Hungry for Biofuel

Yesterday, the U.N. and the World Blank announced plans for a task force to address skyrocketing food prices worldwide (Forbes.com).

The food price shock now roiling world markets is destabilizing governments, igniting street riots and threatening to send a new wave of hunger rippling through the world’s poorest nations. It is outpacing even the Soviet grain emergency of 1972-75, when world food prices rose 78 percent. By comparison, from the beginning of 2005 to early 2008, prices leapt 80 percent…” (The Washington Post)

So when I say “hungry,” I mean hungry. Like, starving. And when I say “for,” I mean “because of.” There’s plenty of blame to go around, but biofuels are in the eye of this hurricane. The Washington Post is running a series this week called “The Global Food Crisis.” Spend some time reading through their pieces on the subject if you want to be kept awake at night. In their first piece in the series, “The New Economics of Hunger,” Anthony Failoa offers a summary of how we got here.

1. Environmental conditions like drought led to poor harvests in major grain-producing countries.
2. Rising oil costs forced other countries to limit the amount of harvest they made available for export.
3. Heavy government subsidies for ethanol drove up the cost of corn.
4. Domestically, a stock market troubled by the mortgage crisis leaned more heavily on grain shares, driving prices up.
5. Foreign investors began to order far above their usual quantities of US grain, which meant domestic buyers panicked and bought even larger quantities, and so on in a vicious cycle.

Ethanol isn’t the only villain in this situation, but it’s certainly the best-dressed, and it’s one of the only factors theoretically under our control–unlike, for instance, Australia’s crippling drought. The United States government offers a staggering tax credit to ethanol producers of 51 cents per gallon (that gets blended with regular gasoline), and has sweetened the deal for exporters to this country, too. So what? Well, 14 percent of domestic corn went to ethanol production in 2005; by 2009, the USDA predicts that number will be up around 30 percent. There are so many valid arguments against biofuel–my favorite being that it actually emits more carbon than traditional gasoline to produce–but this is the crux of the matter: we’re paying farmers to produce fuel instead of food. You’ll hear in the news that President Bush has stated he doesn’t think ethanol plays a significant role in the food crisis, but he to date hasn’t offered any evidence to back that up, and the International Food Policy Research Institute begs to differ:

“Our models analysis suggest that if a moratorium on biofuels would be issued in 2008, we could expect a price decline of maize by about 20 percent and for wheat by about 10 percent in 2009-10. So it’s this significant.” (Forbes.com)

Remember that scene in The Grapes of Wrath when the dispossessed, starving people of the Dust Bowl are gathered around a mountain of oranges in California, literally dying to eat one, and they’re beaten back so that government officials can set fire to it? If they just gave out oranges to anyone who needed them, after all, oranges would get cheap. I ask myself what we’re doing with food production not only in this country but in the world and why. We’re stockpiling grain stores both on a large scale, as nations buy out other nations’ harvests, and on a small scale, as a shop in China is cleared out of its last few bags of rice by one wealthy family. We’re feeling this need to stockpile because we’re seeing proof that our governments are placing more value on what fuels our cars than on what fuels us, and that emphasis is translating into a real global shortage.

In the third Post installment, “Emptying the Breadbasket,” Dan Morgan gives ethanol a bit of a break and explains the other factors that have gone into decreased wheat production in the US, and lays out the stark truth:

The “breadbasket of the world,” which had alleviated hunger and famine since World War I, now generally supplies only a quarter of world wheat exports. U.S. farmers are expected to plant about 64 million acres of wheat this year, down from a high of 88 million in 1981…there is now less wheat in grain bins than at any time since World War II — only about enough to supply the world for four days.”

And the world is knocking. When many of the world’s wheat-producing nations found themselves with insufficient harvests as a result mostly of drought (much of Europe, Russia, Argentina, Kazakhstan, Australia, Morocco), they turned to us. Except we had less to sell. Which meant we could charge an awful lot for what we did have to sell. Which meant that by the time bags of flour reached retail shelves, their cost had, in some countries, nearly doubled. At its low point last year, wheat cost $7 per bushel; one farmer recently received a staggering $20 per bushel.

I know I’m getting a bit sidetracked from ethanol subsidies and their role in this impending disaster (I say “impending” because I’m currently not trying to live on $1 per day and deal with a staple food that suddenly costs twice what it used to; my language might be a bit more frantic if I were). The truth is, there are so many factors in play that addressing only one of them wouldn’t solve this problem. Cutting ethanol subsidies wouldn’t restock our grain silos in a heartbeat. But it would make it possible for farmers to consider it economically viable to plant wheat again. Farmers need inducements to plant wheat because it’s a fickle crop, prone to disease, and less hearty in poor conditions than the commercial species of genetically modified corn and soybeans (which brings us to the issues surrounding genetic biodiversity in crops, but I’ll spare you for now).

As the ethanol market continues to grow, supported by government funding, our food supply is going to continue to be affected at every level. If you’ve noticed the price of your milk and hamburgers and chicken breast going up and have seen headlines that say it’s because of rising oil costs, that’s partly true. But the ripple effect of super-priced corn has led to more expensive grains across the board. That means it costs more to feed food animals, and when it costs more to produce the meat, it costs more to buy the meat.

The USDA has a publication available, “Ethanol Expansion in the United States” (PDF), that details its predictions for the near future of ethanol, with a focus on how that will affect domestic agribusiness and food production. If you’re not ready to tackle the issues facing us globally, start with what’s facing us at home.