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Tag: corn

Food Inflation on the Menu for 2008

Date: December 31, 2007, posted by vonross
 

Some starve so that others can make ethanol.
 
The Darfur donor debacle has made famine relief almost a ridiculous parody of itself. But the coming year may well see serious food shortages worldwide due to the disappearance of agricultural surpluses. The WFP (World Food Programme) reaches a fraction of the 850 million worldwide who need food aide. Rising food prices also mean the UN food programs can no longer afford to feed the 90 plus millions it has helped in Africa and other parts of the world in spite of spending $600 million in 2006 on food.
 
With high oil prices driving demand for ethanol 600 million doesn't go as far as it used to. This year they may be forced to cut food aid because of high commodities prices unless donor countries contribute more money to counteract price increases.
 
Many of these same donor countries have switched arable land from food production to the cultivation of products suitable for biofuel derived gasoline additives. Many agricultural biofuels, consume more energy in the form of water, fertilizer, insecticide, transport & refining than they produce. This energy deficit is in part funded by market driven high prices and 'alternative' fuel subsidies.
 
Marginal land is being pressed back into production in N. America using fossil water aquifers to irrigate bio-engineered crops in near desert conditions topped off with fertilizers themselves the product of an energy intensive process.
 

Fossil water a non-renewable resource.
 
Beneficiaries? While some places, Brazil most notably, do well cultivating sugar cane because of a combination of infrastructure, sunlight and most importantly suitable land and demand.
 
Subsidized corn production in N. America for ethanol could be said to be using a skewed model which does not cultivate a suitable fuelstock plant.
 
Grow more at a loss, make up the difference with subsidies. Other parts of the world cut down rainforest to plant palm oil plantations to take advantage of current high prices. Thanks to the high price of palm oil as fuel additive its far more profitable to cut down existing forest and create palm oil latifundia than it is to conserve standing trees.
 
Agricultural combines will always try and make some extra money selling a refined product, if the market permits. For a time ADM (Archer Daniels Midland) was selling its ADM Vodka in Eastern Europe. ADM was certainly more famous for its cattle & chicken feed than cocktail mixes. But their vodka was clean, well-refined, cheap and didn't make you go blind so it sold quite well.
 

Mere mortals can't consume enough.
 
As a refined product it made more money for the company than animal feed, the company also received a subsidy from the US Government dating from the last energy crisis which partially subsidized its production.
 
Now I don't mind my ethanol C2H5OH in a Grey Goose bottle (product code 020001), apparently where at least some of their bulk sales go. But cars can burn up way more ethanol than even the most dedicated martini drinkers.
 
But it makes sense to grow and use the right crop in the right place. For the US that is probably Sunflower seeds. They grow wild like weeds, require only what rainwater is available, are native and when refined into oil are only a little shy of the energy potential of Number 2 Diesel. (93%). There is also a good future for Algae generated bio-crude, especially varieties that can be cultivated in salt water vats.
 

Sunflowers the weeds of the west.
 
Sustainable biofuels may not be sustainable and are succeeding in driving up food prices worldwide. It is likely this year will see the re-opening of the food verses fuel debate. Purchasing costs for the WFP have risen 50%. WIth prices in some of the poorest countries driven up 150%.
 
One good thing is that cheap corn based sweeteners will no longer be so cheap. Thats only good for affecting the eating habits of the of 'overconsumers' bulked up on cheap food additives for whom forced caloric reduction might not be a bad thing, not for filling the stomachs of those who are empty. About 30% of snack foods are composed of bulk additives mostly refined from corn.
 

"We are no-longer living in a world economy based on surpluses." - WFP
 
Is it a good idea to devote a substantial portion of the worlds best agricultural land to growing corn for fuel? When for 2 billion people food is a greater priority? A policy which could be described as some starve so that others may drive. Ethanol is an additive. It stretches out already high priced gas reserves, makes existing supply go a bit further, and burns somewhat cleaner in terms of CO2.
 
If fuel prices decrease its likely some of that corn will be diverted back to agricultural uses. Since these markets are price driven. High prices have already caused food protests in many countries over the past year. Some examples:
 

  • Italy: Pasta

  • Mexico: Tortillas

  • Mauritania: Bread

  • Uzbekistan: Flour

  •  
    Inflation is particularly sensitive to food prices, which make up higher percentages of the consumer price indexes in less well off countries. Food is 40 percent of the consumer price index in Russia compared with nearer 15 percent in the European Union and around 10 percent in the US.
     

    Enough to go around?
     
    Ethanol makes sense in Brazil where its derived from copious supplies and surpluses of of sugarcane and sunlight. But in the US diesel derived from Sunflowers on marginal land makes much more economic sense. Not much water, little fertilizer, gives a decent return from marginal land as well as providing useful groundcover and a decent snack food.
     
    Factor the the downstream economic consequences into the equation to make sure your 'sustainable' industry isn't temporarily running on a temporary subsidy that actually results in a future loss also makes good ecological economic sense.
     
    Its not a question of cultivating bio-fuels but choosing the right one which results in minimal eco-system and eco-economic consequences. Simply put some stuff works, other stuff is subsidized and the agricombines of the world have to grow the right crops in the right place.
     

    Former agricultural land.
     
     
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    Related: agribusiness | biofuels | corn | ethanol | food inflation
     

    Castro Sides With Treehugger In Battle Against Corn & Palm Oil BioFuels

    Date: March 29, 2007, posted by Piers Fawkes
     
    Yep, being green is confusing. And when you try to be green sometimes, it turns out you're just making things worse. Take for example biofuels. Sounds like the thing to put in your motor, no? Maybe not. Treehugger has a post about their concerns for certain types of biofuels:
     
    Treehugger has complained about biofuels from corn or palm oil for years, and taken some abuse for it; the main argument is "don't worry, all of these ethanol plants will run on algae or switchgrass in a couple of years, corn is just an interim measure" or the Palm Oil Truth Foundation sends another dozen emails about the glories of clearing the rainforest to grow fuel. The subsidies keep growing and the forests keep getting ploughed over.
     
    Craig Mackintosh at Celsias writes about "the obstinate pushing of ethanol from corn, sugar, soy, and palm oils in the face of their overwhelming detrimental effect on people’s lives, and on the environment. It is where big industry, desperate to retain consumer dollars, is influencing government - who are in turn pandering to very destructive whims."
     
    Meanwhile, an article on Bloomberg suggests that Cuba's Castro is taking the Treehugger line in his first signed article since his recent surgery:
     
    In the article titled ``More Than 3 Billion People in the World Condemned to Premature Death From Hunger and Thirst,'' the 80-year-old Cuban president attacked Bush's promotion of alternative fuels such as ethanol, made mainly from corn and aimed at reducing U.S. dependence on oil imports. Castro objected to the use of farmland for fuel production instead of food.
     
    Castro wrote, ``you need 320 million tons of corn to produce 35 billion gallons of ethanol,'' and that it is dangerous to offer financial incentives to ``poor countries'' to produce ethanol from corn. The ``sinister idea'' of converting food into fuel has been ``definitively established as the economic line of U.S. foreign policy,'' Castro said in the article.
     
    ``Apply this idea to Third World countries and you will see how many people among the hungry masses of this planet stop eating corn,'' Castro wrote.
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