In the last few years, demand for ethanol and biodiesel derived from grains, vegetable oils, sugar and other crops or derived products has risen sharply, reaching a level where the entire agricultural sector and its markets are being affected.
This is not the headline of an anti-biofuel propagandist. It is the beginning of the abstract of a paper on Biofuels and Commodity Markets - Palm Oil Focus, by P. Thoenes from the Commodities and Trade Division of FAO (Food and Agricultural Organization of the United Nations). The reason why I bring in palm oil here is the following statement in the FAO paper: “There is general consensus that - in the absence of subsidies - palm oil is by far the most competitive vegetable oil for the production of biodiesel.” Even without biodiesel, the demand for palm oil has gone up sharply and took up about 50% of the global vegetable oil market in 2005, partly by cutting down rainforest in Malaysia and Indonesia.
According to the FAO paper, first studies have been conducted to calculate country and feedstock specific threshold prices indicating at which level of fossil fuel prices biofuel production becomes economically viable: based on two such studies, the following ranking of different raw materials for biofuels emerges (indicating increasing threshold prices or decreasing economic viability, at conditions prevailing in 2005/06):
1st sugar cane (Brazil), 2nd cassava (Thailand), 3rd palm oil (Malaysia and Indonesia), 4th maize (USA), 5th sugar beet (EU), 6th rapeseed oil (Canada, EU), 7th wheat (EU or USA). Here is another table showing which of those are mostly in use and how harmful they are to the environment, food and water ressources. (Click spreadsheet if you cannot read everything)

Even well-known global warming advocates are now puzzled about how to maintain the green image of biofuels vs. fossil fuels. One of them is Lester Brown, president of the Earth Policy Institute (EPO). Here is an extract of the CNN interview of April 25, 2008:
TOM FOREMAN, CNN ANCHOR: Voters grappling with the issue that we’re all grappling with right now. Soaring food prices. What’s the solution?
I’m joined by a man who thinks he might see some solution to all of this. Lester Brown, president of the EPO and author of “Plan B 3.0: Mobilizing to Save Civilization.” And up in New York, a man who knows all the answers are or so, he tells me, CNN’s senior business correspondent Ali Velshi. Thanks for being here.
Lester, let me start with you. Why have our food prices gone up so much?
LESTER BROWN, EARTH POLICY INSTITUTE: There are a number of trends that are operating here at the same time. One is 17 million people a year. And you don’t have to be an agronomist to know you get in trouble if you do that indefinitely. Second is incomes are going up. People around the world, maybe four billion people want to move up the food chain.
FOREMAN: So they’re buying more than moving up in the chain. What else?
BROWN: And third, and the big one in the last couple of years, has been the enormous shift of the U.S. grain harvest in the production of ethanol. The world demand for grain was growing about 20 million tons a year. Food, feed, and so forth. And then suddenly, the last couple of years, it’s jumped to about 50 million tons a year. Thirty million tons is grain going into ethanol.
FOREMAN: That’s corn being used for something other than food but to replace energy. Ali, do you buy those explanations, or is there something else at work?
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Oh, unless he’s being — he’s very learned about this. He’s being extremely polite. It is a ridiculous policy to take a food that we were actually eating and turn it into a fuel for our cars when we have uncontrolled demand for gasoline.
The fact of the matter is it’s a good concept. Reducing your reliance on crude oil to make gasoline by using other things. Other things like waste products or maybe something that nobody ever eats. I don’t know. Maybe we can make oil out of Brussels sprouts or something.
But to take corn which is a staple crop — what it’s done is it’s resulted in causing the prices of other staple crops like wheat and rice, to also go up because there is no interchangeability amongst them. These are very important things. We’ve had record prices in wheat, in corn, in soybeans, in rice, and a lot of it is due to biofuels being done the wrong way.
FOREMAN: Well, Ali, I know you’ve already made enemies in the ethanol community and in the Brussels sprout community, but we’ll get back to that in a minute. Let’s look at some of these increases that we’re talking about here. If you haven’t seen them in your own stores, you can easily.
Look, eggs have gone up 34 percent, almost 35 percent in the past 12 months. White bread up more than 16 percent in the same period of time. Milk up 13.3 percent in that period of time. These are really the kind of prices that hit home on main items here, Lester.
Is there any solution to this? Let’s say you wiped out the ethanol subsidy and you said we’re not going to do that anymore. Well, that contributes to the energy problem and transporting all this food, producing it takes energy. How do we get out of this?
BROWN: Well, first of all, energy — ethanol is not the solution to our automotive fuel problem. If we converted the entire grain harvest into fuel for cars, it would satisfy maybe 16 percent of demand. That’s not the answer. I think the answer and it’s going to be still a couple of years away is plugging hybrids, running almost entirely on electricity.
FOREMAN: That will solve the energy issue, but what do we do about the food issue now? Because I think a lot of people out there are really worried that they’re going to seriously be looking at their grocery bill and saying I can’t buy things.
BROWN: Right. If we reduce the amount of grain going into ethanol substantially and quickly, it will begin to restore some stability in the world food economy including here in the U.S. I mean, right now, we are subsidizing the conversion of grain into fuel and being rewarded for that subsidy with soaring food prices.
Jacques Diouf, director general of FAO, blamed the food crisis primarily on the steady migration of rural populations to the cities, in turn affecting food production, said he was looking to a summit in Rome in the first week of June to address this as well as factors that had to do with the developed world, such as the diversion of farmland to produce biofuels and speculation in the futures markets. There is also some good news, the latest FAO report didn’t mention the U.S. and the EU with their huge biofuel subsidies programs. On a positive note, the latest appeals to governments to increase staple food production is said to bear its first fruits, contributing to a favorable global food production outlook. However “the expected price decline in many basic agricultural commodities during the new 2008/2009 season is likely to be limited, because of the need to replenish stocks and an increase in utilization.” The bad news is that vegetable oil prices are contineously shooting up, along with rising fossil fuel prices.
So far, the bottom line is: Biofuel is bad for the environment, ineffective to reduce CO2 emissions, and it has a negative effect on food supply worldwide. Biofuel doesn’t also contribute a great deal to solve the energy problem. As long as the use of ethanol and the like is dependant on huge government subsidies in developed countries, thus driving up prices of corn, wheat, vegetable oils and rice as staple food, it should not be regarded cleaner than fossil fuels. On the other hand, if subsidies are finally dropped and the demand for biofuels is primarily met by means of sugar cane, palm oil and cassava, even though this may put less pressure on food supplies in developing countries, it would make it almost impossible to save the remaining rain forests from exploitation for the huge land resources needed for such a purpose.




8 users commented in " Global Food Shortage Linked to Biofuel Use - Part III - U.S. Backlash "
Follow-up comment rss or Leave a Trackback[...] unknown wrote an interesting post today onHere’s a quick excerptIn the last few years, demand for ethanol and biodiesel derived from grains, vegetable oils, sugar and other crops or derived products has risen sharply, reaching a level where the entire agricultural sector and its markets are being … [...]
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[...] Jimdittmeier wrote an interesting post today onHere’s a quick excerpt In the last few years, demand for ethanol and biodiesel derived from grains, vegetable oils, sugar and other crops or derived products has risen sharply, reaching a level where the entire agricultural sector and its markets are being affected. This is not the headline of an anti-biofuel propagandist. It is the beginning of the abstract of a paper on Biofuels and Commodity Markets - Palm Oil Focus, by P. Thoenes from the Commodities and Trade Division of FAO (Food and Agricultural Organization [...]
[...] markw wrote an interesting post today onHere’s a quick excerptALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Oh, unless he’s being — he’s very learned about this. He’s being extremely polite. It is a ridiculous policy to take a food that we were actually eating and turn it into a fuel for our cars … [...]
let me repeat my point of thought from part 2 of this topic:
at current oil price, biofuel is pretty compettetive….
these are the major errors in your analysis:
1. starting from the point that biofuels are bad, constructing your argument around it.
Not really. Organic fuels are not bad per se. Besides, we have very effective heating systems in Switzerland from the burning of waste.
2. blaming “green ideas” mainly for the push towards biofuels. (farmers? prices?)
Where did I do this?. I thought I put the blame at where it all started: The carbon neutral myth.
3. ignoring the rather long lasting critisism of environmental organisations of the WAY in which biofuels are produced.
Really? So what were the alternatives they suggested?
4. assuming that the BETTER technologies come from nowhere, and do not require the current biofuels as a middle step.
“the way biofuels are produced - no - the current biofuels as a middle step - yes??
5. another point of thought:
does it make sense that western farmers produce (labor intensive) and heavily subsidiesed food, while the countries in need of food produce (less labor intensive) oil and gas for the western world?
I guess not, although I believe there is a flaw in your question: What does “less labor intensive” mean? As far as I know, the countries in need of food have very labor intensive production methodologies, but the labor is “cheap”. That’s the difference. That’s why palm oil and sugar cane are cheap.
Where did I do this?. I thought I put the blame at where it all started: The carbon neutral myth.
Brazil has been producing since the 70s (oil crissi, remember?) no CO2 involved, what so ever. People are well aware of the fact that biofuels aren t 100% carbon neutral. it is not a myth.
Really? So what were the alternatives they suggested?
The use of biofuels can be considered sustainable only if fuels are produced in a sustainable way and if they are used as efficiently as
possible. The use of biofuels should therefore only be supported as part of a wider energy policy to reduce energy demand dramatically. This includes, for the transport sector, extensive improvements in vehicle fuel-efficiency, a shift of the transport of goods from road to rail and changes in mobility
related behaviour patterns. Also, the use of biofuels in the transport sector must not prejudice the more efficient utilisation of
biomass and biofuels for CHP, heating & cooling and electricity production.
http://ec.europa.eu/energy/res/consultation/doc/2007_06_04_biofuels/non_og/greenpeace_en.pdf
I guess not, although I believe there is a flaw in your question: What does “less labor intensive” mean? As far as I know, the countries in need of food have very labor intensive production methodologies, but the labor is “cheap”. That’s the difference. That’s why palm oil and sugar cane are cheap.
my suggestion is simple:
reduce food exports from the first world to the third. our subsidized food is causing problems there. instead use farm land here, to produce biofuels in a way that does as little damage to the environment has a small CO2 output. help the third world to produce food and only buy biofuels from them, that where produced in a useful way. But all of this is getting harder and harde, because at current oil price, biofuel is pretty compettetive….so the market will make the choices, not “environmental organisations”
ANSWER: You still want to expand biofuel production? Sugar cane in Brazil is pretty competitive if used for the local markets and only because it is not produced in a sustainable way and at the expense of the rain forest. No, politics is making the choices, not the market. If it were for the market, the U.S. and the EU would immediately stop subsidized biofuel production. They wouldn’t have started at first place. More than 95% of biofuel used in first world countries is also produced here. Your suggestion is simple but the world is not and people will go hungry even more. Stop biofuel from wheat, maize, sugar beet and rapeseed oil and don’t import biofuels. See next post
[...] Global Food Shortage Linked to Biofuel Use - Part III - US Backlash How do we get out of this? BROWN: Well, first of all, energy — ethanol is not the solution to our automotive fuel problem. If we converted the entire grain harvest into fuel for cars, it would satisfy maybe 16 percent of demand. …Climate Science %26 Politics - http://climatepatrol.net [...]
ANSWER: You still want to expand biofuel production?
sure! we need biofuels to get independent from oil for many reasons apart from CO2.
Answer: I believe this is up to the local markets to decide and independent from soviet style worldwide planning that would INCREASE such markets.
Sugar cane in Brazil is pretty competitive if used for the local markets and only because it is not produced in a sustainable way and at the expense of the rain forest.
so it IS competetive? that is exactly what i said! the market does NOT care about the environment! that is exactly the problem i was talking about!
So we agree with each other that it is competitive only if it does not care about laborer rights and the environment.
No, politics is making the choices, not the market. If it were for the market, the U.S. and the EU would immediately stop subsidized biofuel production.
you are mixing up the past and the future! politicians made the choice to subsidies biofules in the past. in the future, with current oil prices, the MARKET will increase biofuel production!
So politicians started to create the market by pushing the oil prizes. The same politicians now blame the market. Goethe: Der Zauberlehrling - German/English
… Herr, die Not ist groß! I have need of Thee! Die ich rief, die Geister,,
from the spirits that I called. werd’ ich nun nicht los. Sir, deliver me! …
The Eu already has started to REDUCE and redirect biofuel subsidies!
http://www.nytimes.com/2008/01/22/business/worldbusiness/22biofuels.html?partner=rssnyt&emc=rss
Europe is not EU. Your link says “Under a proposed Swiss directive, for example, a liter of biofuel would have to produce 40 percent less in emissions than fossil fuel to qualify for special treatment. It will be hard to make corn ethanol or even rapeseed (used to make canola oil) meet the standard, said Lukas Gutzwiller of Switzerland’s Federal Energy Office.”
As to the EU, they have currently a subsidy war against the US. I am not impressed at all. The EU overshot the target of 2 million hectares in 2007 by far. And now Bulgaria and Rumania joined the club.
But hey, thank you for your link: “Governments in Europe and elsewhere have begun rolling back generous, across-the-board subsidies for biofuels, acknowledging that the environmental benefits of these fuels have often been overstated. … The biofuels craze was founded on the theory that plant-based fuels are carbon-neutral: The carbon dioxide released from burning biofuels would be canceled out by the carbon dioxide absorbed by plants as they grow. But this equation does not include emissions from processing the crops. Nor does it cover the environmental cost of fertilizers. Such factors vary significantly from biofuel to biofuel.”
the article is very good and does mention this aspect, which you keep ignoring:
Tax breaks for corn ethanol and subsidies for building ethanol plants in the United States are motivated more by the desire to help farmers than to reduce greenhouse gas emissions, critics say.
That’s nothing new. That’s how politics works. The bogus claim of carbon neutral fuels helps nobody but the farmers and producers of biofuel.
you are placing the blame on the wrong groups!
Groups? I was talking about WHAT myth started it. Again, I am happy it is even in your link: “The biofuels craze was founded on the theory that plant-based fuels are carbon-neutral,
another article from october 07 says:
EU says biofuel subsidies hit maximum, questions if they are still needed
http://www.iht.com/articles/ap/2007/10/17/business/EU-FIN-EU-Biofuel-Subsidies.php
Sod, “if they are still needed”, refers to the already overshot targets of 2 million hectares. They did not remove those targets at all. So, you need to be stubborn with soviet style world governnance if you still want to artificially increase biofuel production. The market in Brazil wants it. Let them have it, but the E.U. is right not to import it. STOP BURNING FOOD! Rather let the land rest.
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