Skip to content

Did the US DOE win the debate over Biofuel Crops vs. Food Crops?

August 24, 2014

Food-vs-Fuel-320x240In Washington, USDA just released its August 2014 World Agriculture Supply and Demand Estimates (WASDE – 532) report. Relevant to this discussion, the report stated: “Corn use for ethanol and exports are raised 45 million bushels and 20 million bushels, respectively, for 2013/14, based on reported data to date. Projected corn use for 2014/15 is higher with use for ethanol and exports each raised 25 million bushels, and feed and residual disappearance 50 million bushels higher with the larger crop. Projected ending stocks for 2014/15 are raised slightly to 1,808 million bushels. The projected season-average farm price for corn is lowered 10 cents at both ends of the range to $3.55 to $4.25 per bushel.

Great news but so what? Flash back to late 2007 when the debate over the socioeconomic impact of using feedstocks as fuelstocks started to catch the public’s attention. Maggie Ayre reported for BBC News in WILL BIOFUEL LEAVE THE POOR HUNGRY? (October 2007), “Green groups and aid agencies cite biofuels as forming part of the “perfect storm” of poor harvests, rising oil prices and a surge in demand for food from China and India that are all pushing up the price of everything from pasta to a loaf of bread.”

Then on April 16, 2008, the Earth Policy Institute issued a document, WORLD FACING HUGE NEW CHALLENGE ON FOOD FRONT: BUSINESS-AS-USUAL NOT A VIABLE OPTION, authored by its founder and president, Lester R. Brown. Mr.  Brown pointed out “rising food prices due to fuel crop production is causing social strife throughout the world. ……. The stage is now set for direct competition for grain between the 800 million people who own automobiles, and the world’s 2 billion poorest people. The risk is that millions of those on the lower rungs of the global economic ladder will start falling off as higher food prices drop their consumption below the survival level.”

In response to Mr. Brown’s article, the Office of the Biomass Program of the Department of Energy (DoE) issued the following rebuttal (May 2008), “The Lester Brown article takes a short-term snapshot of U.S. agriculture and ethanol production.  It is probable that we will see significant fluctuations in corn prices over the next three years as an unprecedented expansion in ethanol production takes place.  Eventually, the growth in ethanol production will be mediated by corn prices and other construction and operating costs.  A longer term more rational view suggests that corn production will be able to keep pace with ethanol production through 2015.  For example, the National Corn Growers Association is estimating that the average per acre corn production in 2015 will be 180 bushels based on historic yield increases.  This increase over 2006 would allow the production of 6.7 billion gallons of ethanol without taking any additional corn out the current system.  In addition, there are currently 35 million acres in the Conservation Reserve Program.  If 50% if this acreage was brought back into corn production, this would produce enough corn to supply an additional 9 billion gallons of ethanol.  All of these decisions will be driven by the marketplace supply and demand.  Figure 1 shows historical data on corn prices and ethanol production.”

Lester Brown Article & Detailed DOE Response

DoE Response to Lester Brown Letter Table

Figure 1.  Corn Price and Ethanol Production

Sources:  USDA, NASS, ERS, NCGA, and Renewable Fuels Association

Sources: USDA, NASS, ERS, NCGA, and Renewable Fuels Association

In conclusion, the brouhaha over fueling vehicles with crops is hardly over. Thankfully, the fight will be fought in the economic arena rather than on the public soapbox. The social response will reflect the realities of supply and demand. At this time, both sectors – agriculture produces and ethanol produces – seem satisfied how the resources are currently shared between the two. This however may be eclipsed by changes in demographics, productivity, weather patterns, and price of the king of the road, petroleum. Oh, almost forgot to thank the DoE for addressing the issue in clear and uncertain terms.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: