A number of recent news stories have portrayed biofuels, primarily corn ethanol, as a leading cause of global food price increases. As builders and supporters of our renewable energy industry, this is a matter we take very seriously. It’s important to have good information so we can understand the impacts of our energy choices.
According to leading commodity experts and economists, biofuels are receiving undue blame. In fact, the food price increases are the result of many complex factors, mainly increased demand for agricultural products in emerging markets (especially China and India), a weak U.S. dollar relative to other currencies, and the rising costs of fuel for producing and transporting crops. In addition, weather-related production decreases worldwide have resulted in less overall supply.
Unfortunately the media is not effective at communicating complex economic drivers, and have erroneously pointed the finger at the renewable energy industry. However economists & global leaders are shedding light on this issue. Here’s what some of them have to say.
- Jim Duffield with the U.S. Department of Agriculture and John Urbanchuk with the global economic analysis firm LECG LLC discuss the true causes of rising food prices http://domesticfuel.com/2008/04/16/economists-discuss-food-and-fuel-prices/
- Business Week article discusses the expanding role of speculators in agricultural markets and their effect on price increases. Greg Warner, analyst with AgResource, says what is happening now in the wheat market is unprecedented. “What we normally have is a predictable group of sellers and buyers—mainly farmers and silo operators,” he says. But the landscape has changed since the influx of large index funds. Fund managers seek to maximize their profits using futures contracts, and prices, says Warner, “keep climbing up and up.”
http://www.businessweek.com/globalbiz/content/apr2008/gb20080423_366709.htm - Merrill Lynch commodity strategist, Francisco Blanch, outlines that oil and gasoline prices would be about 15 percent higher if biofuel producers were not increasing their output. Increased output of biofuels reduces the cost of food production & transportation, and lowers prices.
- Achim Steiner, UN Under-Secretary General and Executive Director, UN Environment Programme comments that current news coverage blaming biofuels for shortages of food crops are; “simplistic and perhaps short-sighted scapegoats.” He went on to say that the headlines were; “convenient distractions for what is so often in reality poor management at national and international levels. They do, however, point to the inescapable fact that food security is intimately linked to national and international security.”
http://www.biofuelreview.com/content/view/1549/1/
The debate stems from theory: Crops going toward fuels, rather than meals. Why doesn’t Propel take the waste byproduct of meals and turn it into fuel? I’m talking about Waste Veggie Oil, which is a great biofuel solution. It does not have the stigma of ethanol, and encourages recycling. Some of your biodiesel competition in Seattle offers waste veggie oil solutions.
Propel is always looking for more renewable sources of fuel. The bottom line with waste grease is this: we haven’t found a product that we can depend on from a quality standpoint. Almost all waste grease biodiesel has a gel point of 50degrees or higher. Propel is working closely with cutting edge “feedstock 2.0″ producers, as well as the top waste grease producers nationally.
If local Seattle producers could make a consistent product that meets our quality specs we will buy it from them. Until that happens, we won’t put our customers at risk with low quality fuel.
The fact is that making biofuels is NOT causing food prices to go up. Look at the facts here. Here’s an article: http://www.americanthinker.com/2008/05/the_bum_rap_on_biofuels.html Some quick facts on corn from the article: production of corn in 1995: 192 million tons, 14.7 million tons used to make ethanol, 4.9 million tons of grain back to the system for a total of 182 million tons for consumption and export.
Compare to 2007: 349 million tons, 62 million tons into ethanol, 21 million tons back into the system as grain, for a total of 308 million tons left for consumption and export. That’s 110 million tons more, or an 85% increase on a population growth of 14%. How can anyone turn around and say ethanol is causing food shortages? Ever seen a rice paddy turned into a cornfield? Is wheat used to make ethanol? I don’t think we should cut down rainforest to make palm oil either, but to blame biofuels for food shortages is simply a Big Lie.