Food vs Fuel is incorrect arguement.

[SH3RL0CK]

Lately it seems the media has been running many stories about how the conversion of corn and other grains into ethanol is greatly increasing the costs of food. It seems that because the USA is converting 25% of the corn crop into fuel, most of the world will starve.

 

http://www.washingtonpost.com/wp-dyn/content/article/2007/12/11/AR2007121101834.html

 

 

This seems like nonsense to me as, after the grain is converted ( http://www.ddgs.umn.edu/overview.htm ), the remaining material (distillers grain) still contains 91% dietary equivalent. Is 9% of 25% = 2.25% of only the US crop going to result in mass starvation? I think not.

 

Another way I have thought about it (sorry about the non-metric units, but this is the USA): A box of corn flakes contains 20 oz = 1.25 lbs and costs less than $3.00. A bushel of corn = 75lbs and costs less than $5.00. Therefore the direct cost of the corn in a box of corn flakes is less than $0.08, or 2.8%. At this price, you could double the price paid to the farmer (corn at $10 a bushel) and the consumer would probably not even notice the difference of less than 8 cents.

 

Am I missing some REAL data to indicate that millions of people will starve because of the conversion of corn into ethanol? I cannot find a legitimate study which seems to have realistic assumptions and calculations to indicate this could possibly be the case.

 

So why (other than the obvious sensationalist attempt to sell more copies , or the loony conspiracy theories ) are so many journalists and editors running the story? Do they not check their facts? And why do so many people seem to buy this fallacy outright?

[iNow]

That 25% was not used for fuel previously. Previously, it was used for food. Seems pretty straight forward to me. What do you think I'm missing? Can you tell me without calling me loony?

[SH3RL0CK]

I have no intention of calling any serious poster here loony.

 

Most of the corn used in the USA goes to feed cattle. When converting corn to ethanol, mostly the inedible parts of the corn kernel is consumed. The remaining substance (distillers grain) contains 91% of the dietary equivalent, and is likewise fed to cattle. Since 9% of 25% = 2.25%, this is naturally a reduction of the food supply by only 2.25%, not 25% as seems to be commonly reported in the press. Seems pretty straightforward to me that this is incapable of raising the cost of food significantly considering 1) the potential of the USA to grow more corn to compensate for this drop and 2) the potential (well actually, need considering most of us in the developed world are overweight) to eat less or at least eat less meat.

[Realitycheck]

Tell that to the commodities traders.

[Glider]

Exactly.

 

It's not just the use of grain for biofuel. That's only one factor. There have also been failed crops in Australia and elsewhere. The main problem is that any reduction in the volume available for food will result in the price going up which, although merely annoying to most of us in the developed world, is becoming disastrous to those in less developed countries.

 

There have already been food riots and as you (Sh3rlock) point out, there isn't really a shortage of food. It's just that the food available has become more expensive than many can afford.

[Pangloss]

I've read that if we stop using biofuel we'll see another 20% increase in prices at the pump. And again, we do not have a food problem in the US -- it's elsewhere that the problems over food exist. I think government took the right tack this week, reducing the subsidies (but leaving them intact), and the White House asking today for an additional $770 million in food aid for use abroad (a spot increase to help with specific situational shortages).

 

I agree with some of the points raised about ethanol subsidies causing food problems (outside of the US), but shaking things up and re-formulating the whole energy situation is what we WANT to happen. We need to push forward, not step back, and renewable sources need to be part of the dynamic, because it will help us break through to the "far side" of the equation, where we are off the oil teat completely.

[tvp45]

There are three points that modify the original poster's point:

(1) the multiplier on farm prices. Typically, a farmer receives less than 20% of the shelf price. The processing and distribution chain add the rest, not as + 80% but as x4.

(2) the food value of the mash residue. Ruminants are able to digest the remains of the corn fairly well, but not so humans. Corn is hard to digest in general. Meat from ruminants is a good food source, but the overall efficiency is quite low.

(3) diversion of arable land. Wheat and rice are more efficient food crops and do less harm to the land than corn.

[iNow]

Additionally, more farmers are growing corn than wheat and rice, hence we have (not only) less corn supply for food due to it's use in fuels, but also less wheat and rice supply for food... Thus driving up the costs of those as well.

 

As supply goes down and demand remains the same or increases, costs rise. Eco 101.

[Pangloss]

But actually in this case if they immediately reallocated those crops from biofuel to store shelves prices would not likely go down, since pump prices have not yet caught up with the rate of increase in the price of a barrel of crude.

 

And we don't need the stuff on store shelves, because there isn't a shortage of those items. Which again points to the likely fact that the increase in food costs in the US is entirely due to rising gas prices, and has nothing whatsoever to do with ethanol.

 

But I'm not making that claim, I'm just suggesting it might be the case. I don't know all the variables well enough to know if that's true.

[iNow]

But actually in this case if they immediately reallocated those crops from biofuel to store shelves prices would not likely go down, since pump prices have not yet caught up with the rate of increase in the price of a barrel of crude.

 

And we don't need the stuff on store shelves, because there isn't a shortage of those items.

Your point is valid with limited scope. In US stores, sure, no problem. The people who are starving, however, don't have a Publix or a Piggly Wiggly from which they obtain their sustenance. (well... the vast majority don't).

[Pangloss]

Which would be significant if we had been sending that excess corn overseas, but as I understand it it was just going to waste. I'm not opposed to changing that and sending it overseas, but that's just charity and therefore only a temporary solution. Long-term those nations need to be developed with a proper economic infrastructurs so they can pay for it.