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Ethanol Demand Is Boosting Food Prices Worldwide 599

Posted by kdawson
from the may-sound-corny dept.
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."
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Ethanol Demand Is Boosting Food Prices Worldwide

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  • by toby (759) * on Tuesday May 22, 2007 @05:13PM (#19227769) Homepage Journal

    George Monbiot wrote [guardian.co.uk] about this 2 months ago in the UK Guardian:

    If we want to save the planet, we need a five-year freeze on biofuels

    Oil produced from plants sets up competition for food between cars and people. People - and the environment - will lose

    George Monbiot
    Tuesday March 27, 2007
    The Guardian

    It used to be a matter of good intentions gone awry. Now it is plain fraud. The governments using biofuel to tackle global warming know that it causes more harm than good. But they plough on regardless. In theory, fuels made from plants can reduce the amount of carbon dioxide emitted by cars and trucks. Plants absorb carbon as they grow - it is released again when the fuel is burned. By encouraging oil companies to switch from fossil plants to living ones, governments on both sides of the Atlantic claim to be "decarbonising" our transport networks.

    In the budget last week, Gordon Brown announced that he would extend the tax rebate for biofuels until 2010. From next year all suppliers in the UK will have to ensure that 2.5% of the fuel they sell is made from plants - if not, they must pay a penalty of 15p a litre. The obligation rises to 5% in 2010. By 2050, the government hopes that 33% of our fuel will come from crops. Last month George Bush announced that he would quintuple the US target for biofuels: by 2017 they should be supplying 24% of the nation's transport fuel.

    So what's wrong with these programmes? Only that they are a formula for environmental and humanitarian disaster. In 2004 I warned, on these pages, that biofuels would set up a competition for food between cars and people. The people would necessarily lose: those who can afford to drive are richer than those who are in danger of starvation. It would also lead to the destruction of rainforests and other important habitats. I received more abuse than I've had for any other column - except for when I attacked the 9/11 conspiracists. I was told my claims were ridiculous, laughable, impossible. Well in one respect I was wrong. I thought these effects wouldn't materialise for many years. They are happening already.

    Since the beginning of last year, the price of maize has doubled. The price of wheat has also reached a 10-year high, while global stockpiles of both grains have reached 25-year lows. Already there have been food riots in Mexico and reports that the poor are feeling the strain all over the world. The US department of agriculture warns that "if we have a drought or a very poor harvest, we could see the sort of volatility we saw in the 1970s, and if it does not happen this year, we are also forecasting lower stockpiles next year". According to the UN food and agriculture organisation, the main reason is the demand for ethanol: the alcohol used for motor fuel, which can be made from maize and wheat.

    Farmers will respond to better prices by planting more, but it is not clear that they can overtake the booming demand for biofuel. Even if they do, they will catch up only by ploughing virgin habitat.

    Already we know that biofuel is worse for the planet than petroleum. The UN has just published a report suggesting that 98% of the natural rainforest in Indonesia will be degraded or gone by 2022. Just five years ago, the same agencies predicted that this wouldn't happen until 2032. But they reckoned without the planting of palm oil to turn into biodiesel for the European market. This is now the main cause of deforestation there and it is likely soon to become responsible for the extinction of the orang-utan in the wild.

    But it gets worse. As the forests are burned, both the trees and the peat they sit on are turned into carbon dioxide. A report by the Dutch consultancy Delft Hydraulics shows that every tonne of palm oil results in 33 tonnes of carbon dioxide emissions, or 10 times as much as petroleum produces. I feel I need to say that again. Biodiesel from palm o

  • by zappepcs (820751) on Tuesday May 22, 2007 @05:17PM (#19227833) Journal
    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.
  • Food is too cheap (Score:3, Interesting)

    by analog_line (465182) on Tuesday May 22, 2007 @05:19PM (#19227885)
    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.
  • Green? Who cares? (Score:3, Interesting)

    by maillemaker (924053) on Tuesday May 22, 2007 @05:20PM (#19227907)
    Look, I don't give a wet fart how green the fuel that makes my car goes is. The simple fact is, the mere act of existing has negative consequences on something. So I don't really care if my car is "green" or not.

    All I want is the cheapest fuel possible. At the very least, I don't want to be tied to a single source for the fuel. Especially the Middle East.

    The day oil ceases to be a major fuel source is the day the whole Middle East dries up like a popcorn fart and blows away in the wind of irrelevance.

    I hope to not have to buy a car again for another five years. When the time comes, though, I won't consider any car that doesn't get at least 60 MPG. Hopefully it will be electric instead. Give me a SmartCar that is pluggable, does 100 miles at 70 MPH between overnight charges, and I'm there.
  • A study released in May from Iowa State University shows increased prices for ethanol have already led to bigger grocery bills for the average American -- an increase of $47 US compared to July 2006.

    If I'm not mistaken, that means $47 per year. Which really isn't that bad when you notice the price of gasoline lately.

    The move is based in part on wide-spread belief that ethanol-blended fuel produces cleaner emissions than regular gasoline.

    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.)

    Environmental groups have argued that producing ethanol -- whether from corn, beets, wheat or other crops -- takes more energy than is derived from the product.

    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.
  • Let's not forget... (Score:5, Interesting)

    by Radon360 (951529) on Tuesday May 22, 2007 @05:27PM (#19228039)

    ...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.

  • I call BS! (Score:5, Interesting)

    by ElForesto (763160) <elforestoNO@SPAMgmail.com> on Tuesday May 22, 2007 @05:33PM (#19228107) Homepage
    Corn shortage my eye. The reason corn is a prime target for ethanol production is because, nationally, we grow far more corn than we need. You can thank farm subsidies for that little gem. Because it's all subsidized, corn is dirt cheap compared to a lot of other crops which is a major factor in using corn syrup instead of cane sugar in a lot of foodstuffs. The NY Times recently had an article [nytimes.com] (registration or BugMeNot required) on the egregious farm subsidies and how they make junk food artificially cheap to buy. Some highlights:
    • 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.
  • cane coke (Score:3, Interesting)

    by LunaticTippy (872397) on Tuesday May 22, 2007 @05:34PM (#19228137)
    You can get mexican coke (cane sugar, sweeter, less carbonated) easily at any mexican grocery. If you live somewhere without mexican grocery stores, you can buy it online. I've only seen it in small (355ml), tall glass bottles.
  • Re:Green? Who cares? (Score:1, Interesting)

    by Anonymous Coward on Tuesday May 22, 2007 @05:41PM (#19228281)

    What? You never heard of public transit? You started talking about cost; least cost and least emission per person is usually mass transit.

    Try living in the U.S. somewhere other than downtown metropolis. Public transportation is only a functional solution above a certain population density.
  • I wouldn't hold your breath waiting for a nuclear energy source that passes prominent environmentalists' litmus test.
  • zero sum game? (Score:3, Interesting)

    by Orp (6583) on Tuesday May 22, 2007 @05:57PM (#19228587) Homepage
    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.

    News Flash: Environmental groups argue for the second law of thermodynamics!

    Really... the whole reason fossil fuels are so compelling is the energy that went into making them was used eons ago. Ethanol requires resources *now*. The big advantage of ethanol (from a climate change standpoint) is it's a zero-sum game with regards to carbon dioxide emissions. We're not taking concentrated carbon from millions of years ago and turning it into an atmospheric gas, we're using plant material that was created, in part, from recently utilized atmospheric CO2.

    In my opinion, feeding people now trumps using a fuel source which consumes enormous resources. Let's also not forget irrigation - our aquifers are being depleted faster than then can get restored. I doubt California is going to embrace growing corn, which can require large amounts of irrigation, for ethanol when they are running out of drinking water.

  • by RingDev (879105) on Tuesday May 22, 2007 @05:57PM (#19228593) Homepage Journal
    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
  • by Baldrson (78598) * on Tuesday May 22, 2007 @06:04PM (#19228757) Homepage Journal
    You can discredit guys like Pimentel virtually over night if you just remove pork barrel for ADM and the oil companies, charging oil companies importing oil the fair market value for the cost of military enforcement of trade routes to the middle east letting ADM sink or swim in the resulting price environment.
  • by atomic777 (860023) on Tuesday May 22, 2007 @06:06PM (#19228787)
    The fact that biofuels are introducing competition for scarce food resources is a regulatory problem, not a problem with biofuels themselves. There need to be laws in place to prevent the food supply from competing with the biofuel supply. eg. only waste oils/alcohols, oils derived from inedible crops using land not fit for human consumption, etc. should be permissible as 'fuel'. This will be a net positive for the environment, as more existing carbon in the atmosphere will be utilised as unused swathes of land are brought under heavier agricultural development with hardy crops like mustard seed.

  • by Dastardly (4204) on Tuesday May 22, 2007 @06:16PM (#19228927)
    Not necessarily...

    It depends entirely on the plant and the location. Plants are simply solar collectors that store sunlight as chemical energy in the form of carbohydrates, fats, and proteins (amino acids). I agree that plants for energy should probably not displace plants for food, but there are a lot of places unsuitable for food plants that may be suitable for fuel plants.

    Secondly, even if biofuels were to require more energy to grow than you could get out of them there may still be an argument for them as a portable energy storage medium. This would depend entirely on the source of the excess energy. Say it takes 50% of the energy in a biofuel to grow the fuel and 55% of the energy in a biofuel to refine the fuel. If the refinery energy came from solar then the biofuel could be a decent portable energy storage medium. Possibly better than hydrogen.

  • by WillAffleckUW (858324) on Tuesday May 22, 2007 @06:47PM (#19229317) Homepage Journal
    The same climate conditions that are good for corn are good for soybeans too. With the price of corn skyrocketing, many farmers, understandibly, will switch from soybeans to corn. Our free ride with cheap fuels has come to an end.

    Actually, that has already happened. There was an article on that very subject in the Wall Street Journal just a few months ago, and how the switch is already under way.

    Maybe if we stopped subsidizing oil, gas, corn, and other things the market would work better, huh? But I'm not holding my breath. That's why I bought a few hundred shares of Valero Energy (ethanol from corn) at the IPO.
  • Re:Corn Syrup (Score:4, Interesting)

    by wass (72082) on Tuesday May 22, 2007 @07:19PM (#19229677)
    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.
  • by ookabooka (731013) on Tuesday May 22, 2007 @07:43PM (#19229987)
    While algae would yield 8000 gallons of biodiesel and 5000 gallons of ethanol per acre. . .and it requires less water (closed system) and that water can be salt water (set up algae farms near coast, use seawater). . .
  • Re:Food is too cheap (Score:3, Interesting)

    by Lars T. (470328) <Lars.Traeger@ g o o g l e m a i l.com> on Tuesday May 22, 2007 @07:54PM (#19230121) Journal

    In the US, sure, this could possibly lead to smaller portions, but what about people in other countries that don't have enough to eat to begin with? The price of torilla's rising 50% in Mexico doesn't mean "smaller portions" it means NO portions.

    Ask yourself, "Why is the price so high?"

    In EVERY case of people starving on this Planet in this day and age is because of failed states. Period. Africa's food problems? Just look at their governments and how they appropriate food for their armies and buddies of the "President" (read Dictator). Sorry, the only food and starvation problems today are Government made. And no, I DO NOT mean some "evil corporation in their corporation offices being all corporaty" causing the problem. That reason is a smokescreen.

    But in this case the failed state is the USA, having flooded Mexico with subsidized corn, killing off any chance of local farmers making a living, and then paying even more for the corn to make "bio-fuel".
  • by i8-p (951301) on Tuesday May 22, 2007 @07:55PM (#19230135)
    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.
  • by trout007 (975317) on Tuesday May 22, 2007 @08:25PM (#19230389)
    I have a company that can sequester CO2 permanently using Clams. For an investment of $1000 you can sequester 1 ton of CO2 in two years plus you will get back $1200 when the clams are harvested for market. http://www.carbonclamup.com/ [carbonclamup.com]
  • Re:Corn Syrup (Score:2, Interesting)

    by Eli Gottlieb (917758) <<moc.liamg> <ta> <beilttogile>> on Tuesday May 22, 2007 @09:13PM (#19230777) Homepage Journal
    Find a store that sells to Jews during Passover (usually around early April, but it's on a lunar calendar). Strict Judaic law forbids the consumption of corn during Passover, so stores sell sodas, chocolate sauces, and other sweets made with cane sugar just before and during Passover.
  • by Z34107 (925136) on Tuesday May 22, 2007 @09:13PM (#19230787)

    Maybe I'm wrong, but doesn't most third world countries depend on agriculture products as exports? So if agriculture products become more expensive, the food they buy is more expensive, but they will also have more money with which they can buy the expensive food.

    Most third world countries can't export agriculture products because there's no-one to export to. First world countries, (read: the US and EU) have very powerful agriculture lobbyists. Our government subsidizes agriculture production - our farmers can produce the same crop cheaper than the African farmer because the government pays most of his costs. Even if the African farmer could produce a bushel of corn or cotton or whatnot cheaper than a domestic producer, tariffs and quotas prevent him from selling there.

    If food becomes more expensive, the third-world countries are SOL. The vast majority of people in the world (first or third) are not commercial farmers who sell the food they grow, so the price increase benefits very few people.

    In the meantime, starving people have to pay more for the same inadequate rations.

  • Taxohol (Score:2, Interesting)

    by NinerSevenTango (968036) on Tuesday May 22, 2007 @09:38PM (#19230977)
    Taxohol is only as cheap as it is because energy from other sources is cheap.

    A 1.3 to 1.5 energy gain is miserable compared to other sources. It can never be more than solar power, because quite literally, the energy comes from the sun. Slowly!

    You'll notice that the farmers aren't using alcohol to produce the crop or the pesticides and fetilizers.

    How many of the dryers and stills use the alcohol or byproducts to get their heat?

    And just forget about making steel or aluminum with energy from alcohol. There is energy used in every step of the process for everything that gets produced.

    Force a low-density energy source on the economy, and watch it go back to pre-1900 levels. Because that's what they had then. They broke out of their condition and created an industrial revolution that raised the standard of living of mankind beyond anything before in history, mainly by lowering the cost of energy. The society that resulted from an industrial economy then raised a generation of brats who figure they can destroy the basis of their civilization without it affecting them.

    Watch as the exodus of manufacturing from the U.S. continues ....

  • by TheGreatHegemon (956058) on Tuesday May 22, 2007 @10:30PM (#19231387)
    The amount of problems with ethanol are staggering. The raised food prises, the fact that we practically pollute more MAKING ethanol than any environment savings (Which, apparently, seem to be nonexistent). Beyond this, it's near impossible to make enough ethanol to support the U.S...
    Biodiesel, on the other hand, can be made with nearly ANYTHING and nearly ANYWHERE. Human waste? We can make biodiesel out of it (There was even a slashdot article about that). Used frying oil? We can make biodiesel? Algae, grown in swampy areas unfit for farming? We can use it. The catches are seriously minor too. For the U.S., the big issue is a lack of acceptance of Diesel as a whole. Secondly, colder climates could have problems with it, due to it solidifying. The second one may be an issue if you life in ice cold weather, but as a whole, it seems FAR more promising than Ethanol (And, it seems that Europe has pretty good Biodiesel penetration, too). The U.S. needs to give up on the ethanol dream.
  • No! Oysters! (Score:3, Interesting)

    by mdsolar (1045926) on Tuesday May 22, 2007 @10:43PM (#19231483) Homepage Journal
    Do it with oysters, they mature faster! All you have to do is be sure that all that up stream biofuel production does not increase the nitrogen load and kill all the oyster/clam beds. If you do oysters you can also get value added in your sequestration by using the shells as a building material called tabby: http://www.bcgov.net/bftlib/tabby.htm [bcgov.net]. Biomineralization is one of the key sequestration methods and we need to make room for it through nitrogen/phosphorous management.
    --
    Rent solar power and save: http://mdsolar.blogspot.com/2007/01/slashdot-users -selling-solar.html [blogspot.com]

Practical people would be more practical if they would take a little more time for dreaming. -- J. P. McEvoy

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