Bad link on food prices and biofuels

Biofuels such as ethanol and biodiesel have been the subject of a lot of bad press lately. It seems like everywhere you turn, there's another alarming announcement to the effect that biofuels are a bad idea.

The latest topic in this trend is the claim that biofuels are responsible for higher food prices. Some commentators go so far as to claim that the growth of biofuel crops is "taking food from the mouths of Third World babies." What are we to believe?

It's fairly easy to refute the claims about biofuels and food prices. While it is true that large tracts of farmland are newly devoted to corn for ethanol, production of corn for animal feed and human consumption has risen over the same period.

In other words, more corn than ever is available for food. (Source: Food & Agriculture Organization of the United Nations). Output of other food grains has also risen over the last year.

So, why are prices of basic food commodities rising so sharply? Other possibilities mentioned in the press include rising consumption in India and China.

However, U.N. statistics indicate that Indian importation of grains has held steady, while China remains a net exporter of grains. Other more likely contributors to higher food costs include the costs of fuel and fertilizer.

However, some economists are now suggesting that the largest part of food price increases is speculation in commodity markets, which, with the collapse of real estate markets and the poor performance of stock and bond markets, are now the darling of investors. In other words, if someone is taking food from the mouths of Third World babies, it is more probably financial speculators. Unfortunately, this category indirectly includes many of us, since financial institutions such as large pension funds are now investing in commodities.

We're also hearing how biofuels are somehow contributing to climate change rather than being a part of the solution. In the case of ethanol, this may well be true. In fact, many lines of argument suggest that corn ethanol does not live up to any of the claims made for it, apart from the claim that it’s a boon to agribusiness in this country. Corn is simply the wrong crop for biofuel production. Unfortunately, biodiesel, which is produced mainly from soybeans in this country, gets tarred with the same brush as corn ethanol. In contrast with corn, oilseed crops require relatively little tillage, fertilizer or insecticides, and biodiesel refining requires very little water and does not involve energy-intensive processes such as distillation. Gasoline engines running on ethanol produce less power and more CO2, while diesel engines running on biodiesel produce the same power, the same CO2 and far less other pollutants. The soy meal left from biodiesel production IS the component of soy used for food. The list of differences that favor biodiesel goes on and on.

Biofuel advocates are all looking forward to the day when biofuels are produced entirely from waste biomass and on desert lands. In the meantime, it still makes sense for some of us to produce and use the present generation of biodiesel with a clear conscience. Corn ethanol remains a farm subsidy that doesn’t make much sense otherwise, but it doesn't seem to be responsible for rising food prices, however much oil companies and The Wall Street Journal would like to believe as much. Instead, financial speculators are the real culprits.

Paul Mathews is a Langley resident.

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