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Ethanol Demand Is Boosting Food Prices Worldwide
hereisnowhy writes "The rising demand for corn as a source of ethanol-blended fuel is largely to blame for increasing food costs around the world, the CBC reports. Increased prices for ethanol have already led to bigger grocery bills for the average American — an increase of $47 US compared to July 2006. In Mexico last year, corn tortillas, a crucial source of calories for 50 million poor people, doubled in price; the increase forced the government to introduce price controls. The move to ethanol-blended fuel is based in part on widespread belief that it produces cleaner emissions than regular gasoline. But a recent Environment Canada study found no statistical difference between the greenhouse gas emissions of regular unleaded fuel and 10 per cent ethanol-blended fuel. Environmental groups have argued that producing ethanol — whether from corn, beets, wheat, or other crops — requires more energy than can be derived from the product."
George Monbiot wrote about this 2 months ago in the UK Guardian:
you had me at #!
remove the sugar tariff and then you will see big changes.
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are rejoicing. Not only has the US government mandated the use of corn and corn derived products in just about everything that US consumers use, now their profit margins will soar above whatever they were being subsidized for. Most corn in North America is big business farming, so they are off and running toward all those dollars, no matter how inefficient using corn is for fuels.
All we have to do now is declare corn growers as reducing global warming, and that every stalk of corn planted saves a child to make the headlong rush toward bio-diesel an unrecoverable flop.
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Farmers have been unable to support themselves by farming because of the insane cheapness of food, and high fructose corn syrup being so cheap is one of the big parts of the obesity epidemic. Anything that raises the price of food means portions will need to be reduced, and farmers will be more likely to be able to support themselves by growing crops.
I frankly don't give a shit whether the emissions are "cleaner" with ethanol. If it means I'm not forced to shovel money into the pockets of Arab governments, Russia, Venezuela, etc, just to continue to make a living and survive, then I'm all for it.
They should make ethanol from unhealthy foods instead, like Twinkies, eclairs, or Jolly Ranchers. I find my car runs on the watermelon flavor the best.
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Well, that's what we get for letting hysteria and politics shout down environmental science. And many of the more strident environmental groups have no one but themselves to blame - they embraced the politics and hysteria because (in the short term) it furthered their agendas. Politicians and the corporations (including big agriculture) that bribe^H^H^H^H^H contribute heavily to their campaigns are far from stupid, however, and will twist things to their advantage. The corporations make money and "be green", and the politicians can sucker voters by "being green" and both laugh all the way to the bank. My favorite one was how DuPont got all green over Freon - because they owned the patents on non-CFC-based refrigerants that would replace it. Nice of "t3h world is going to end!!!1!!" crowd to get the government to force everyone to replace their patent-expired Freon with something much more profitable, never mind that this raised the cost of refrigeration and decreased the quality of food supplies in poorer countries.
In the long run, the most outspoken members cause the rest of the environmentalist community lose credibility (because the world doesn't end), and the politicians will just look for the next sucker cause to exploit. Too bad for the environment.
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If I'm not mistaken, that means $47 per year. Which really isn't that bad when you notice the price of gasoline lately.
Ethanol is not really chosen for its environmental friendliness. The environmental models I know of are based on the fact that the increased crop production produces a greater number of carbon sinks. Increases in carbon sinks won't show up in the EPA testing.
The real reason for choosing ethanol is its availability. It's easy to come by and is currently cheaper than gasoline. The US also has a great deal of surplus farming capacity from which to draw greater yields. (Though folks generally argue about how much surplus capacity there is, and how much can be brought online before food production is seriously impacted.)
Actually, that comes from the US Government's ethanol studies done in the 1970s. Dr. David Pimentel headed up those original studies. Since then, technology has improved and the US Government's studies have shown it to be energy positive. However, Dr. Pimentel has continued to rely on the outdated figures in attempts to discredit the newer findings. So the ethanol community is in a bit of a flux, with Pimentel rallying his forces against the idea that ethanol is a sustainable energy source.
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But yeah, it's all about biofuels.
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...that most fertilizers and pesticides applied to corn are derived from petroleum bases. Farming equipment also uses diesel/gasoline during the planting, cultivating and harvesting of corn. Adding to this, natural gas and propane are commonly used to run corn dryers used to reduce the moisture content of the harvested corn. At one point in 2005, the cost of the fuel for these dryers was more than the revenue produced from the corn itself, making it a wash to even bring the corn to market.
Sure, the price of corn is being driven up by its use for ethanol production, but let's not forget that the cost of growing corn has risen sharply as well in recent years, mostly due to the rising price of petroleum based products.
Ethanol is added to gasoline to reduce carbon monoxide emissions and ground-level ozone as an alternative to MTBE. Greenhouse gases (carbon dioxide) have nothing to do with it.
- The cost of fresh produce increased in price in terms of real dollars by over 40% between 1985 and 2000 whereas soft drinks using corn syrup declined in cost by 23%.
- A dollar buys you 1200 calories of cookies or chips but just 250 calories worth of carrots.
- The top subsidies are for corn, rice, wheat, soybeans and cotton. There often translate into cheap meats and dairy as most of this gets reused as animal foodstuffs.
- Most estimates are that subsidized US corn has displaced over 2 million Mexican farmers who move north to get jobs.
Blaming ethanol production for these ills is just plain stupid. Follow the money of the farm bills for real answers.There is a difference between "insightful" and "inciteful" other than spelling.
The motivation for corn-based ethanol is political. While Washington advocates "free markets", American politicians of all political persuasions advocate subsidizing the production of corn-based ethanol because American agribusiness nearly owns the government.
Generally speaking, subsidies cost taxpayers dearly but do not pose a hazard. Corn-based ethanol is an exception. It drives up the price of corn and could lead to severe malnutrition in Mexico and other poor countries which cannot afford higher prices for basic food items. Subsidies for corn-based ethanol could indirectly kill people (via starvation) in the 3rd world.
Do American politicians care? No. They care only about making American agribusiness happy.
"A permanent moratorium on growing plants in soil as a biofuel feedstock is what we need."
And the alternative is....?
"Ask not what your country can do for you." --John F. Kennedy
But a recent Environment Canada study found no statistical difference between the greenhouse gas emissions of regular unleaded fuel and 10 per cent ethanol-blended fuel.
No shit. Ethanol releases carbon dioxide while it burns, too. However, its carbon dioxide was already in the atmosphere, absorbed by the plants, then released again when burnt. That makes it carbon neutral*, even though the emissions are the same.
Or, did they mean to take that into account? Who knows, the article is incomplete or misleading.
* I'm talking about the carbon in the plant, not carbon used in production. That's next.
Environmental groups have argued that producing ethanol -- whether from corn, beets, wheat or other crops -- takes more energy than is derived from the product.
No shit. Unless it violates certain laws of thermodynamics, of course the energy derived is less than the energy required to produce. But they don't talk about where that energy comes from. Maybe it's all from the sun, or from other renewal resources. Do they mean that the same amount of net fossil-fuel based carbon is released? Who knows, the article is incomplete or misleading.
Re: Food prices
The US subsidizes farmers who grow corn, because corn prices have been historically too low to support production. Now, corn prices are higher, and we're complaining about what it does to food costs? How about we take away the subsidies - clearly no longer needed - and give the money to food programs. Then, we look into the side effects of corn being the majority of all American's diets. See some of the repercussions in the recent documentary King Corn. Maybe we could find something else that could substitute for corn in some foods. Like, say, sugar, if we'd remove our tariffs. (Hey, if folks from other countries could sell their sugar to the US for food, they'd have more money to buy our more-expensive corn.) Then, maybe we could find something better than corn to use for ethanol. Like, say, hemp or switchgrass. I'm sure if corn gets too expensive, some entrepreneur out there will start looking for alternatives.
But all of that would be constructive work toward making our planet a better place. It's far better to rant and rave and use single points of change as excuses to throw up our hands and give up.
It doesn't hurt to be nice.
The big donors to US political parties are not corporations. They are unions.
The US is controlled by UNIONS! Unions demanded the war in Iraq in order to produce more jobs with living wages! Unions required that we borrow trillions from China as a display of worker solidarity! Those in unions want to see jobs outsourced to India so we can have time to spend with our family during the week!
That's right folks, our country is run by a bunch of unions.
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Cornell, Cornell. That sounds familiar. Oh yeah! Isn't that where Pimentel works? i.e. The same guy who's been trying to discredit ethanol for the past 30 years?
Studies that have been done independent of Pimentel's research have shown the exact opposite to be true:
List of studies
* "Estimating the Net Energy Balance of Corn Ethanol" - "We show that corn ethanol is energy efficient as indicated by an energy ratio of 1.24."
* "The Energy Balance of Corn Ethanol: An Update" - "For every BTU dedicated to producing ethanol there is a 34% energy gain."
* "How Much Energy Does It Take to Make a Gallon of Ethanol?" - "Using the best farming and production methods, the amount of energy contained in a gallon of ethanol is more than twice the energy used to grow the corn and convert it to ethanol."
* "New study confronts old thinking on ethanol's net energy value" - "Ethanol generates 35% more energy than it takes to produce, according to a recent study by Argonne National Laboratory conducted by Michael Wang."
Why is it that every study that shows ethanol as net negative has Pimentel's name on it somewhere, while independent studies are quickly showing the exact opposite to be true?
Pimentel's numbers were probably correct in the 1970s. It's not the 1970s anymore, and that guy is becoming a serious pain in the posterior.
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One option is hydroponics. The most promising crop is algae. A study done at Sandia said some years ago that growing algae in foot-deep concrete "raceway" ponds (a circular stream) agitated by paddlewheels suggested that it should be economical before diesel fuel hit $3/gallon.
Another option is to only make the fuel out of waste oils and cellulose. Biodiesel can be made out of waste animal fat, but honestly that can only provide a small portion of the demand. Tyson Foods is currently engaging in a trial in Ireland with ConocoPhilips. Cellulosic biodiesel is rapidly approaching as a viable technology.
You could also ignore the possibilities of biodiesel and go straight to butanol. Butanol is made by bacteria in the "ABE" process, in which a specific organism originally isolated as an aid to making TNT can be used to make fuel. ABE stands for Acetone, Butanol, and Ethanol. All three of these things can be burned in an ordinary gasoline engine, but Butanol is the most interesting compound in this regard as it is a direct one-to-one replacement for gasoline. The ABE process can be used on any organic matter.
You could go all-electric, which would require building more nuclear plants, and building breeder reactors to supply them with fuel. Using the proper types of reactors prevents the use of the systems to produce weapons-grade materials; all breeders are not the same (no pun intended.) But this would be in many ways a more major undertaking than the other options because the infrastructure to transport and dispense biodiesel or butanol already exists - precisely the same means used to transport diesel and gasoline, respectively.
Ultimately, the answer can only be a combination of these and other ideas. But it's easy to see that topsoil-based fuels are utterly and completely wrongheaded. They deplete soil, techniques used in mass-farming create hardpan and reduce diversity in soil, killing off the majority of organisms found there, and so on. Everything about modern farming techniques is wrong! It's simply not a sustainable activity on its own. Depending on it for fuel will cause a crisis rapidly. Certain parts of the world cannot feed themselves today because of their agricultural activities in the past. The Amazon is approaching a crisis state in which it can no longer support itself and it collapses entirely - eliminating the source of some 25% of the planet's oxygen.
If we don't get a grip on agriculture now, it will all be a moot point soon, because we won't have oxygen to breathe.
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The sooner cars go electric and we can consolidate our energy sources at the power plant, the better, because it's much easier to make a power plant clean, than to make an internal combustion engine clean. The only thing holding us back is the pitiful state of the Battery. If we spent half the money on battery research that we did trying to make cars run on food, we'd be running silent, emissionless cars before we even ran out of oil.
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The gateway for most countries to get out of the third-world-nation status is agriculture. The problem though is that the US government subsidizes US farmers so heavily that we are keeping the world market prices artificially low. If the ethanol demand increases crop values, the market will demand more crops and more poor farmers out side the US will suddenly have a profitable profession, spreading wealth, profit and MORE FOOD.
Either that, or we're gonna kill a lot of people.
only time will tell.
-Rick
"Most people in the U.S. wouldn't know they live in a tyrannical state if it walked up and grabbed their junk." - MyFirs
As a Pennsylvania farmer put it to me in February: "It looks like we're going to burn up the last remaining six inches of Midwest topsoil in our gas-tanks." I *heart* Jim Kunstler. Here's a link to his piece on ethanol, etc..
If corn prices doubled, then more farmers will plant corn, and it will cause the price of corn to drop. I'm sure at some point there will be a crisis where too much corn is produced, which will cause a plummet of corn prices and another "corn crisis", and less farmers will plant corn, cycle repeats, etc. It will all work itself out.
BTW, ethanol is not added to make emissions cleaner, it was added to replace MTBE. It's a widely held misnomer that it was added to decrease emissions or whatnot.
Conservation alone isn't a replacement for burning fossil fuels. Sure, it's a good idea for many reasons, but the fact remains that we need a source of energy that can maintain and improve our standard of living.
Environmentalists argue that high standard of living and technological progress is mutually exclusive with good stewardship of the earth. They will never be taken seriously by enough people to make a difference until they abandon their pessimistic ludditism.
"Ask not what your country can do for you." --John F. Kennedy
Regards,
Ross
Perhaps food companies should stop putting that crap in everything that they make. Just a thought. 2 birds with one stone. Obesity problems are likely to go down too.
The Farm Bill subsidizes 5 commodity products, one of which is corn. This bill has far-reaching consequences, which include starvation of population in Africa (by subsidizing farmers the US competes with the 3rd world countries, who cannot compete at that level with a super-industrialized nation that only needs 1% of its citizens to work as farmers and even then it produces enough food products to feed a quarter of the planet.) Now, should the US politicians care about this or should they only work to make the US farmers happy, that is a different question. I am not a US politician or a US citizen, but I understand why a US politician would rather make a US citizen-farmer happy than think about far-reaching consequences to other countries. Other countries do not vote for this US politician, that's probably the most important point to remember.
You can't handle the truth.
Actually, what was the primary factor for stifling Cuba's sugar industry is the USA trade embargo, that collapsed the Cuban economy (which was predominantly it's sugar) overnight.
In the past few decades Cuba has reworked its economy entirely, due to the trade limits of it's biggest nearest neighbor, and has since made itself nearly a self-sufficient entity, which is actually quite remarkable in itself.
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The change in prices in Canada, according to the article, was 3.8% year-on-year. Inflation, per the Bank of Canada, is 2.0%. That is a world-wide increase in prices? Inflation aside, the impact of transportation fuel prices on bringing food to the grocery store can easily account for that increase.
As for Mexico, how many ethanol plants are there in Mexico, a country that produces 3.5 mm bbl/day of oil and consumes 2.0 mm bbl/day of oil products (source: April IEA OMR)? Not that many. So why the impact in Mexico? It's because the US used to grow so much corn that we couldn't use that we dumped it on the Mexican market, lowering their cost of corn, and taking some of their producers out of the market. The sudden increase in ethanol production due to oil product price increases has sucked up this additional supply, and now those producers will come back into the market.
Yes, it sucks that Mexican consumers were hit with such a swing this year, but it's due more to NAFTA than anything else. So if you want to get your knickers in a twist about something (which I don't advise), blame free trade and the natural delay in the supply/demand feedback loop. But note how there weren't a bunch of articles when the price of tortillas went down after the implementation of NAFTA.
Not all countries extract ethanol from corn. Nobody does that in Brazil. All ethanol here is made from sugar cane, which has a higher production rate than corn. And, here in Brazil, the use of ethanol never made any influence on the cost of food, just a little bit on alcoholic beverages. :)
There are a lot of cars here running on ethanol since the 70s. In 1986, more than 76% of all cars sold ran on ethanol. For a long time already, all gasoline sold here has 25% of ethanol. Many of the cars sold in Brazil now are flexible-fuel: they can run on any mixture of gasoline and ethanol. They are a huge selling hit. All all gasoline stations in Brazil sell both gasoline and ethanol
More information about ethanol in Brazil can be found at Wikipedia.
farmers have been severely pissed off about the low prices they've been getting. One frind of mine who farms poined out there's more money in hauling garbage per ton than selling corn per ton.
Exactly. Corn prices have been near historic lows, and now we finally have upward change (which apparently is something the under-educated news media doesn't grasp. Guess we know who flunked out of calculus in school).
I live in rural Iowa and work in Nebraska and have many friends who are row crop farmers. Both corn and soybean prices have finally increased past the government subsidy for minimum prices (which unfortunately has detrimental effects itself). Last year, farmers were dumping crops and not even bothering to store them due to the prices being so low. The took the subsizided minimum price and cut their losses. More farmers were squeezed out of the market. The U.S. economy has had a massive shift from farm-oriented rural economies over the past century (from 95% rural agricultural focused to less than 5%) which automation and technologies certainly improves, but the losses we've seen since 1990 has had little to do with any further automation.
Unless you've inherited at least 2,000 acres, you can't make the finances work in today's row crop economy. Those that are doing fine have more than 3,000 acres per family for corn and beans in our parts. At $2,200 to $3,200 an acre, you cannot purchase new land and go into farming and survive, even with considerable governmental support. You have to have a base of inherited land that has nearly zero cost as a base, and even then you're dependent upon subsidized government crop insurance. Consider these numbers: good corn yields around these parts of the Midwest are 140 bushels per acre. At $2.50 a bushel, your gross income per acre is a whopping $350. Less fuel costs, seed costs, fertilizer and other chemical costs, irrigation, crop insurance, tractor & combine machinery costs, contractor costs for spraying, trucking costs to move crops from the field to market, and any storage costs, you're looking at hard costs of $200-$250 per acre. $100 income per acre, before labor and land cost. Remember, I said you had to already own the land, because if you do the net present value math on 1,000 acres at $2500/acre (6% over 10 years), you'll be paying $340 per year per acre - which is almost as much as your gross profit itself. Care to dive into farming?
So understand that corn prices have been historically low, and now they are finally changing due to demand for the product. Any economist worth his salt can tell you the crops being produced aren't priced right when the total profit from the sale of those crops barely covers the cost of dormant land, let alone all the other expenses (using pragmatic numbers assuming 10% margins bearing full costs, we should expect to see $7 to $8 dollar corn per bushel, or must see a dramatic devaluation in farmland prices). Foreign subsidization of corn crop production has also kept prices unnaturally low, as well as import barriers on U.S. product. Just like global warming, you cannot have a rational perspective if you accept only the extreme outliers at one tail and call that a central tendency. Prices will change, and in this case, regression to the mean is going to occur (meaning that things tend to want to go back to the normal medium, rather than staying at the extremes).
If you're looking for things to panic about, this isn't one of them. Be thankful that we won't lose even more U.S. crop production human capital, or the natural correction of this unnatural trend will be even more dramatic. Be encouraged that poor foreign farmers in Mexico, South America and elsewhere are being paid more for their crops, instead of throwing a couple more billion dollars at the oil elites. If you hate big business, hate the multi-billionaire clubs, hate corrupt oil cartels, then spend your gas money on ethanol fuel and biodiesel.
We can produce far more ethanol from sugar, switchgrass, and hemp. We need to re-organize our national priorities to explore these crops and keep corn as food, not as fuel. Sorry corn lobby. When you use E85 the difference in emissions in undeniable. Who cares about E10. Its time to do what Brazil has already done and get off Gas, and jump on a fuel we can create domestically and sustain a healthier world.
If a job's not worth doing, it's not worth doing right.
Only applies to spent fuel. You don't reprocess decommissioned reactor vessels. And reprocessing still leaves the fission products to deal with, as well as mining and processing tailings.
The problem is that reprocessing isn't economical at current conditions - which is why initial U.S. attempts failed and why Germany is ending their program.
This might change if all the external costs were included; but then if all the external costs were included, we wouldn't even be considering plutonium and uranium fission.
(We wouldn't be considering biofuels from food crops either - biowaste, algae, and fuel crops like hemp and switchgrass, maybe bamboo. Growing food-grade corn to make fuel-grade ethanol is just plain stupid, and has more to do with lining the pockets of agribusiness than with meeting energy needs.)
And breeders aren't a perpetual motion machine. You still run out of uranium in the order of decades ro centuries. (Unless you go to thorium, in which case spallation "energy amplifiers" are a much better design. Those, and fusion, are where we should be looking to nuclear technologies.)
...until you separate them out, or change your bomb design to account for a different mix of isotopes. In 1962, the U.S. detonated a bomb made from "reactor grade" plutonium. (See 15th page of the PDF, footnote 5.)
Google for "Iran nuclear", and tell me that we're going to let every country on earth have a couple of plutonium factories, on the assumption that they're all too dumb to be able to do that.
Separation is not easy, but certainly not impossible. Many of the claims of difficulty of obtaining weapons-grade fissionables are based on the difficulty of handling highly radioactive waste. When you have martyr wannabe's standing by, though, a lot of these problems are solved. Shielding? Feh. "Come here, unskilled uneducated believer-type. You will die a glorious death for $CAUSE and be assured of a rewarding afterlife if you handle this Rock of the Gods exactly as I tell you..."
Indeed, given the fears of a "dirty bomb", bad guys don't even have to seperate, or achieve a fission bomb. Take a chunk of mixed Pu, stick it in the middle of a Ryder truck full of fuel oil and fertilizer, and drive into the center of $BIG_CITY. Let the good times roll.
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Rainforest is carbon neutral. There is such a rich and efficient ecosystem that the vast majority of organic matter is recycled in some way. The forest mass is in a steady state (where it isn't being chopped down, of course). The topsoil layer is only a few feet thick and not rich at all - which is obvious when you look at the slash and burn pattern of agriculture there. Yes, it produces a significant fraction of the world oxygen output. But it then consumes it again.
What people forget is that plants consume oxygen! They need aerobic respiration just like every other living thing. During the night, they emit carbon dioxide. They just happen to produce a surplus of oxygen as a result of their growth process, because they source carbon from atmospheric sources (i.e. CO2). Animals in the rainforest all consume any dead plant matter with immense efficiency. And the animals get eaten by smaller organisms, etc, etc. All of these steps emit the carbon that the plant biomass originally sequestered.
An ecosystem only has a positive oxygen production (and carbon sequestration) when the biomass it produces increases. The biomass of the rainforest, per hectare, remains pretty stable (until you burn it). Ergo, the rainforest is not as commonly portrayed, "the lungs of the planet". If you were to enclose it in a huge glass dome tomorrow, the human race would not suddenly keel over from lack of oxygen.
I'm not saying it doesn't have a regulatory effect. The enormous amount of water transpiration alone must effect global climate in ways that we probably don't fully understand. And it's value as one of the most biologically diverse environments on earth cannot be understated. From a selfish point of view, more cancer treatments come from the rainforest than anywhere else.
But environmental campaigners really need to focus on arguments that are not disprovable without even resorting to spin and misinformation.