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In the last year or so, biofuels – at least first generation biofuels such as those derived from corn and soybeans – have been criticized for driving up global food prices. The argument is simple: growing crops for biofuels reduces the amount of crops grown for food and raises food prices. However, Jim Greenwood, president and CEO of the Biotechnology Industry Organization (BIO) issued a statement today claiming that the high food prices seen this past year correlate strongly with oil prices, not biofuel production.
Now, obviously Mr. Greenwood is representing a lot of biofuel companies and he’s not exactly an unbiased judge of things. But the figures he quotes certainly make one wonder. He points out that in July, when oil was $140 a barrel, a bushel of corn was $7.50 a barrel. Now that oil is down to around $65 a barrel, corn is less than $4 a bushel.
Although food prices are certainly influenced by multiple factors, Mr. Greenwood makes a fair point. Agriculture technology is constantly increasing the quantity of crops that can be grown within a limited space. Food prices have dropped since the summer despite the fact that we have not seriously scaled down biofuel crops. And besides delivering renewable energy, the biofuel industry creates thousands of jobs and keeps energy dollars within the US. So maybe we should reconsider our criticisms of the industry.
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written by Cameron, November 19, 2008
Mr. Greenwood is hoping we're stupid and follow along with his simplistic argument. The truth is that the price of virtually every commodity was inflated in July. What we had was a worldwide commodity bubble and the reasons for are too involved for a blog post.
Additionally, it should be noted that, to an extent, the price of ethanol is tied to the price of oil. At $147.00/barrel, ethanol producers obviously were snatching up every bushel of corn they could get their greedy little hands on. At this point, with oil (and therefore ethanol) prices in the toilet (relatively speaking) those producers that are still paying $7.50/bushel for their forward contract corn are really struggling.
Growing fuel does replace food. There is no way around this. Every calorie that goes to run an engine is a calorie that doesn't go into the mouth of human being. It's that simple.
Additionally, it should be noted that, to an extent, the price of ethanol is tied to the price of oil. At $147.00/barrel, ethanol producers obviously were snatching up every bushel of corn they could get their greedy little hands on. At this point, with oil (and therefore ethanol) prices in the toilet (relatively speaking) those producers that are still paying $7.50/bushel for their forward contract corn are really struggling.
Growing fuel does replace food. There is no way around this. Every calorie that goes to run an engine is a calorie that doesn't go into the mouth of human being. It's that simple.
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written by alan, November 19, 2008
are we really talking about this? ecogeek please please do not be so naive, how will you gain credibility like this?
THANKYOU SODAPOP AND CAMERON, i think you said enough.
THANKYOU SODAPOP AND CAMERON, i think you said enough.
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written by Hassan, November 19, 2008
Sodapop mentioned the immediate loss of the rainforests... There is another impact too.
I can't speak to the USA, but in Canada, when the land was farmed for the first time, there was between 3 and 4 feet of topsoil. In Ontario, on land that is actively farmed, there is only 4-6 inches of topsoil left. Wouldn't it be a sad use of that remaining resource, to create fuel for our cars?
(PS - Read a book by Ronald Wright called a Short History of Progress)
I can't speak to the USA, but in Canada, when the land was farmed for the first time, there was between 3 and 4 feet of topsoil. In Ontario, on land that is actively farmed, there is only 4-6 inches of topsoil left. Wouldn't it be a sad use of that remaining resource, to create fuel for our cars?
(PS - Read a book by Ronald Wright called a Short History of Progress)
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written by David, November 19, 2008
Watch as oil runs out and if biofuel from crops becomes the main source of fuel, you don't think the prices will go up? You don't think that greedy motherfuckers won't tear up all the forests to plant biofuel crops? You don't think people would stop producing food to produce more lucrative biofuel crops? You don't think that all this would drive up food prices???
It's quite simple.
This guy is a dishonest douchebag.
It's quite simple.
This guy is a dishonest douchebag.
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written by microzen, November 19, 2008
The above commentors have all made good points.
Basically high energy prices drive the food costs in 2 ways.
1, higher cost of energy to produce food increases its cost. That is in line with BIO's theory.
2, high energy costs incentivize the concurrently more expensive fuels to come to the marketplace. High oil costs mean higher prices for farmers selling their crops as fuel. In order for food to compete with fuel in the farmer's pocketbook, its price must increase too. Therefore, more biofuel, higher food prices.
Sure oil prices may be the catalyst driving up food prices. But the mechanism is not only the simple correlation higher commodity prices.
Any farmer who can make more money selling their crops as fuel will drive up the food price.
Basically high energy prices drive the food costs in 2 ways.
1, higher cost of energy to produce food increases its cost. That is in line with BIO's theory.
2, high energy costs incentivize the concurrently more expensive fuels to come to the marketplace. High oil costs mean higher prices for farmers selling their crops as fuel. In order for food to compete with fuel in the farmer's pocketbook, its price must increase too. Therefore, more biofuel, higher food prices.
Sure oil prices may be the catalyst driving up food prices. But the mechanism is not only the simple correlation higher commodity prices.
Any farmer who can make more money selling their crops as fuel will drive up the food price.
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written by Chromawave, November 19, 2008
I am surprised no one has mentioned that their are several other sources of biofuel besides corn & soybeans that have a smaller footprint.
Algae, switchgrass, and jatropha can be grown on marginal land not used for consumption agriculture in the U.S. and in countries with less arable land that desperately need money. Algae can even be grown without sunlight, although it requires some sort of sugar.
Also, waste products from the food that we do eat can be used. Animal and vegetable fat can also be made into fuel.
Of course, these technologies are not as far along as ethonol, but they can be ramped up to be used in the near future.
Algae, switchgrass, and jatropha can be grown on marginal land not used for consumption agriculture in the U.S. and in countries with less arable land that desperately need money. Algae can even be grown without sunlight, although it requires some sort of sugar.
Also, waste products from the food that we do eat can be used. Animal and vegetable fat can also be made into fuel.
Of course, these technologies are not as far along as ethonol, but they can be ramped up to be used in the near future.
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written by Ben, November 19, 2008
You all need to read up on ethanol research done by David Blume(alcoholcanbeagas.com). In fact, done right, ethanol is a completely sustainable replacement for transport fuel.
The unholy alliance between big oil and greenies to sabotage our research and development into ethanol, NOW, is uninformed if not unconsionable. The idea that our civilization will go back to the way life was 150 years ago to keep our planet green is naive.
Blume shows that even corn (which isn't even the best ethanol feedstock)used as feedstock for ethanol actually has a byproduct (dry distillers grain) that feeds livestock BETTER than whole corn for the same amount of input.
But put permaculture agricultural techniques in place and the full solution is in place to make our own sustainable, clean, fuel and create millions of American jobs in the process.
The unholy alliance between big oil and greenies to sabotage our research and development into ethanol, NOW, is uninformed if not unconsionable. The idea that our civilization will go back to the way life was 150 years ago to keep our planet green is naive.
Blume shows that even corn (which isn't even the best ethanol feedstock)used as feedstock for ethanol actually has a byproduct (dry distillers grain) that feeds livestock BETTER than whole corn for the same amount of input.
But put permaculture agricultural techniques in place and the full solution is in place to make our own sustainable, clean, fuel and create millions of American jobs in the process.
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written by Paul, November 19, 2008
The argument that ethanol and corn plastics take away from food production just doesn't work because the world produced enough food for 10 billion people last year yet 25% of the world went hungry at some point. The problem is waste, distribution and governmental issues.
Corn is a bad fuel source. We need to drop their subsidies and the industry will pick up algae, rapeseed, switch grass, etc. very quickly.
Corn is a bad fuel source. We need to drop their subsidies and the industry will pick up algae, rapeseed, switch grass, etc. very quickly.
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written by George, November 19, 2008
He's hoping we're stupid, as above. High oil-prices mean greater demand for bio-fuels, and more production (or pricing that reflects the expectation of more production). To suggest that oil demand would not drive up production and therefore competition for arable land or deforestation is ridiculous, and without credence.
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written by Cameron, November 19, 2008
"The unholy alliance between big oil and greenies to sabotage our research and development into ethanol..."
Big oil and greenies conspiring together... that's an interesting development. LOL.
All laughs aside, Ben, you say spent distillers grain makes better feed than whole corn... which is interesting considering almost all the energy has been pulled out to make ethanol. All that's left is some protein and fiber. Feeding this crap to cattle raises their stomach ph making them breeding grounds for dangerous strains of e. coli.
Big oil and greenies conspiring together... that's an interesting development. LOL.
All laughs aside, Ben, you say spent distillers grain makes better feed than whole corn... which is interesting considering almost all the energy has been pulled out to make ethanol. All that's left is some protein and fiber. Feeding this crap to cattle raises their stomach ph making them breeding grounds for dangerous strains of e. coli.
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written by Kyle White, November 20, 2008
... Can someone explain how 2 - 1 is greater than 2 - 0?
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written by Cornholer, November 20, 2008
GM 's sudden stewardship of the environment is simply a way to continue to make gas guzzlers thanks to E85 an extremely inefficient fuel. The CAFE standards call for all car companies to achieve an average MPG for all vehicles. I believe the most recent number is 27 MPG. Well if you make the biggest money off of 10 miles per gallon SUV's you would hate to say good bye to them wouldn't you?
The CAFE standards has a loophole, that being that an E85 vehicle operating on E85 miles per gallon are ONLY figured against the actual amount of gasoline in the blend (15%) if you divide 100% fuel by 15% gasoline you get the multiplier to the mpg (666) therefore a gas guzzling 10 MPG SUV is given credit for 66.6 MPG. If you sell one SUV like this you can have 5 vehicles only achieving 20 MPG and this gas guzzling SUV and you average more than 27 MPG overall while not one of their vehicles really met the standard.
GM is not the only one taking advantage of this free ride Ford and Chrysler are too. The big three are heading down the toilet and this is just their hands clinging to the rim.
The CAFE standards has a loophole, that being that an E85 vehicle operating on E85 miles per gallon are ONLY figured against the actual amount of gasoline in the blend (15%) if you divide 100% fuel by 15% gasoline you get the multiplier to the mpg (666) therefore a gas guzzling 10 MPG SUV is given credit for 66.6 MPG. If you sell one SUV like this you can have 5 vehicles only achieving 20 MPG and this gas guzzling SUV and you average more than 27 MPG overall while not one of their vehicles really met the standard.
GM is not the only one taking advantage of this free ride Ford and Chrysler are too. The big three are heading down the toilet and this is just their hands clinging to the rim.
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written by nuvi, November 21, 2008
Chromawave , I hate to break it to you but big ag are greedy b@stards that will grow crops that can grow on marginal lands on good lands to increase productivity. just because something can grow in poor soils doesn't mean its financially viable to grow them in poor soils.
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written by Russ Finley, November 25, 2008
Only biofuel advocates use the strawman argument that "biofuels are the sole cause" of the high price of food. The recent (and temporary) price spike was a result of commodity speculation, as was the price spike for oil.
Press accounts always point out that biofuels are just one of the factors exacerbating high food prices, which have been growing rapidly since the RFS was put in place in 2005.
Increases in crop productivity have dropped to roughly 1% annually. World population is increasing by more that 1% annually, meaning that if we continue to turn food into fuel we must either let people starve or we must plow up more carbon sinks, which is exactly what we are doing.
Food prices have not dropped appreciably even as oil prices have plummeted. Go to the grocery store and look around. Corn prices have dropped and for the same reasons oil has dropped (the speculative bubble finally burst). But corn is still much more expensive than it was in 2005. All ag experts agree that ethanol has a significant impact on the price of "corn."
Speculation, in part spurred by biofuels consuming world grain reserves, caused the rapid spike that cooled off. There are three billion more people on the way.
Press accounts always point out that biofuels are just one of the factors exacerbating high food prices, which have been growing rapidly since the RFS was put in place in 2005.
Agriculture technology is constantly increasing the quantity of crops that can be grown within a limited space
Increases in crop productivity have dropped to roughly 1% annually. World population is increasing by more that 1% annually, meaning that if we continue to turn food into fuel we must either let people starve or we must plow up more carbon sinks, which is exactly what we are doing.
Food prices have dropped since the summer despite the fact that we have not seriously scaled down biofuel crops.
Food prices have not dropped appreciably even as oil prices have plummeted. Go to the grocery store and look around. Corn prices have dropped and for the same reasons oil has dropped (the speculative bubble finally burst). But corn is still much more expensive than it was in 2005. All ag experts agree that ethanol has a significant impact on the price of "corn."
Speculation, in part spurred by biofuels consuming world grain reserves, caused the rapid spike that cooled off. There are three billion more people on the way.
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written by TampaJoe, November 25, 2008
You've all addressed the demand side of the equation. Higher demand through use of corn for biofuel. On the supply side, once the price increases, producers will start producing more to capture that higher price. More supply will bring down prices. Oil speculation has a minimal effect on prices. Futures contracts are a zero sum game. Money is made by one trader only by another trader losing the same amount.
The actual sale of oil does not take place by means of futures contracts, but rather spot market contract sales. These contract sales can be for immediate delivery, or delivery at a future time, in which case they are called forward contracts. What distinguishes forward from futures is that forward are binding commitments to make and take delivery. With futures actual delivery almost never takes place. Contract sales are for “cargoes,” that is ship or barge loads of oil or in some cases amounts delivered via pipeline.
In other commodities markets, speculators speculate by actually exchanging money for goods, which will result in speculative price changes.
The actual sale of oil does not take place by means of futures contracts, but rather spot market contract sales. These contract sales can be for immediate delivery, or delivery at a future time, in which case they are called forward contracts. What distinguishes forward from futures is that forward are binding commitments to make and take delivery. With futures actual delivery almost never takes place. Contract sales are for “cargoes,” that is ship or barge loads of oil or in some cases amounts delivered via pipeline.
In other commodities markets, speculators speculate by actually exchanging money for goods, which will result in speculative price changes.
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Still, ethanol is not "greener" than fossil fuel. It is a renewable resource (despite the lack of fossil fuels has been greatly exaggerated). In fact, fossil fuel ethanol blends pollute more than fossil fuel alone. The only thing that ethanol "solves" is the dependence on foreign oil. And that is not really a solution because we will become dependent on foreign ethanol that is immediately destroying the rain forests.