Grain demand for car fuel threatens food supply
Now that the year’s grain harvest is safely in the bin, it is time to take stock and look ahead. This year’s harvest of 1,967 million tons is falling short of the estimated consumption of 2,040 million tons by some 73 million tons. This shortfall of nearly 4 percent is one of the largest on record.
Even more sobering, in six of the last seven years world grain production has fallen short of use. As a result,grain reserves for the world are down to 57 days of consumption, the lowest level in 34 years. This usually means the wheat and rice prices double.
World grain consumption
The world grain consumption grew since 2000 roughly 31 million tons per year. Of this growth, close to 24 million tons were consumed as food or feed. The amount of grain used to produce fuel ethanol for cars in the US was 2 million tons in 2001 and 14 million tons in 2006.
Grain for fuel
Now the amount of grain used to produce fuel is exploding. This is caused by the rising price of oil. The conversion of agricultural commodities into fuel for cars has become hugely profitable.
54 new ethanol distilleries were started in the US between October 25, 2005, and October 24, 2006. Virtually all of them will be producing by the end of 2007. Together these plants, with 4 billion gallons of annual ethanol production capacity, will consume 39 million tons of grain per year, nearly all of it corn. And more are being planned.
To calculate the amount of grain that will be going into ethanol, we start with the 41 million tons of the 2005 crop that were used to produce ethanol and add to that 39 million tons for the new construction starts for a total of 80 million tons of corn. This does not include the additional grain required by the expansion of several existing plants. Nor does it involve the numerous new grain-based ethanol distilleries in other countries, principally those in Europe and China.
In looking forward to 2007, for the U.S. alone we are looking at a growth in demand of 136 million tons of additional grain from the 2007 harvest.
For a world where the growth in the grain harvest has averaged scarcely 20 million tons per year since 2000, the chances of such a huge jump in the harvest next year are not good, even with the stimulus of high grain prices. Beyond this, farmers have problems like growing shortages of irrigation water and the prospect of even more intense heat waves as the earth’s temperature rises.
Prices are rising already. In some corn-growing states such as Iowa, Indiana, and South Dakota, completion of the plants under construction and those planned means distillery requirements would take virtually the states’ entire corn harvest.
The world is worried
Corn importers like Japan, Egypt, and Mexico are worried that the likely reduction in U.S. corn exports, which are 70 percent of the world total, will disrupt their livestock and poultry industries. In some importing countries in sub-Saharan Africa and in Mexico, corn is the staple food. In the United States corn supplies sweetener for soft drinks and is used in breakfast cereals, but most corn is consumed indirectly. The milk, eggs, cheese, chicken, ham, ground beef, ice cream, and yogurt in the typical refrigerator are all produced with corn. In effect, the refrigerator is filled with corn. And the price of every item in the refrigerator is affected by the price of corn.
Wheat and corn prices have climbed by a third or more over the past several months. Wheat and rice prices will likely follow corn prices upward. By the end of 2007, the emerging competition between the 800 million automobile owners who want to maintain their mobility and the world’s 2 billion poorest people who want simply to survive will be on center stage. If grain prices do climb to all-time highs, food riots and political instability in lower-income countries that import grain, such as Indonesia, Nigeria, Mexico, and scores of other countries, could disrupt global economic progress.
Clash between motorists and people
This clash between motorists and people over the food supply is occurring when 854 million of the world’s people are chronically hungry and malnourished and some 24,000 of them, mostly children, die each day. The U.N. Millennium Development Goal of reducing by half the proportion of people suffering from hunger by 2015 is now failing as the number who are hungry edges upward, and it could collapse completely in the face of the food-for-cars onslaught.
The attempt to solve one problem–growing U.S. dependence on imported oil–is creating another far more serious problem. Fortunately this can be avoided. The 3 percent of U.S. automotive fuel supplies now coming from ethanol could be achieved, several times over and at a fraction of the cost, by raising automobile fuel-efficiency standards by 20 percent.
Lester R. Brown
(summary of the original text)
Lester R. Brown was President of the Earth Policy Institute (closed in 2015) and author of Plan B 2.0: Rescuing a Planet Under Stress and a Civilization in Trouble.
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