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Massive diversion of U.S. grain to fuel cars is raising world food prices
Lester Brown, Earth Policy Institute
If you think you are spending more each week at the supermarket, you may be right. The escalating share of the U.S. grain harvest going to ethanol distilleries is driving up food prices worldwide.
Corn prices have doubled over the last year, wheat futures are trading at their highest level in 10 years, and rice prices are rising too. In addition, soybean futures have risen by half. A Bloomberg analysis notes that the soaring use of corn as the feedstock for fuel ethanol “is creating unintended consequences throughout the global food chain.” ..
Rising grain and soybean prices are driving up meat and egg prices in China. January pork prices were up 20 percent above a year earlier, eggs were up 16 percent, while beef, which is less dependent on grain, was up 6 percent.
In India, the overall food price index in January 2007 was 10 percent higher than a year earlier. The price of wheat, the staple food in northern India, has jumped 11 percent, moving above the world market price. ..
Ethanol euphoria is not an acceptable substitute for a carefully thought through policy. For Washington, it is time to decide whether to continue with the current policy of subsidizing more and more grain-based fuel distilleries or to encourage a shift to more fuel-efficient cars and a new automotive fuel economy centered on plug-in hybrid cars and wind energy. The choice is between a future of rising world food prices, spreading hunger, and growing political instability, or one of stable food prices, sharply reduced dependence on oil, and much lower carbon emissions.
(21 Mar 2007)
Corn Can’t Solve Our Problem
David Tilman and Jason Hill, Washington Post
The world has come full circle. A century ago our first transportation biofuels — the hay and oats fed to our horses — were replaced by gasoline. Today, ethanol from corn and biodiesel from soybeans have begun edging out gasoline and diesel.
This has been hailed as an overwhelmingly positive development that will help us reduce the threat of climate change and ease our dependence on foreign oil. In political circles, ethanol is the flavor of the day, and presidential candidates have been cycling through Iowa extolling its benefits. Lost in the ethanol-induced euphoria, however, is the fact that three of our most fundamental needs — food, energy, and a livable and sustainable environment — are now in direct conflict.
Moreover, our recent analyses of the full costs and benefits of various biofuels, performed at the University of Minnesota, present a markedly different and more nuanced picture than has been heard on the campaign trail.
Some biofuels, if properly produced, do have the potential to provide climate-friendly energy, but where and how can we grow them? Our most fertile lands are already dedicated to food production. As demand for both food and energy increases, competition for fertile lands could raise food prices enough to drive the poorer third of the globe into malnourishment. ..
David Tilman is an ecologist at the University of Minnesota and a member of the National Academy of Sciences. Jason Hill is a research associate in the Department of Applied Economics at the University of Minnesota.
(25 Mar 2007)
China’s Corn Exports May Plunge as Local Demand Rises
William Bi, Bloomberg
China, the world’s second-biggest corn producer, may slash exports of the grain by almost half as the livestock sector expands to cater for more meat-based diets and industrial use surges in line with economic growth.
Corn exports are forecast to fall 44 percent to 2.5 million metric tons in 2007/08 from 4.5 million tons in the current year ending in September, Jiang Jianhua, vice chairman of Jilin Grain Group Co., one of the country’s two authorized grain exporters, said at the China JCI feed conference in Guangzhou today.
Reduced Chinese corn exports will further shrink worldwide supplies that the U.S. Department of Agriculture expects will drop this year to the lowest since 1978. Corn prices have risen 87 percent in the past year due to record production of the alternative fuel ethanol and global demand for livestock feed. ..
Chinese corn exports for the year ending September will be no more than 3.8 million tons by the end of this month, out of 4.5 million tons of export quotas issued, Jiang said, adding that the government may not approve further sales. ..
(23 Mar 2007)
