Common sense would suggest that the world population hasn't massively increased in the last couple weeks, and so in all likelihood the food cost increases and shortages (many grains have increased in price over 100% on the world market over the last year and China and India have announced they will stop exporting rice in order to make sure they have enough to feed those in their own countries) are at least somewhat related to a decrease int he supply of food resulting from diverting grain to fuel production.
However, I try to keep a wary eye on explanations that are too ideologically convenient, so I'd assumed that the impact of bio-fuel couldn't be all that increadibly huge, and that a fair amount of the increase in grain cost must be mainly the result of increased oil costs driving up the costs of running farm equipment and transportin grain to market destinations. Perhaps I was too cautious in this, however. Deroy Murdock writes in a piece last week:
As ReasonOnline’s Ronald Bailey observed April 8, “the result of these mandates is that about 100 million tons of grain will be transformed this year into fuel, drawing down global grain stocks to their lowest levels in decades. Keep in mind that 100 million tons of grain is enough to feed nearly 450 million people for a year” — assuming 1.2 pounds of grain each, daily.His source on the tonage of grain slated to be turned into bio-fuels this year is this Reuters piece. Not only are we burning all that grain at a time when grain is in short supply in poverty-stricken parts of the world, but since producing ethanol as fuel is currently less efficient than using petroleum, one can't even argue that all this is necessary to keep transportation costs from skyrocketing further and increasing food costs.
In short, car engines are burning the crops that feed a half-billion people. That has to hurt.
Not to say that bio-fuels will never under any circumstances be a good idea. It's quite possible they will be someday. But I don't see how the mandated burning of enough food to feed half a billion people is a good idea at a time when there are bread riots in the third world.
Actually, the biggest factor in the food crisis is the growing prosperity of China and India. Both countries now have large and growing middle-classes, and like middle-class people everywhere else in the world they want to eat more meat. It takes a lot more grain to produce a pound of beef than a pound of, um, grain, so this change in Asian diet is causing dramatic increase in demand for grains. Secondly, Australia had a serious drought last summer which caused their rice crop to be much smaller than usual, which had a serious effect on their largest market, Asia.
ReplyDeleteI've seen some hard-core denialists in other forums saying that there's no real shortage of food today, that this "crisis" is being manufactured by the media. The truth is, food prices have increased by over 30% in two years in most of the world, and in some places by more than that. Prosperous people can still buy food, though we may gripe about the cost. Poor people, however, are suffering. For example, the average Afghan is now spending half of his income on food.
Meanwhile, Americans continue to put food in our cars.
Yeah, long term the trend towards meat eating definately creates an increased demand for grain. And although I hadn't read it was specifically the Australian rice crop, I had read that part of the current rice shortage is the result of bad crops last year.
ReplyDeleteI'm thinking ethanon must be a fairly major factor as well, though. If the Reuters article is at all accurate, the use of grain for ethanol has doupled over the last two years, and tripled over the last six, so that would mean that (unless grain production has massively scaled in the last two years) we've got grain to feed 200 million less of the world's poorest now compared to two years ago.
Hopefully on the longer term issue of meat eating, meat prices will gradually shape demand both in the developed nations and in the developing world so that everyone can get a piece of the cow without starting those who are closer to subsistence levels.
Poor people, however, are suffering. For example, the average Afghan is now spending half of his income on food.
Good point. Which I guess underlines that point that the subsistence farming which was the normative mode of human existence for thousands of years (much less hunter-gathering) is pretty much the definition of poverty. We measure our progress, in a sense, by how far we're able to get away from spending all out time earning/producing food.
Context is everything. The global grain production for 2007 was 2.3 billion tons, a jump of 95 million tons from 2006, according to this piece, which also notes a couple of other interesting trends.
ReplyDeleteSo 100 million tons used for fuel production (or the 255 million tons used for energy in general) is a significant amount, but not a huge one. Also, as the article notes, most of the increase in grains for energy came from increased production, not by taking away from grains previously dedicated to food. Biofuel just makes it profitable to plant more land in the US (a tricky equation, given the farm subsidies for not growing anything on some land). More of the problem may be due to the aforementioned global increase in livestock.
The whole synopsis is pretty fascinating.
The Blackadder Says:
ReplyDeleteAs I recall, the last time the federal government decided it would be a good idea to start burning food on a mass scale was during the Great Depression, when FDR's "brain trust" decided that farmers were producing too much food (this during a time of mass hunger).
The more things change....
Not only are we burning all that grain at a time when grain is in short supply in poverty-stricken parts of the world, but since producing ethanol as fuel is currently less efficient than using petroleum, one can't even argue that all this is necessary to keep transportation costs from skyrocketing further and increasing food costs.
ReplyDeleteExactly. Burning grain raises food prices more than it lowers fuel prices. And since the average person in a developed country still needs food in addition to fuel, it ends up hurting our pocketbooks in addition to the greater evil of starving people in 3rd world countries.
One way or another, our politicians are going to get jerked into reality on this issue, either because of the mounting public outcry to avert the coming disaster, or to deal with the disaster after it happens.
Food and fuel prices are going to keep going up unless we take deliberate action to stop them. They won't just magically drop by themselves. And a developed economy simply can't withstand this kind of pressure on basic commodities indefinitely. If we don't stop the rising costs, we're going to end up in an outright depression, period. It's as simple as that.