January 2007
The Environmental Aspect Of Guns v Butter
This coming year, we may be facing the highest grain prices in history and the negative trend is set to continue. What's the connection between this, biofuels and feeding the world?
Corn and wheat futures are now both trading at 10-year highs. This leaves us with a real dilemma. When a farmer can get more money for selling his crops to a biofuel manufacturer rather than a food producer, does one choose cars or food?
For the sixth time in the last seven years, humans will be consuming more food than they produce. Although increased productivity through new farming techniques and increased arable land space have helped overall production to continue rising at a slow but steady rate, this has been outstripped by consumption. Best seen through a comparison in world food stocks in 1999 and in 2006, 1999 reserves were big enough to feed the entire world for 116 days, but a mere 7 years later this had dropped to only 57 days. Although the situation is not yet critical unless action is taken, the prospect of food shortages, price rationing and rocketing grain prices will become a reality in the developed world as well as the developing world.
Though the EU may be well placed to robustly deal with this prospect thanks to its agricultural policy of self sufficiency, other nations, including the United States will be harder hit through the operation of free markets trading in crops.
The precipitation of this looming disaster is partly caused by drastic declines in grain surpluses attributable to the increased demand for biofuels. The principle is as follows: carbon dioxide absorbed when the crops are grown exactly equals the carbon dioxide released when the fuel refined from those crops is burned, so the whole process of biofuel production is carbon-neutral.
Although this in theory represents a more environmentally friendly approach to energy and fuel generation than the continued use of fossil fuels, it has serious sustainability implications.
The first and foremost concern is that of land use re-designation. If land with no other available use was producing output for biomass fuel, this would be sustainable. Indeed, South-East Asia has seen an increase in deforestation in an attempt to grow oil palms, which negatively impacts on carbon offsetting and biodiversity.
A further problem is that of the United States "corn rush”. This is of special importance considering that the U.S. corn crop accounts for 40 percent of the global harvest and supplies 70 percent of the world"s corn exports. In Iowa, because the sale of "ethanol plants” for use in biofuels produce such excellent returns for farmers and the free market economy in the US is sacrosanct, so much farmland has been devoted to this, that "ethanol plants” may absorb the state"s entire crop of corn. To put this into sharp relief, the amount of ethanol needed to fill the tank of a Sports Utility Vehicle just once, is the same amount needed to feed a human for an entire year.
As if this pressure wasn"t enough, the biofuel sector is currently experiencing a snowball effect. Taking the US as an example, if one ignores the 73 million ton grain shortfall in 2006, an additional 24 million tons of output is needed just to cover the need in the growth of food and feeding needs. On top of this, there is a further 39 million ton demand created by the 54 new distilleries created for the biofuel sector. Thus, in the US alone, there is a cumulative growth in demand of 136 million tons in grain if the country is to even balance supply with demand. Because we are already committed to this increasing pressure because of distillery construction, the short term outlook is bleak.
Lester Brown of the Earth Policy Institute has reduced this to its most basic expression:
"The competition for grain between the world"s 800 million motorists who want to maintain their mobility and its 2 billion poorest people who are simply trying to survive is emerging as an epic issue. Soaring food prices could lead to urban food riots in scores of lower-income countries that rely on grain imports, such as Indonesia, Egypt, Algeria, Nigeria, and Mexico.”
In spite of assertions by biofuel proponents that up to 30% of the corn used may be reused for animal feed, this represents a very total small offset. Thus the imperative remains not only the need to balance the power the emerging food-fuel struggle but to ensure that our desire to save the environment is achieved in a sustainable manner. It was perhaps Marx who expressed this best in his astute warning "the path to hell is paved with good intentions.” It is time for us to take note.
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