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WHAT OTHERS SAY: Can't blame high food prices on the biofuels myth

Tuesday, December 31, 2013 | 6:00 a.m. CST

Stroll through the aisles at many grocery stores, and you're bound to see looks of bewilderment among shoppers who are finding it increasingly difficult to stretch their food dollars.

Prices have been on the rise, but it's not because Mr. Farmer is taking a larger slice of the action or because ethanol production has diverted too much corn from the human food chain, as some anti-agriculture activists insist.

These tired theories about rising food prices — that farmers are getting fat from overpriced breakfast cereal or that mixing corn-based ethanol with gasoline is creating a food shortage — have long been the centerpiece of the food vs. fuel debate, but they have no basis in fact.

Corn prices have plummeted. Last year, a bushel fetched almost $8, but today the prevailing price is about $4 per bushel — near the break-even point for many corn growers.

While corn markets have declined nearly 50 percent during the past 12 months, it's impossible to see a corresponding drop in corn products at the retail level. That's because perpetrators of the food vs. fuel myth have it wrong. It's not grain prices or ethanol that drive food prices, but an array of other factors, chief of which are the price of fuel and cost of transportation.

Very few Americans noticed when, in July, a study by ABF Economics, an agriculture and biofuels economics consultancy, found no direct correlation between the Renewable Fuels Standard — and thus increased ethanol production — and increasing food prices.

The finding backs up a 2010 World Bank study that cited higher oil prices as the leading cause of increased food prices globally, reversing the World Bank's earlier stance that linked increases to global biofuel policies.

The ABF Economics report uncovered the complexity of the multiple drivers behind increasing food prices. One of the main factors — high fuel prices — directly affects processing and transportation costs. The greater the cost of producing a product and transporting it to grocery shelves, the higher the price consumers will pay.

If the food vs. fuel people were correct, the 50-percent decline in corn prices — from nearly $8 per bushel one year ago to about $4 per bushel today — would be reflected at the supermarket.

Sadly, Mr. Farmer is taking a bath in the commodities markets, while consumers aren't getting any relief when they buy breakfast cereal at the supermarket.

Copyright Kearny (Neb.) Hub. Distributed by the Associated Press.


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Comments

Ellis Smith December 31, 2013 | 8:21 a.m.

Agreed, but what's their solution?

Regarding use of corn to produce ethanol, maybe we need to look at the longer term. World population continues to increase; while many Americans may not think about it the United States (Canada, Australia, Argentina) supplies a significant portion of the food needed, as agricultural exports.

Long term, how much arable land do we want to tie up growing crops to make fuels? I'm not suggesting abandonment of corn-to-ethanol, but maybe we should put upper limits on the amount of corn used.

Some folks talk about other crops besides corn: this business about growing non-food "renewalbe" crops for use as combustible fuel. Is that good use of arable land? What would be the consequences if we turn marginal land to that purpose? Greater soil erosion? Another Dust Bowl? (We REALLY need that!)

What advocates of growing non-processed renewable fuels (ethanol being a processed renewable one) neglect to consider is these crops tend to be at the low end of the caloric scale, meaning we must burn more of them to get the thermal energy needed. THAT won't reduce carbon dioxide emissions (versus burning high caloric energy fuels, such as natural gas, fuel oil or coal).

There ARE NO absolutes, but there can be intelligent choices.

(Report Comment)
Mark Foecking December 31, 2013 | 1:52 p.m.

There's also the fact that these biofuels are grown and processed with oil and natural gas, and by the time you burn the biofuel you may not have gained very much over simply burning the oil and gas. I know net energies of cellulosic biofuels tend to be better than corn ethanol, but still, they're diffuse fuels requiring a lot of land for a given amount of energy.

Our core problem is the amount of energy we use, and efficiency can only help us so much.

DK

(Report Comment)
Ellis Smith December 31, 2013 | 9:36 p.m.

Mark Foecking said, "Our core problem is the amount of energy we use..."

Absolutely.

(Report Comment)
Ellis Smith December 31, 2013 | 10:20 p.m.

FIRST HOMEWORK ASSIGNMENT FOR 2014 (But...but...but we're supposed to be on Christmas break!)

Here are the world's top ten energy consumers, expressed as metric tons of oil equivalent (times 1 million):
[2010, source "The Economist" magazine]
China=2,417
United States=2,216
Russia=702
India=693
Japan=497
Germany=327
Brazil=266
France=262
Canada=252
South Korea=250

Surprised that China consumes more than we do? If you've been following matters, you shouldn't be. Both China and India plan to significantly increase domestic production of energy - mainly by burning coal for electrical generation.

Here are the respective populations of the ten countries, also times 1 million:
[2011, source "The Economist" magazine]
China=1,347.6
United States=313.1
Russia=142.8
India=1,241.5
Japan=126.5
Germany=82.2
Brazil=196.7
France=63.1
Canada=34.3
South Korea=48.4

Now, divide equivalent metric tons of oil by population for each country. Since "times 1 million" for both cancel each other out, this will be easy. Your answers will be equivalent metric tons of oil per capita for each country.

Then re-order the top ten countries in decending order. Now who is number one?

(Report Comment)

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