Big Food's War on Biofuels

big food biofuel debate photo

photo by zorilla

In 2007, the Grocery Manufacturer's Association launched a campaign to "change the perceptions about the benefits of biofuels" by linking ethanol production with rising food costs and global food shortages. Ethanol producers defend their product, saying that biofuels do not cause soaring food prices and meal shortages and insinuate that the GMA is the one reaping the benefits of high food prices by scapegoating biofuels. Who exactly is telling the truth?
The Newest Anti-Biofuel Barb
In a recent interview with USA Today,Kraft CEO Irene Rosenfeld said this:

USA TODAY-Q: Like most companies, you have lobbyists in Washington. What's their agenda with the new administration coming in?

Rosenfeld-A: One of the most important agenda items for us is the whole biofuels phenomenon. Forty percent of the food supply is being diverted for use in fuel. There's not a lot of indication that it has a beneficial impact on the environment. Corn-to-ethanol has had a very difficult impact on the cost of food, and I'd like to see the administration take that challenge on.

Q: Can you put a number on how much your costs have gone up?

A: Our costs have gone up significantly in 2006 to 2007 and again in 2008. The particular impact of our biofuels policy is hard to tease out. But there's no question that those policies have had some unintended consequences. We need an administration that is willing to talk about the facts and science as opposed to bending to political pressure to address some of these issues.

Biofuels use 40% percent of the food supply? Not a lot of indication that it has a beneficial impact on the environment? Ethanol is driving up food prices?

Let's look at those claims.

Biofuels Use 40 Percent of the Food Supply?
I can't verify those numbers. The American Farm Bureau and economist Bob Young say she is way off the mark. I'm not a mathematician or an economist or an agriculturalist, but that number seems unrealistic.

But if it were true:

More than half of the corn grown in the United States is used to feed livestock. Furthermore, ethanol can be produced without destroying the protein in the kernel. The proteins are converted into meal and fed to animals. There is some food lost in the process, but not enough to reduce the overall food supply by 40%. So forty percent of crops could go to biofuel production, but not forty percent of the food supply. (If that number were to be true.)

US Food Consumption - A Note
In the United States, half the food purchased goes to waste.

Biofuel's Impact on the Environment
UC Berkeley's 2006 study shows that ethanol is 10-15% better for the environment than regular gasoline. It's not exactly a miracle fuel, but we'd be a bit better off, carbon-emissionwise, if everyone used ethanol.

On the other hand, a 2007 study predicts that in the rush to produce biofuel, farmers will tear down forests, use up grasslands and increase overall carbon emissions by doing so.

Another Argument Against Biofuel
There is also concern that an increase in ethanol production will decrease grains fed to livestock and more corn would have to be grown on new land in order to support the livestock and doing that would dramatically increase carbon emissions.

Ethanol producers claim that new technologies and higher crop yields will increase the amount of food produced on the same amount of land. They also promise that biofuels will be made cleaner, greener and more efficiently as time goes on.

I don't know who is right, but the arguments of both sides seem to be based on speculation.

Biofuels Increase Food Prices
It is true. The UN report says that biofuels have caused a 15% percent rise in the price of food. The USDA claims that biofuels are only responsible for a three-percent hike. The USDA may be a bit biased, but a UN expert once called biofuels a crime against humanity. So they be a little biased as well.

Biofuels: A Worst-Case Scenario
Let's go with the worst-case scenario. Biofuels have caused a 15% hike in food prices. Food prices have raised by 40%-50% in the last year or two. Where did that other 35% jump come from? One report claims that the drought in Australia caused the price of food to jump by 25%. That's ten percent left over for increased demand and (at the time) high gas prices.

Big Food or Biofuel?
Obviously, biofuels have to be responsibly produced with the food shortage in mind and in such a way that they don't end up creating more carbon emissions. Ethanol isn't a miracle fuel, but it is better for the environment than gasoline.

Big Food seems to be making a stink over the 15% (max) increase in food prices that biofuels have caused, but other factors seem to have a more significant effect on the prices.

More on Ethanol
Ethanol : How the Fuel is Produced, Growing Corn and Other
Ethanol Death Watch As Corn Prices Rocket
Ethanol Mandates: The Single Most Misguided Agricultural Program

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