Again Ethanol and Food are in Conflict

Once again the conflict between the use of corn for ethanol production and the amount of corn available for consumption by swine, beef, dairy and poultry has come into conflict.

Corn prices have increased an astounding 85% in 6 months.

There simply is not enough corn to go around, and thus the price of corn increases RusBankNet. When corn prices rise, prices of other grains also rise. Wheat, rice, even barley rise.And surprise, surprise, the price of  processed food rises.  Why is this?

First, one has to look into the dark world of agricultural economics. Corn, in many ways similar to oil, is a world-wide commodity. Many countries produce corn (for example, China grows more corn than the United States, but has a lot more people to feed). But only a few countries have enough left over to sell on the world markets. Argentina along with the United States are the main exporting countries. And when the corn crop declines in other consuming countries such as China or Mexico, they buy more corn on the open market. And as these countries move “up the food chain” to consume more red meat, pork, dairy and  poultry, they need more corn. So they buy corn from those few countries that have some to spare. But with several countries bidding for corn and a limited supply, the price goes up. It is an “inelastic” situation.  If corn is not available, wheat will do nicely, so will sorghum, etc. So these grains become more valuable. And “wala” food prices rise. Most affected are foods that rely on corn, such as pork, beef, chickens and eggs. But bread soon follows. and this brings food riots. Even the recent uprising in Egypt is being blamed in part on rapidly increasing food prices (I feel this is a stretch,but do not claim to be well-informed in such matters). Even the price of tamales goes up in Mexico. Sure they use white corn, but white corn is also good pig feed so it is bidding against our yellow corn.

Ethanol plays a central role in this fray. Processing a bushel of corn gives about 2.8 gallons of ethanol (less if one converts the energy in ethanol to a gallon of gasoline). The government in its wisdom has mandated that we must use about 12 billion gallons of ethanol by next year. That translates to a lot of corn, about 25% of all the corn grown in the United States. In Iowa, by far the largest ethanol producing state in the nation, about half the corn goes to ethanol. So when supply goes down while demand goes up, the market “bids” for corn. They buy corn from other uses by paying a higher price, and the higher price encourages farmers to plant more corn next year. More grassland and highly erodible land go into cultivation. This increases erosion and water pollution, and turns the countryside even more into a row crop desert.

It seems pretty clear that changing climate is impacting the discussion. This past year, corn production dropped in the United States by about 9%, a huge decline. Bad weather in other parts of the world have cut down on grain production as well. In the meantime, demand for meats and  for foods made from corn continues to increase.

The struggle between the farm state politicians who push for ethanol from corn (and they must or they are summarily dismissed by the farm block supporters such as Farm Bureau and National Corn Growers) and the rest of the country who are being pressured by food wholesale and retail interests, as well as by swine and poultry growers). It is all part of the farm bill, no matter how altruistic the discussion may be.

I have said for years that ethanol policy was really corn policy. Its objective was to assure a demand for corn and a stable high price. Well it worked. Now we have the unintended consequences. At least for the next few months higher prices for many food staples will increase. And to hear some say it, corn based ethanol is to blame. I tend to agree, but as you can see, it is not simple. But then nothing in the convoluted world of farm policy is.

Response to Professor Mitloehner

Dear Professor Mitloehner,

I appreciate you taking the time to respond to my post.  What you wrote was informative, but your response also raised additional questions for me.  I will lay them out here and you are welcome to respond again.

From your response:

“I did not write the press releases and feel that a lot of the recent reporting has been a line-up of catchy sound bites.”

I have spoken to researchers here at the Johns Hopkins Bloomberg School of Public Health and they report being highly involved in the creation of press releases and in making sure the documents are not only accurate, but difficult to misrepresent.  The UC Davis press release contains the following text:

“…it is simply not true that consuming less meat and dairy products will help stop climate change, says a University of California authority on farming and greenhouse gases.”

And these direct quotes:

“Producing less meat and milk will only mean more hunger in poor countries.”

“We certainly can reduce our greenhouse-gas production, but not by consuming less meat and milk.”

As I stated before, those statements are not backed up by “Clearing the Air.”  Based on the report, examples of supported statements include: (1) Livestock’s Long Shadow used flawed methods when they compared global GHG emissions from animal agriculture and transportation, and (2) due to differences between developing and developed countries, some country-level and regional analyses are significantly different than a global comparison of livestock and transportation GHG emissions.  The “catchy sound bites” in the media follow directly from the UC Davis press release (and the subsequent ACS press release).  Do the press releases accurately represent your statements?

“This key statement in LLS’s executive summary – “The Livestock sector is a major player, responsible for 18% of GHG emissions measured in CO2e. This is a higher share than transport.” – has been quoted extensively over the last few years by animal welfare and food activists, leading to Meatless Monday and other social policy initiatives. This statement has now lost its validity (see BBC report http://news.bbc.co.uk/2/hi/8583308.stm), which is regretted by many who advocate for meatless nutrition. That’s what happens when a social or political agenda tries to use science as its sword.”

Even though a new comparison of GHGs from livestock and transportation is in the works at the UN, this does not mean eating less meat has no impact on GHGs.  To make that claim, research would need to compare GHG amounts linked to diets with different amounts of animal products and find no difference.  Again, I have not seen any such research.  Also, stating that the Meatless Monday Campaign was created in response to Livestock’s Long Shadow (or livestock GHGs in general) is incorrect.  It was created in 2003 in association with the Center for a Livable Future at the Johns Hopkins Bloomberg School of Public Health to prevent disease by decreasing saturated fat intake.   The campaign incorporated the environmental benefits of decreased meat consumption (including GHG reduction) in its messages in 2009.  It is a public health campaign strongly rooted in scientific evidence, and twenty schools of public health have supported it for many years.

“We should not relax on any issue concerning our society’s mass consumption and what it takes to make these products available. My personal approach is to purchase to the greatest extent possible food that is produced locally and sustainably, and that includes meat and dairy products, which we purchase from producers at our local food co-op and farmer’s market. My scientific objective, however, is to find real solutions for society at large that support a reduction in greenhouse gases and other pollutants.” Read More >