Friday, March 11, 2011

The Absolute Madness of Biofuels

Robert Bryce at the Washington Times explains why the President needs to get over his infatuation with biofuels. All that this short-sighted policy is accomplishing is to make life harder for those who are already hungry, and to provoke food riots around the world. But aren't biofuels good for the environment? What's the connection between biofuels and food?

Mr. Bryce explains:
Last month, Peter Brabeck, the chairman of the Swiss food giant Nestle, declared that using food crops to make biofuels was “absolute madness.” The epicenter of that madness is the U.S. corn-ethanol sector. This year, it will consume 40 percent of all U.S. corn - that’s about 15 percent of global corn production or 5 percent of all global grain - in order to produce a volume of motor fuel with the energy equivalent of about 0.6 percent of global oil needs.

Congress lavishes about $7 billion in annual subsidies, mandates and tariff protections upon an industry that is helping push global food prices to all-time highs and shrink grain reserves at the very same time that global grain production is faltering and protests over food prices are becoming common.

The quantity of grain to be consumed this year for ethanol production - 4.9 billion bushels - boggles the mind. That’s more than twice as much as all the corn produced in Brazil and more than six times as much as is grown in India. Put another way, that’s more corn than the output of the European Union, Mexico, Argentina and India combined.
All that food is being used for fuel, and as the the demand for corn rises, it increases the demand for, and thus the price of, other grains as well. This makes grain-fed meat more expensive, and makes it very difficult for poor people to buy food:
Despite these facts, President Obama said last month in his State of the Union speech, “We can break our dependence on oil with biofuels.”

Soaring food prices led to violent protests in Egypt, Cameroon, Ivory Coast, Haiti, Mauritania, Ethiopia, Madagascar, the Philippines and Indonesia. Worries about adequate food stocks led several countries to ban food exports.

In recent weeks, we’ve seen food price increases and protests that are reminiscent of 2008. There have been food riots in Algeria and Mozambique. Last month, about 8,000 Jordanians protested in the streets of Amman and other cities over rising food prices. In Egypt, the world’s biggest wheat importer, wheat prices are up by 30 percent over the past 12 months. Those higher wheat prices are being stoked by rising corn prices, which have doubled over the past six months and are at about $7 per bushel. “Higher corn prices always means higher wheat prices,” says Bill Lapp, president of Advanced Economic Solutions, an Omaha-based commodity consulting firm.

In December, a study by two U.S. agriculture economists, Thomas Elam and Steve Meyer, found that corn prices are being directly stoked by demand from the ethanol sector. Mr. Elam and Mr. Meyer, who have done consulting work for the meat industry, found that without the ethanol mandates, the average price of corn would be lower by more than $2 per bushel. They also conclude that “biofuels policy has caused significant cost increases for all users of feedgrains.”
Bryce has more details about how the demand for corn for use in biofuel diminishes the amount of corn available for food and raises the price of most of the food we buy. For many of us it's just a matter of tightening our belt but for people who live everyday on the edge of starvation it's a calamity.

An unnecessary calamity at that. In the name of reducing pollution we're increasing starvation. Perhaps this makes sense to Mr. Obama, but I doubt that it makes sense to an Ethiopian mother who spends most of her waking hours trying to scrounge together enough grain to feed her hungry children a single pancake each day.