes up between 60 cents and 90 cents. When per bushel corn prices go up $1, your $100 food bill goes up 30 cents. That means a $1 increase in gasoline will squeeze your food budget two to three times more than a $1 increase in a bushel of corn.
In fact University of Nebraska-Lincoln economist Richard Perrin said recently that during a five-year period ending in February, ethanol was responsible for food prices rising by no more than 2 percent while total U.S. food prices went up about 16 percent.
And for full disclosure, Perrin notes his research and analysis were not funded by the ethanol industry.
It’s little comfort that Monroe is so concerned about our moral souls given the fact she knows nothing about corn or ethanol, and given this ignorance we’re more than a little disturbed that she’s doling out investment advice.
In March 2007, the USDA stated that growers intended to plant 90.5 million acres of corn. Given that farmers had planted 78.3 million acres in 2006, this was a very optimistic prediction. This past month, the projection from USDA was 86 million acres, down from last year but still way above what was seen before.
High input costs, especially fertilizer, are greatly to blame, but the National Corn Growers Association has held that the number of planted corn acres will be above the USDA prediction. Today, we have further confirmation, via the Associated Press.
Darrell Good, University of Illinois agricultural economics professor:
“The pendulum has swung decidedly in favor of corn at this point. For a lot of the central and northern Illinois farms, corn pencils out easily to be $200 an acre more profit than soybeans.”
Last year, the final corn planting was 3.1 million acres over and above the USDA’s prediction. Question now is — how high in 2008?
Corn will be playing in the major leagues with the boys of summer this year.
Some of the nation’s major league baseball teams are adopting cups made from corn starch this season to help quench the thirst of fans and be more environmentally-friendly at the same time.
The Pittsburgh Pirates, for example, have announced a new greening initiatives program called “Let’s Go Bucs. Let’s Go Green.”
Beginning with the 2008 season, the concessionaires at PNC Park will be using corn-based beverage cups. They are also reportedly printing game-day programs with soy-based inks and providing flex-fuel vehicles for team scouts.
According to Bob Nutting, Pirates Chairman of the Board, “We are not launching this program because ‘going green’ is a popular trend. We are doing it because it is the right thing to do. The measures being put into place at the ballpark will have an immediate positive impact. These initiatives not only make sense for the environment, but they make good business sense as well.”
The Oakland A’s are also reportedly using cups made of biodegradable cornstarch this season.
Texas oilman T. Boone Pickens, who once scoffed at ethanol, recently told the CNBC financial news network that he now supports increased production of the homegrown, renewable fuel. Pickens cited the $1 billion a day that America spends on imported oil.
The editorial writers appear to have been reading our blog. We’ll give them the final word:
In America, ethanol is currently produced chiefly from corn. Consequently, in their latest attack, naysayers have concocted a near-doomsday scenario in which increased demand for corn sends food prices sky high. Farmers all over the world would plow up forests to plant more acres, leading to an environmental disaster.
The critics’ mistake — aside from gross exaggeration — is that they are failing to look ahead.
In a letter to the editor of Time, EPIC executive director Toni Nuernberg says the article makes corn-based ethanol “the scapegoat of the week.”
She notes that the studies alluded to in the article, although not specifically referenced, (authored by Timothy Searchinger and Joseph Fargione) “reach conclusions regarding the greenhouse gas emissions associated with potential global land-use changes caused by increasing biofuels demand — specifically for corn-based ethanol. Their conclusions are considered debatable by others in the scientific community.”
She also points out that the studies make assumptions that are unrealistic.
(The assumptions) double the level of corn ethanol that is actually required under the new Renewable Fuels Standards by 2015, an assumption that’s not realistic to U.S. corn ethanol production in the next seven years. Congress established a production cap of 15 billion gallons of corn ethanol by 2015 to help guard against dramatic land use changes. But Searchinger bases his projections on a model in which U.S. corn ethanol production increased from 15 billion gallons a year to 30 billion gallons a year by 2015. Thus, the findings are irrelevant.
Finally, she says, “today’s grain-based ethanol industry is providing the auto industry with incentive to manufacture flex-fuel and alternative-fuel vehicles and creating an infrastructure to distribute ethanol produced from any feedstock.”
Unfortunately, the Time article is filled with sensationalism, emotionalism and just plain misinformation that will lead the public to believe that corn ethanol is starving the world and responsible for for everything from destabilization in Pakistan to deforestation in Brazil. Toni’s letter is likely too long to make it into the Time letters to the editor, if they would even include it - but ethanol supporters everywhere who feel that they are being slandered by that article should respond with a deluge of letters to the magazine.
The story is from the Catholic News Service and the author is Barbara Fraser. She mentions drought, high oil prices and increased demand as causing higher prices - but not production of biofuels. But rather than dwelling on the blame game, the article talks about what needs to be done to address the problem.
Speaking to farm broadcasters in Washington on Tuesday, Schafer talked about the importance of ethanol today. “We’ve passed Renewable Fuels Standards in this country that are important,” he said. “We cannot meet those demands with (only) corn-driven ethanol as a feed stock,” But, he says corn ethanol is a “stepping stone” to get to alternative feed stocks. “If we pull it back, we can do all the research in the world and come up with new ideas for alternative feed stocks and you won’t be able to do anything with them. So we need to make sure that we continue to develop the ethanol industry based on a corn feed stock.”
What it does say is, “Almost all of the increase in global maize production from 2004 to 2007 (the period when grain prices rose sharply) went for biofuels production in the U.S., while existing stocks were depleted by an increase in global consumption for other uses.” What that means is that, as Agriculture Secretary Ed Schafer told farm broadcasters Tuesday, “Only about 25 percent of the corn crop goes into ethanol today and we have been able to stay ahead of that by yield increases.” In other words, our yield increases in the United States have offset the increased demand for corn to make ethanol.
In announcing a food crisis task force on Tuesday, United Nations Secretary-General Ban Ki-moon blamed the escalating prices on a range of factors — high oil prices, growing demand, bad trade policies, bad weather, panic buying and speculation, as well as, “the new craze of biofuels derived from food products.”
President Bush noted that the high price of gasoline is going to spur more investment in ethanol as an alternative to gasoline. “And the truth of the matter is it’s in our national interests that our farmers grow energy, as opposed to us purchasing energy from parts of the world that are unstable or may not like us,” he added.
Corn will be playing in the major leagues with the boys of summer this year.
Beginning with the 2008 season, the concessionaires at PNC Park will be using corn-based beverage cups. They are also reportedly printing game-day programs with soy-based inks and providing flex-fuel vehicles for team scouts.
In a letter to the editor of Time, EPIC executive director Toni Nuernberg says the article makes corn-based ethanol “the scapegoat of the week.”