Fool vs. Fuel

Debate keeps getting recycled at ethanol’s expense
By Holly Jessen | May 13, 2011

In April, the Grain Farmers of Ontario and Global Renewable Fuels Alliance both attempted to put an end to the food vs. fuel debate. It has been shown many times that food price spikes were not caused primarily by biofuels as originally thought, but by a variety of factors, the main one being higher oil prices. Will now be the time the debate is finally put to rest?

The Grain Farmers of Ontario released a study on the effects of biofuels on crop prices, food prices and world hunger. Authored by Terry Daynard and KD Communications, the 117-page study identifies four key points. First, biofuels and bioproducts reduce greenhouse gas emissions and the use of fossil fuel—a definite positive for the environment. Since 2007, biofuels have had only a marginal effect on Canadian and international food prices and the small increases have been offset by the fact that biofuels help lower the price of gas for consumers. Current food and crop price spikes will stimulate agricultural development in developing countries. Finally, biofuels and other bioproducts provide an opportunity to use excess agricultural productivity in Canada, as well as address other societal goals.

The world’s hungry number about 900 million and have for 40 years. Most hungry people are in Asia, although the numbers are declining there and rapidly growing in Africa, and most live in rural areas. “The ‘grain deficiency’ for the hungry people in the world’s most hungry countries is equivalent to 1.1 percent of annual world grain production,” the study says. “The problem is lack of local food production in hungry rural areas, not supply of grain from the developed world.” To feed the hungry, more local grain production is needed, rather than imports from developed countries, the study added.

The spike in grain prices in 2007-’08 was higher for rice and wheat than corn. Rice is much more important as direct human food in most developing countries than corn, the grain most commonly used for biofuel production. World grain supplies did not decline during the price spikes, which were caused mostly by higher energy prices, hoarding, export bans and panic buying by governments, says the study. In North America, the corn price increase caused by biofuels affected food prices by less than 1 percent.

In April, GRFA called on the United Nations Food and Agriculture Organization to focus on oil prices, the real driver behind rising food costs. “There is very clear evidence that oil prices are continuing to have a disproportionate affect on the price of our food,” said Bliss Baker, spokesperson. 

The organization points to a USDA report released in early 2011 that answers the question, “For what do our food dollars pay?” (See illustration below.) The report identifies labor costs, packaging and processing, among other inputs. In addition, the USDA estimates that 33 percent of every dollar spent on food covers energy costs, adding that unpredictable energy costs are responsible for the recent food price spikes. “The USDA’s report echoes the GRFA’s position that oil prices are responsible for rising food prices,” Baker says. “The world needs to take decisive action today and expand our capacity to produce reliable, clean and sustainable biofuels in order to move away from our reliance on crude oil.”   —Holly Jessen