Bio Fuels and the World's Food Crisis

[FidelCashflow]

Lately I've seen quite a bit on the news about how rising commodity prices around the world are making it very difficult for the world's poorest to afford food. There have already food riots in Haiti with reports that people are so desperate they're resorting to eating cookies made from dirt to survive.

Now people are saying that bio fuels are a major cause for the increase in demand for basic food crops and are driving up prices. Other people have contended the real cause is India and China's growing middle class which likes to eat meat, which requires much more grain to produce.

The idea that we're making it impossible for poor people to buy food to survive so that we can invest in bigger and better hybrid cars is quite disturbing to me.

Should we ban the usage of staple food crops in bio fuel production? Should we try to discourage meat consumption in the developing world to sustain or own lifestyles?

 

[B1FF]

Originally Posted by FidelCashflow

Should we ban the usage of staple food crops in bio fuel production?

No. We should end the subsidies.

 

[FidelCashflow]

Originally Posted by B1FF

No. We should end the subsidies.
subsidies for bio fuel development or subisidies for wheat growers? I don't see how the latter would help. Wouldn't that just decrease wheat supply worldwide making these basic crops even more expensive and out of reach to poor people? I have heard some anti-WTO people talk about government farm subisidies in the past, but admittedly I never paid any attention to it. Now I'm genuinely curious to know.

 

[Nantucket Red]

It's not about wheat, it's about corn, which is being pressured by methanol production.
Certain approaches to biofuels are a potential environmental disaster in the making.

Jatropha for biodiesel is one of the best options. It's inedible and grows in inhospitable climates and soils that are not suitable for food crops.

 

[DNW]

Originally Posted by Nantucket Red

It's not about wheat, it's about corn, which is being pressured by methanol production. Certain approaches to biofuels are a potential environmental disaster in the making.
Yes. And yes. In essence, corn produced for biofuel conversion is not fit for human consumption. Thus, prices are being driven up because farmers are now using their land to produce this instead of foodstuff. FCF, I don't know if you have a subscription, but the current issue of the Economist is all about this topic.

 

[lawyerdad]

This is clearly an important issue, but persistent poverty and starvation pre-date biofuels. I think the issue/story is the latest media flavor of the month.

 

[hi-val]

We could save lots of grains to feed poor people if we didn't waste them by turning them into beer and whiskey.

O wait...

 

[DNW]

Originally Posted by lawyerdad

This is clearly an important issue, but persistent poverty and starvation pre-date biofuels. I think the issue/story is the latest media flavor of the month.

Farm subsidies must be on the agenda at the next meeting of the Doha Round.

 

[B1FF]

Originally Posted by FidelCashflow

subsidies for bio fuel development or subisidies for wheat growers? I don't see how the latter would help. Wouldn't that just decrease wheat supply worldwide making these basic crops even more expensive and out of reach to poor people?

Removing subsidies (and quotas, etc.) related to the development and production of ethanol, which comes primarily from corn, would help end this stupid practice of burning food.

But cutting farm subsidies and tariff protection would help the third world poor, too.

 

[Nantucket Red]

Right, ethanol, not methanol. Leave it to me to screw that up.

 

[FidelCashflow]

Originally Posted by B1FF

Removing subsidies (and quotas, etc.) related to the development and production of ethanol, which comes primarily from corn, would help end this stupid practice of burning food.

But cutting farm subsidies and tariff protection would help the third world poor, too.

OK. This I don't get. I think I'm missing something here.

My understanding:
Subsidizing corn means the government gives money to corn farmers to make it more profitable to grow corn which encourages it and should increase the supply. Increased supply should help decrease price (assuming demand is constant.) I don't get what quotas we're talking about. Are governments setting caps on how much can be produced?

I think I need a "schoolhouse rock" version of this whole bio fuels debate.

 

[arced]

One of the biggest problem with subsidizing US corn based ethanol production is that corn production in the US is dependent on the use of nitrogen-based fertilizers (which means petroleum). The energy in the ethanol produced from the corn is largely equivalent to the amount of oil that was put in the soil in the first place to grow it, so we're needlessly sucking up valuable farm land to grow a crop that doesn't lessen our (foreign) oil use at all and merely gives a huge subsidy to the agricultural sector (Cargill, etc.).

The other problem is that it's come out that the production of bio fuel is worse for global warming, but that's another topic....

 

[DNW]

Originally Posted by FidelCashflow

OK. This I don't get. I think I'm missing something here.

My understanding:
Subsidizing corn means the government gives money to corn farmers to make it more profitable to grow corn which encourages it and should increase the supply. Increased supply should help decrease price (assuming demand is constant.) I don't get what quotas we're talking about. Are governments setting caps on how much can be produced?

I think I need a "schoolhouse rock" version of this whole bio fuels debate.

I'll try. Basically, the government provides financial incentives (read: money) to encourage farmers to produce corn. So, instead of producing other foodstuff, e.g. grains, they produce corn. This has the effect of reducing the supply of other foodstuff, and increasing the supply of corn. Well, this should decrease prices, right? No. The problem here is that the corn suitable for ethanol conversion isn't fit for human consumption. Meanwhile, decreased supply of edible food causes prices to go up, all else being equal. So, there you have it. More corn production and higher food prices.

 

[B1FF]

Originally Posted by FidelCashflow

Subsidizing corn means the government gives money to corn farmers to make it more profitable to grow corn which encourages it and should increase the supply. Increased supply should help decrease price (assuming demand is constant.) I don't get what quotas we're talking about. Are governments setting caps on how much can be produced?

Yep, there are farm subsidies that much with what and how much of different products are produced, what and how much land is brought into use, makes poor third-world producers less competitive, etc. Those cause problems.

On the demand side different laws like the Energy Policy Act and Clean Air Act subsidise the production of ethanol and the development of infrastructure, require that a certain amount of ethanol has to be blended into all gas sold at the pumps, etc., etc. In the US, biofuels = burning corn.

 

[unpainted huffheinz]

The majority of grain in the US is used to feed livestock and not humans. Here's a bit of reading from Cornell on the inefficiency of grain fed livestock:
http://www.news.cornell.edu/releases...stock.hrs.html

The number to pay attention to is how for one gram of animal protein the animal eats 6 grams of grain protein. At some point that will no longer make sense to continue.