The Biggest Green Mistake - Biofuels and the global food crisis

Reason ^ | April 8, 2008 | Ronald Bailey

[neverdem]

In the last year, the price of wheat has tripled, corn doubled, and rice almost doubled. As prices soared, food riots have broken out in about 20 poor countries including Yemen, Haiti, Egypt, Pakistan, Indonesia, Ivory Coast, and Mexico. In response some countries, such as India, Pakistan Egypt and Vietnam, are banning the export of grains and imposing food price controls.

Are rising food prices the result of the economic dynamism of China and India, in which newly prosperous consumers are demanding more food—especially more meat? Perennial doomsters such as the Earth Policy Institute's Lester Brown predicted more than a decade ago that China's growing food demand would destabilize global markets and signal a permanent increase in grain prices. But that thesis has so far not been borne out by the facts. China is a net grain exporter. India is also largely self-sufficient in grains. At some time in the future, these countries may become net grain importers, but they are not now and so cannot be blamed to for today's higher food prices.

If surging demand is not the problem, what is? In three words: stupid energy policies. Although they are not perfect substitutes, oil and natural gas prices tend to move in tandem. So as oil prices rose above $100 per barrel, the price of gas also went up. Natural gas is the main feedstock for nitrogen fertilizer. As gas prices soared, so did fertilizer prices which rose by 200 percent.

As a report from the International Center for Soil Fertility and Agricultural Development (ICSFAD) notes, applying the fertilizer derived from 1000 cubic feet of natural gas yields around 480 pounds of grain. That amount of grain would supply enough calories to feed a person for one year. Rising oil prices also contribute to higher food prices because farmers need transport fuel to run their tractors and to get food to urban markets.

Even worse is the bioethanol craze. Politicians in both the United States and the European Union are mandating that vast quantities of food be turned into fuel as they chase the chimera of "energy independence." For example, Congress passed and President George W. Bush signed misbegotten legislation requiring fuel producers to use at least 36 billion gallons of biofuels by 2022-which equals about 27 percent of the gasoline Americans currently use each year and is about five times the amount being produced now. And the European Union set a goal that 10 percent of transport fuels come from biofuels by 2020.

The result of these mandates is that about 100 million tons of grain will be transformed this year into fuel, drawing down global grain stocks to their lowest levels in decades. Keep in mind that 100 million tons of grain is enough to feed nearly 450 million people for a year.

As Dennis Avery from the Hudson Institute's Center for Global Food Issues points out, the higher corn prices that result from biofuels mandates mean that farmers are shifting from producing wheat and soybeans to producing corn. Less wheat and soybeans means higher prices for those grains. In the face of higher prices for wheat, corn and soybeans consumers try to shift to rice which in turns raises that grain's price. In addition, higher grain prices encourage farmers in developing countries to chop down and plow up forests. It also hasn't helped that some traditionally strong grain exporters such as Australia have experienced extreme weather.

So what to do? In the short run, there is some good news. High prices are encouraging farmers to shift back toward wheat and soybeans which should relieve some of the pressure on grain prices. Second, the biofuels mandates must go. If biofuels are such a good idea, entrepreneurs, inventors and investors will make them into a viable energy source without any government subsidies. Thirdly, both high and low technologies are addressing high fertilizer prices. On the high tech front, Arcadia Biosciences has created biotech rice and corn varieties that need much less nitrogen fertilizer that conventional varieties require. In Bangladesh and other poor countries, farmers are embedding low tech fertilizer-infused briquettes in the soil to deliver nitrogen to rice. This boosts crop production 25 percent while cutting fertilizer use by 50 percent.

Expanding acreage to grow biofuels is bad for biodiversity and may even boost the carbon dioxide emissions that contribute to man-made global warming. Avery notes that food production needs to double because there will be more people who will want to eat better by 2050, at which point world population begins to slide back downwards. Turning food into fuel makes that goal much harder to achieve. Avery is right when he argues, "Biofuels are purely and simply the biggest Green mistake we've ever made and we're still making it."

Ronald Bailey is Reason's science correspondent.

[steelyourfaith]

Absolutely, but for some reason the Main Steam Media is unable to make the connection.

[polymuser]

Them first!

Voluntary Human Extinction Movement: www.vhemt.org

[keepitreal]

Isn't this the plan? Starve the useless eaters, while the rich, fat elites continue to be able to afford to eat?

I guarantee you that this man will never go hungry, no matter how many poor people starve from his stupid policies:

[Jeff Chandler]

Let me see....fuel prices rise due to the high cost of ethanol, higher fuel costs lead to smaller cars and more highway deaths...ethanol production leads to food shortages and mass death from worldwide starvation...

For the Greens, it’s WIN-WIN-WIN!

[ripley]

“stupid energy policies...”

correction: the insane, ill-advised, puerile, infantile, silly, inane, nonsensical, out-of-contact-with-reality, idiotic, ridiculous actions of a totalitarian bunch of arrogant punks who have been elected by an electorate that has been well-indoctrinated to the point of being in a perpetual state of onanism; an evil bunch of stupid people with power; no-good, dirty, rotten bunch of scu&bag punks. (imho)

[Crawdad]

It’s not nice to fool Mother Nature.

[fightinJAG]

That would require the MSM to concede that it helped perpetrate a huge hoax on the world, that—worse—it actively harmed the environment and poor people, and, finally, that there does indeed exist a file (stuffed with liberal programs) called “Law of Unintended Consequences.”

Not gonna happen!

[tbw2]

What if biofuel mandates are a way of doing that? Save the environment (starvation of humans) in the name of saving the environment (biofuel instead of petrol-fuel)?
(X-files conspiracy music, cued.)

[NVDave]

Exactly.

The truth here is that the priests of libertarianism and Ayn Rand worshipers at _Reason_ hate US Ag subsidies much more than they care about the food situation in Africa.

Rhodesia (now Zimbabwe) used to feed their residents and many, many more in Africa besides. The collapse of their output has NOTHING to do with trade, ethanol or any of this other BS that self-styled ag policy experts want to bluster about.

It is because Mugabe has run off all the white farmers and delivered the lands to savages and morons with AK-47’s.

[curiosity]

yes. All three candidates remaining are hot for this ethanol fraud.

Last time I checked, McCain was against the ethanol shakedown (it's much worse than fraud). That was one of his few redeeming qualities. Has he flip-flopped on this issue again? Please say it ain't so...

[curiosity]

The manufacturing of ethanal should be viewed much as manufacturing PCP and crack cocaine are viewed, i.e. as a criminal activity.

I'd say it's more like an old-school mob shakedown racket.

[EQAndyBuzz]

“Twilight Zone “To Serve Mankind” Correct?”

SOYLENT GREEN IS PEOPLE!!!!

[curiosity]

The truth here is that the priests of libertarianism and Ayn Rand worshipers at _Reason_ hate US Ag subsidies

You don't need to be a Randian cultist to hate such brazen graft. In fact, just about all rational people hate it, provided they 1) have an elementary grasp of economics and 2) don't personally benefit from the shakedown.

[NVDave]

Do you eat food?

I’m betting you do.

Then you personally benefit from the “shakedown.”

[wendy1946]

Rhodesia ( I refuse to call that place “Zimbabwe”) could easily feed all of Africa, it’s a natural breadbasket like the Ukraine. For anybody to go hungry or starve in a place like that is nearly the same proposition as not being able to get laid in a whorehouse; it simply should not be possible. Only the vilest and worst possible forms of government could produce such a state of affairs.

[curiosity]

Then you personally benefit from the “shakedown.”

Actually, farm subsidies on net make food more expensive. That's why they're sometimes called price supports.

And I most certainly don't benefit from massive ethanol subsidies.

[NVDave]

The idea that subsidies which have resulted in consistent over-production above market demand make food more expensive is a laughable canard by the libertarian think tanks, none of which have actual farmers on their staffs.

Here’s the gruesome facts:

There has been a “cheap food” agenda in DC for decades. The Congress has consistently supported over-production of commodities, to the extent that farm commodities haven’t even kept pace with the rate of inflation as measured by the BLS CPI-U for the last 25 years. Since we’ve left the last vestige of the gold standard in 1973, farmers have watched commodity prices lose ground.

Example: Here’s corn:

http://www.inflationdata.com/inflation/images/charts/Corn/corn_inflation_chart.htm

You’re getting a real sweet deal. If there had been no subsidies, there would have been no systemic over-production, and you’d be paying something substantially more than $6/bushel now, which has everyone’s panties in a bunch, but still isn’t even 50% of the peak price from the early 70’s, if adjusted for inflation.

As a result of the systemic over-production, you, the consumer, have enjoyed rather cheap food for a rather long, long time.

Here’s some other commodities that are now catching up to inflation now that we’re in the bull period of a commodities boom. Oil:

http://www.inflationdata.com/inflation/images/charts/Oil/Inflation_Adj_Oil_Prices_Chart.htm

Gasoline:

http://www.inflationdata.com/inflation/images/charts/Oil/Gasoline_inflation_chart.htm

So you see, it isn’t just corn and other ag commodities that are going up in price. Gold, copper, nickel, zinc, steel, aluminum, oil, gas, diesel, are all going up. Ag commodities are seeing increases rather late in the this commodities up-cycle compared to these other commodities.

Ethanol: You do benefit from ethanol subsidies.

The EPA mandated a oxygenate in gasoline. The former oxygenate was MTBE, which was a highly mobile substance in soil, which resulted in widespread groundwater contamination, lung irritation and other issues. The EPA seems to be fixated on adding oxygenates to your gasoline (so that people in LA can enjoy cleaner air) and when MTBE was removed from gasoline, there were three other potential oxygenates. None of them had the oxygen content or the octane of ethanol.

In other words, if you’re pissed off about the impact to your mileage from the mandatory blending of ethanol in your gasoline, you’d be even more pissed off if one of the two non-ethanol/MTBE oxygenates were being used.

So yes, you are a beneficiary of ethanol. You just don’t know it because the EPA hasn’t shown you the other alternatives. Yet.

[NVDave]

Yes, they could.

Here’s the truth that is just too inconvenient for the professionally sensitive to bear:

The highest ag yields in the world are achieved by one select group of farmers: white, western (esp. US) educated, well capitalized, industrialized farmers.

In short, US farmers. European farmers are second.

When you take land away from white, western-educated farmers and hand the land over to people who have no experience in running a farm, as Mugabe is doing in Zim, you’ve just guaranteed a production crash. You could pull all the US farmers out of Brazil and watch their soybean production crash, perhaps not as hard, but you’d see the effects in the world markets.

As Mugabe runs all the white farmers off the land in Zimbabwe and you get what we have here: famine and starvation. This is not the fault of the US, and certainly has nothing to do with ethanol, regardless of whatever hyperventilation emits from the “ethanol is evil” crowd here on FR.

You might as well turn control of the space shuttle over to cave men while on final approach as turn a modern farm over to third world natives. The results will be the same.

There is no equivalent in worldwide ag development to the progress made by white European farmers in Europe and the US since the 18th century. None, zippo, nada, nothing, nowhere else in the world. There is no equivalent in the rest of the world to such men as Jethro Tull, inventor of the seed drill. There is no equivalent in the rest of the world to the US program of no-till farming, which I might add, involves subsidies.

Even now, we enjoy brilliantly colored sunsets in the western US due to the amount of dust put into the air by nearly neolithic farming practices on a wide scale in northern China and our sunsets are the result of the dust these practices create from widespread desertification. The ChiComs are ruining vast tracts of land every year with their ignorance and collective farming practices.

While we’re on the subject, there is no one man who has done more to feed the ignorant masses of the third world in the history of the world than this one American:

http://en.wikipedia.org/wiki/Norman_Borlaug

No one comes even remotely close, certainly no one in the third world.

It is pretty fair to say that US farmers and US researchers have more than pulled their weight in feeding their fellow man. People who want to blovate about what/how US farmers farm should shut their pie holes unless and until they can do better.

[wendy1946]

Even now, we enjoy brilliantly colored sunsets in the western US due to the amount of dust put into the air by nearly neolithic farming practices on a wide scale in northern China and our sunsets are the result of the dust these practices create from widespread desertification. The ChiComs are ruining vast tracts of land every year with their ignorance and collective farming practices.

Given that, what would be your impression of anybody importing wheat or chicken products into the US from China (similar to importing ice into Alaska from Arizona or Nevada...)?? My own instinctive feeling is that in theory at least there should be no legal way anybody could do that and do anything other than lose money. The United States is VASTLY more efficient at producing all of the grains at the bottom of the food pyramid than anybody else on the planet, and particularly than anybody still using neolithic farming techniques.

[SunkenCiv]

Thanks neverdem.

Although they are not perfect substitutes, oil and natural gas prices tend to move in tandem. So as oil prices rose above $100 per barrel, the price of gas also went up. Natural gas is the main feedstock for nitrogen fertilizer. As gas prices soared, so did fertilizer prices which rose by 200 percent. As a report from the International Center for Soil Fertility and Agricultural Development (ICSFAD) notes, applying the fertilizer derived from 1000 cubic feet of natural gas yields around 480 pounds of grain. That amount of grain would supply enough calories to feed a person for one year. Rising oil prices also contribute to higher food prices because farmers need transport fuel to run their tractors and to get food to urban markets.

...and that's it. The biofuels rant that follows that paragraph is a load of crap.