Monday, June 11, 2007

The Corn Conundrum - How Biofuels Could Starve the Poor

by C. Ford Runge & Benjamin Senauer, Chronogram Magazine, May 30.

Now, thanks to a combination of high oil prices and even more generous government subsidies, corn-based ethanol has become the rage.

The push for ethanol and other biofuels has spawned an industry that depends on billions of dollars of taxpayer subsidies, and not only in the United States.

The industry's growth has meant that a larger and larger share of corn production is being used to feed the huge mills that produce ethanol. According to some estimates, ethanol plants will burn up to half of US domestic corn supplies within a few years.

The enormous volume of corn required by the ethanol industry is sending shock waves through the food system. In March 2007, corn futures rose to over $4.38 a bushel, the highest level in 10 years. Wheat and rice prices have also surged to decade highs, because even as those grains are increasingly being used as substitutes for corn, farmers are planting more acres with corn and fewer acres with other crops.

This might sound like nirvana to corn producers, but it is hardly that for consumers, especially in poor developing countries, which will be hit with a double shock if both food prices and oil prices stay high. The World Bank has estimated that in 2001, 2.7 billion people in the world were living on the equivalent of less than $2 a day; to them, even marginal increases in the cost of staple grains could be devastating. Filling the 25-gallon tank of an SUV with pure ethanol requires over 450 pounds of corn-which contains enough calories to feed one person for a year. By putting pressure on global supplies of edible crops, the surge in ethanol production will translate into higher prices for both processed and staple foods around the world. Biofuels have tied oil and food prices together in ways that could profoundly upset the relationships between food producers, consumers, and nations in the years ahead, with potentially devastating implications for both global poverty and food security.

read more (Chronogram Magazine)