According to the media, we now find ourselves in a Global Food Shortage particularly in wheat and rice with ethanol and farm subsidies getting most of the blame. We need to get some facts straight. by Chuck Angier
Tuesday, May 6, 2008
We can’t blame ethanol…at least not this year. As much as I disapprove of ethanol, I’m afraid it is not as simple as that. If you’ve read my earlier post, The Futility of Ethanol, you know I’m no friend of ethanol. Ethanol is a National embarrassment. We’ve spent most of our years here on earth developing better ways to convert abundant, inedible energy into food and now we’re going to reverse that process? I don’t think so. President Bush announced the Advanced Energy Initiative in January of 2005, placing an adulterated demand on corn, doubling the price and corrupting everything related to it. According to the Renewable Fuels Association we produced 6.485 billion gallons of ethanol in 2007 consuming about 2.326 billion bushels of corn. Thanks to a 19.5% increase in corn acreage and an ideal growing season setting near record yields, we produced 2.54 billion more bushels of corn in 2007 than we did in 2006 easily covering the demand for ethanol. Considering the chart below, the 19.5% increase in corn acreage was clearly at the expense of soybeans and cotton, down 15.7% and 29.1% respectively and NOT at the expense of wheat or rice. Domestic wheat acreage actually increased in 2007 Rice acreage was (as always) flat and insignificant.
So for 2007, it’s fair to say that ethanol had little or no impact on the precarious situation we now find ourselves in, thanks to a benevolent Mother Nature and the cannibalization of soy and cotton acreage. 2008 will be entirely different. Projections are already calling for a REDUCTION in corn acreage, which should be real interesting and an increase in wheat and soybean acreages. Never mind what Mother Nature might have in store for us.
We can’t blame subsidies either. Subsidies are wrong, abused, embarrassing and in my opinion, unconstitutional. But let’s be realistic. According to the Environmental Working Group, the American taxpayer provided about $34.75 billion in farm subsidies over the 3 year period ending in 2005. That’s about $11.58 billion per year, $7,502 per recipient, $39 per citizen, about 11 cents per day. It is certainly a lot less than the $34.795 billion that the USDA spent on food stamps, or the $13.9 billion for the School Lunch Program, never mind the $5.36 billion for WIC, the $2.787 billion for natural resources and the $7.719 billion for the Forestry Service in 2007. Why is the USDA dabbling in welfare, natural resources and trees anyhow? By the way the 51 cent "ethanol subsidy" is an exemption from Federal Excise taxes, not a payment to the grower. (The White House)
So, what is the problem?
Energy Agriculture is energy intensive, never mind getting it from the farm to the consumer. The end of April 2007 saw crude oil at $63.25/barrel. A year later it was $111.03/barrel, a 75% increase in just one year! (How can the cost of food or (anything else for that matter) NOT go up?
Government? Our government over time has encouraged economic growth through deficit spending, thus weakening our currency. This makes our resources more attractive for export driving up the cost of what little we still produce here (like food). It also drives up the cost of anything we import like, duh, oil. Here’s a scenario to consider…
OPEC? In February of 2008, OPEC sold us 149.52 million barrels of oil at cost of $14.6 billion (about $6 billion more than it would have cost a year earlier), and this is just one month from one region. What can our "friends" do with all of those petro-dollars? Well, how about investing it in American commodities, further stressing the economy, further weakening the currency, increasing the cost of oil and…..well, you get the picture. (EIA – Net Imports by Country, EIA – World Crude Oil Prices)
Consumption? Global production of corn, wheat & rice continues to advance, yet ending stocks have plummeted by 84% since 2000! It’s pretty obvious that globally we are consuming more than we’re growing, not just in corn, but in wheat and rice also.
So maybe we need more acreage In 44 years, globally, we have increased the production of grain by 144% but only on 6% more land! Remarkable…and…dangerous! We’ve increased our production by 144% by reliance not on acreage, but on genetics, technology, chemicals and…you guessed it, energy.
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Good article. This is a freaking serious issue. Hungry people are angry people. An enterprising individual could profit from organizing his neighbors to plant their yards. Harvest and share among themselves and sell the excess to local markets, restaurants and such.
Yikes.¬† If these trends continue, you will see rationing, starvation, forced population control, and then soylent green.¬† There is also a limit to acreage too.¬† Brazil is trying to convert as much of the rainforest to farmland as fast as¬†it can.¬† I'd hate to see the world go the way of Easter Island.
Malthusian Crises have been avoided due to the genetic engieneering of food done by the Green Revolution lead by Norman Borlaug. GM foods are protested by Greenpeace and other psuedoscience groups that think that population is the problem. Vertical farming might solve a lot of the problems posed by lack of farmible space.
Ethonol production has driven the cost of food up and the Euro is used by more nations that print the money rather than nations that hold on to it. Wait until the Euro is horded, then they too will suffer from a falling dollar. It is time to kill ethonol production.
Gee, lloyd, you actually managed a reasonably intelligent post. But I have to ask: Why would someone hord valueless game tokens? I prefer steel, aluminum,¬†lead, brass, copper, smokeless powder and of course food stuffs. There's something in the Bible about them throwing their gold into the streets because there was nothing to buy.
But¬†this is a good article, didn't look at every detail.¬†But I've¬†been wondering what will happen when people can no longer afford to drive to their 7-10 dollar an hour¬†jobs?
I've seen predictions of $10 a gallon¬†gas. This will destroy our society, though the eco-commies(just take off the¬†'eco' part¬†'cause it's an expediency) would love it. They could then herd us all into the village they've been dreaming of.
¬†That's why I have my steel, aluminum, lead, copper, brass, and¬†powder. ¬†
Actually the biggest factor is the commodities market. Various foods are considered commodities and are all available for speculation on the market. In todays economic climate there is no safety in real estate, manufacturing, or any number of other traditional safe havens for money. Each of those have been in one way or another destroyed or deposed by fiscal policy creating excess "money" which then creates price bubbles.
Today, as has happened often in the past people choose to reinvest in safer harbors to at least keep their money from being devalued by inflation. Commodities like food and oil are currently those safe harbors, the more people buy them up the higher the prices climb. While there is no lack of resources of either oil or food the fact that people have excess "inflated" money to spend allows them to "over-invest" in the new bubbles which causes prices to rise.
As more people invest time in gardening and other methods of putting inexpensive (moneywise) food on the table and as the buyers begin to realize that there is no actual shortage of food there will be a dissconnect between commodity prices and what the consumers are willing to pay. As a result the food prices will crash and the food "bubble" will be relatively short lived.
"As more people invest time in gardening and other methods of putting inexpensive (moneywise) food on the table and as the buyers begin to realize that there is no actual shortage of food there will be a dissconnect between commodity prices and what the consumers are willing to pay. As a result the food prices will crash and the food "bubble" will be relatively short lived. "
I grew up on a farm and live on a farm but¬†that doesn't make me a¬†farmer.¬†I have no romatic illusions about 'living off the land.' It's hard drudgery. Even garden crops can be affected by weather, too much or too little. ¬†
In the 30s most of the people were agrarian and already poor, accostumed to a subsistance lifestile. Are millions of people going to start growing their own food? Is enough fertilizer, pesticide, etc. available for that?
I heard my grandparents and other old folk talk about the 'good ol' days' which often weren't so good. Are we going to return to that?
I wasn't trying to say that "victory"-gardens were the best way to go about beating this "crisis". I was simply saying that they were one of the coping methods that people will use to offset the negative effects. Realistically not all food prices will rise, and people will simply choose to purchase less expensive food which will lower the demand on the overpriced alternatives and will cause the food "bubble" to end.
We are not running short on food, we simply have over-investment and speculation going on in the food commodities market.