The food-for-fuel debate continues . . .
Reader Duane Truitt writes in responding to my “Food for Fuel is No Laughing Matter” and suggests that Planet Gore spend its time fighting Al Gore’s cult of global warming, not alternative fuels:
Your article that tries to debunk Cliff May’s “The Hunger” contains several errors in logic based upon faulty assumptions:
1. You blame corn-based ethanol for the entire worldwide inflation in food commodity prices of the last two years, laying responsibility for millions or billions of starving poor on the lack of corn to eat. That just isn’t so. Yet, even though you go in some detail in refuting May’s point that total corn production is much higher than it was just five years ago, you still end up having to admit that total U.S. non-ethanol corn crop production stayed virtually level over the last four years.Do the math:
For 2004/2005, 11.8 bb less 1.2 bb for ethanol use = 10.6 bb for non-ethanol use.
For 2007/2008 the estimated numbers are 13.0 bb less 3.2 bb = 9.8 bb.
The total reduction = 0.8 bb, or about 7.6 percent of non-ethanol corn.
Yet worldwide food prices have increased, as you report, something like 25 percent to 117 percent for non-corn-based commodities in the last year. It is fairly ridiculous to blame a minor drop in non-ethanol corn for such huge cost increases on non-corn commodities. You have not made the connection in your article, nor have you cited any specific causality or direct link between corn and other food crops that are not derived from corn. You could point to a link between feed corn prices and meat, egg, and dairy prices that are linked to the cost of animal feed, but you did not do that. You pointed instead to cooking oil, wheat, and rice that are specifically not linked to corn. Even if you did, the world’s poor don’t eat much if any meat or eggs anyway . . . it’s always been too expensive, so the world’s poor eat mostly basic staple grains like rice or wheat.
2. My first point is especially cogent when one considers that the normal year-to-year variations in the corn crop (as with other food crops) tend to be of a similar if not significantly greater magnitude from year to year, due to a wide variety of physical and market causes. In fact, citing the USDA report you linked to for your stats, over any comparable four-year time period between 1980/81 and 2007/08, the total U.S. corn exports (remember, it’s the export fraction of the crop that affects world prices that you’re griping about) varied by anywhere from 30 percent to 50 percent between peaks and valleys of export production during the “pre-ethanol era” (before 2004/2005). It would seem, in fact, that if you look at the graph on the first page of the USDA report, one thing that jumps right out at the reader is that the oscillations in the corn export crop have actually gotten much smaller since the ethanol era began. So in other words, it makes a lot more economic sense for farmers now to produce corn, lots of it, every year now, because they are now much less susceptible to the bottom falling out on the world market price of corn with this new, steadily growing demand for their corn crop. Once grown, in an emergency some of our corn crop can always be redirected to food supplies. If the grain is not grown in the first place, there is no excess capacity to deal with a worldwide crop failure.
3. You do attempt to link corn and wheat production by pointing out to an increase in the U.S. acreage in acreage devoted to corn as compared to a slight decrease in U.S. wheat acreage. However, if you knew anything about farming, you’d realize that very little land that is useful for growing corn in America is going to be used for growing wheat, and vice versa. Corn grows well on land that has excellent loam soil with abundant summer rainfall, as is typical in the corn belt of eastern Great Plains states (eastern NE, IA, IL, etc.). Corn does not do well on more arid lands where most of the wheat crop is grown (the western Great Plains states like western NE, KS, western ND/SD, MT, etc.), as well as some portions of the Rocky Mountain states like north ID, eastern WA, eastern OR) because the soils are not as rich and the available rainfall does not support corn crops. You cannot simply convert large swaths of the wheat belt into growing corn crops.
4. You fail to mention that there is no shortage of agricultural lands in the U.S. Farmers could, if the U.S. government’s nanny-state agricultural policies allowed it, increase the output of all manner of crops, including corn, wheat, soybeans, rice, potatoes, and other staples. Of course, if we did so, the markets would crash for all of these crops virtually overnight, and there would be hell to pay for the politicians who allowed that to happen. The fact that U.S. ethanol production is being ramped up over a period of a decade and a half is easily sustainable without any major market disruptions.
5. You give short shrift to the other factors that, far beyond the effects of corn ethanol production, are moving food prices upward today — such as the increasing demand from huge, hungry, and economically strong customers like China and India . . . in case you haven’t noticed, the same guys are also driving up the costs of virtually every commodity in the world today, such as energy, concrete, building materials, etc. There is also the fact of a weak U.S. dollar and the recent credit-markets meltdown that have caused a massive rush of investment funds into “safe” commodities like petroleum and food staples, greatly lifting futures prices as well as current prices.
Your article is part and parcel of Planet Gore’s misguided focus on trashing alternative fuels production, when the real purpose of the blog ought to be to debunk the religion of anthropogenic global warming.
America needs alternative fuels — not to battle Al Gore and the U.N., but to battle the bad guys who today are stealing us blind on the sales of overpriced petroleum and gas — Chavez, Putin, and Ahmadinejad, not to mention our so-called allies the Saudi royals. They are not only stealing us blind, but they are using very same money that they extort from us to fund the terrorist bad guys who are killing our soldiers in Iraq and Afghanistan, and murdering civilians all over the world.
This dog piling on ethanol has really jumped the shark lately . . . anytime that you have the New York Times and the Washington Post agreeing with NRO that it’s time to stop producing ethanol, we can all be assured that ethanol production is a good thing for America. When Chavez and Putin and Ahmadinejad are criticizing and trying to delegitimize the use of alternative fuels, we can be assured that the bad guys have finally realized that they went too far in ramping up the price of their product, because now all of a sudden they are complaining about the competition.
Corn-based ethanol is not the uber-solution for alternative fuels (no single technology is) — but one thing is certain: every gallon of ethanol that we make is one gallon less that we have to buy from the bad guys at inflated prices. And since most of the hydrocarbon fuel input required to manufacture corn ethanol in the U.S. is derived from domestic coal and gas resources (to the tune of a ratio of nearly 6 to 1 reduction in imported petroleum fuels per gal. of ethanol), this resource is a definite weapon in our war of survival with the world’s bad guys.
Mr. Truitt’s opening complaint is that I “blame corn-based ethanol for the entire worldwide inflation in food commodity prices of the last two years.” Maybe he only skimmed my column, because I noted my agreement with Cliff May that “the biggest factor driving up grain prices is global income and demand growth.” I also mentioned “high petroleum prices” and “drought in Australia” as additional causes of grain price inflation. My column made two simple points — Cliff wrongly trivialized both the impact of rising grain prices on world hunger and the role of biofuel policy in driving up those prices.
He observes that, over the last four years, U.S. corn production for purposes other than ethanol declined by 0.8 billion bushels, or about 7.6 percent, yet world food prices shot up by much more. From these facts he concludes that, “It is fairly ridiculous to blame a minor drop in non-ethanol corn for such huge cost increases on non-corn commodities.”
No, it’s not ridiculous when global demand for food and feed is growing rapidly. As he mentions in paragraph 5, demand for grain is “increasing . . . from huge, hungry, and economically-strong food crop customers like China and India . . . the same guys [who] are also driving up the costs of virtually every commodity in the world today, such as energy, concrete, building materials, etc.” Like energy, the demand for grain is price inelastic. People must eat about the same quantity of food to stay healthy whether food is costly or cheap. Consequently, if demand surges but supply lags, the price increase can be sudden and steep. In this light, reconsider the World Bank’s analysis: “From 2004 to 2007, global maize [corn] production increased 51 million tons, biofuel use in the U.S. increased 50 million tons and global consumption for all other uses increased 33 million tons, which caused global stocks to decline by 30 million tons.”
I would also note that a 0.8 billion bushel decline in non-ethanol corn is not trivial. According to C. Ford Runge and Benjamin Senauer of the University of Minnesota, “Filling the 25-gallon tank of an SUV with pure ethanol requires over 450 pounds of corn — which contains enough calories to feed one person for a year.” Since a typical bushel of corn weighs 56 pounds, this means that 8 bushels contain enough calories to feed one person for a year. From which it follows that 0.8 billion bushels of corn contain enough calories to feed 100 million people for a year.
Complaint number 2, which argues that year-to-year variations in corn exports has declined during the ethanol mandate compared to previous years is, thus, besides the point. In previous years we didn’t have the surge in global demand for grain. U.S. corn exports are actually higher than they have been in three decades: about 2.45 billion bushels according to the USDA report (p. 13). However, at 3.2 billion bushels (p. 16), corn production for ethanol now exceeds corn exports for the first time. Granted, if there were no mandate, not all of the bushels used to make ethanol would be exported or even produced. However, absent the mandate, corn production and export for feed and food would likely be higher and corn prices lower. By how much, I don’t know. But, as noted in my column, the International Food Policy Research Institute estimates that a mandate moratorium would lower corn prices by 20 percent and wheat prices by 10 percent in 2009/10.
Point 3, which argues that corn and wheat grow in different climates, hence farmers cannot switch from wheat to corn in response to the ethanol mandate, is outdated. Check out this New York Times article from September 6, 2006 (14 months after the mandate was enacted). It begins: “Once the driving force behind transforming the United States into the ‘breadbasket of the world,’ wheat is being steadily replaced by corn as the crop of choice for American farmers.”
The Times continues: “Genetic modifications to corn seeds, the growing demand for corn-based ethanol as a fuel blend and more favorable farm subsidies are leading farmers to plant corn in places where wheat long dominated. In Kansas, known for a century as the Wheat State, corn production quietly pulled ahead of wheat in 2000, with Kansas producing 23 percent more corn than wheat last year.”
Nor is Kansas an anomaly. The Times goes on to report: “And while corn acreage nationwide passed wheat about a decade ago, its footprint and that of soybeans are spreading across a greater swath of the Midwest, farther north and west into the Dakotas and central Minnesota — traditional wheat country, where growing corn and soybeans was once almost unthinkable.”
The growth of corn production in traditional wheat states continues apace. Here’s what the Kansas Corn Commission says in its 2007 Annual Report: “Kansas growers planted 3.7 million acres of corn and are now looking at the largest harvest in Kansas history” (p. 1). Similarly, “The October crop estimates peg the 2007 Kansas corn crop at over 493 million bushels, 46 percent above the 2006 harvest” (p. 1). The Report leaves “no doubt” (p. 1) that the ethanol industry boosts corn prices and, therefore, corn production in Kansas. Indeed, we are told, “Since the creation of the Kansas Corn Commission in the late 1970s until today, one thing has remained constant: the Commission’s commitment to promote the use and production of ethanol in Kansas” (p. 2).
In a similar vein, the North Dakota Corn Growers Association’s 2005-2006 Annual Report states that between 2001 and 2006, corn production in the state “nearly doubled” (p. 1). The report shows corn production increasing from less than 40 million bushels in 1989 to more than 160 million bushels in 2006 — and, not coincidentally, a steep rise in ethanol capacity under construction, from about 50 million gallons in 2001 to 1.9 billion gallons in 2006.
Although technological advances do not make it possible to grow corn everywhere that wheat grows, corn and wheat do compete for land. So the fact that U.S. wheat acreage increased only 1 percent when corn acreage increased 18 percent at a time of record-low global wheat stocks is likely no accident.
In addition, as also noted in my column, corn and wheat compete for customers. This means that when corn prices rise, wheat farmers can charge more with less risk of losing sales.
Truitt’s argument in point 4 is contradictory. On the one hand, he claims there is “no shortage” of good farm land to sustain huge increases in the production of all crops, implying that we can always expand corn production without affecting the price or supply of other commodities. But then, he also says that if farmers actually use all the good farmland, “the markets would crash virtually overnight, and there would be hell to pay for the politicians who allowed that to happen.” This implies that good farmland is actually a finite resource, which further implies, in the USDA’s words, that, “Strong expansion of corn-based ethanol production in the projections affects virtually every aspect of the field crops sector, ranging from domestic demand and exports to prices and the allocation of acreage among crops.”
In point 5, Truitt says I give “short shrift” to other factors fueling food price inflation. Yet, as noted above, I specifically said that growing global demand is the number one factor, and mentioned others (transportation energy costs, drought). Yes, I forgot to mention the falling dollar (as did Cliff May). However, this in no way detracts from my basic point: Biofuel mandates contribute to food price inflation and, therefore, aggravate world hunger.
He states that my “article is part and parcel of Planet Gore’s misguided focus on trashing alternative fuels production, which does absolutely nothing to defeat the follies of anthropogenic global warming.” On the contrary, columns like mine raise a key question for the global warming debate — namely, which poses the greater peril to people and nature, global warming or global warming policy?
Al Gore and other AGW activists have been hawking biofuels as an energy/climate solution for years. In a speech delivered almost a decade ago, Gore said: “I was also proud to stand up for the ethanol tax exemption when it was under attack in the Congress — at one point, supplying a tie-breaking vote in the Senate to save it. The more we can make this home-grown fuel a successful, widely-used product, the better-off our farmers and our environment will be.” More recently, in An Inconvenient Truth (p. 312), Gore described “biodiesel and ethanol” as “alternative fuels” that could help solve global warming.
The corn ethanol mandate is just the first baby step in the AGW activists’ policy road map. Yes, many environmental groups now want to revise the mandate and suspend Europe’s biofuel directive, for both humanitarian and ecological reasons. But this should foster skepticism about the AGW crowd’s larger agenda: If their judgment was so off about the baby step, why should we trust their judgment about the “great leap forward” they propose via carbon taxes, cap-and-trade, and a moratorium on new coal plants? If the rush to ethanol and biodiesel has dreadful unintended (although not unforeseen) consequences, why should anyone believe that the AGW crowd’s far more ambitious eco-energy planning schemes pose no significant risks to people or the planet?