The Next Global Crisis: Food Shortages

With prices for rice, wheat, and corn soaring, food-related unrest has broken out in places such as Haiti, Indonesia, and Afghanistan. Several countries have blocked the export of grain. There is even talk that governments could fall if they cannot bring food costs down.

One factor being blamed for the price hikes is the use of government subsidies to promote the use of corn for ethanol production. An estimated 30% of America’s corn crop now goes to fuel, not food.

“I don’t think anybody knows precisely how much ethanol contributes to the run-up in food prices, but the contribution is clearly substantial,” a professor of applied economics and law at the University of Minnesota, C. Ford Runge, said. A study by a Washington think tank, the International Food Policy Research Institute, indicated that between a quarter and a third of the recent hike in commodities prices is attributable to biofuels.

Once again, government actions in one area have distorted markets and have unintended and far reaching consequences. In a quest to go "green," governments including the US, pushed for biofuels - taking food staples like corn and using them for food instead.

It is a colossal folly of epic proportions to do such a thing. Biofuels can be viable, if you're talking about waste biomass biofuels - products like used vegetable oil, and not corn which is a base product for thousands of food products and billions of people around the world.

The market distortions due to subsidies and tariffs has sent prices for corn products and other staples through the roof. Those least capable of affording the price increases are most affected.

The environmentalists are concerned that the food shortages might curtail the green movement. That's a good thing for people who are concerned with making sure that people don't go hungry. So much of what the environmentalists have said and policies implemented have been based on junk science that the harm done is tremendous.

It's one thing to call for cleaner air, but it's quite another to demand that we use food for fuel to curtail carbon dioxide emissions - a natural byproduct of human respiration that makes up a fraction of 1% of the atmosphere and may be only a lagging indicator of global climate change, and not a predictor or cause.

Seeing Green

So, Earth Day is coming up tomorrow. Yippee.

Isn't every day Earth Day? You know, it's kind of like why celebrate Mother's Day or Father's Day when you should be celebrating your parents every day of your life?

Earth Day is a gimmick, and the environmentalists and business and industry have caught on that the best way to see green (money) is to appear to be green. Companies like Google and Yahoo will change their logos around to highlight just how green they are. Big deal even as they use tons of power to keep their computer operations going and have sited their overseas operations in places where the energy costs are cheapest because of loose (or no) environmental oversight.

My wife and I were watching one of those "green" DIY shows last night and we were laughing our asses off - and she's as green as they get - over what they wanted these families to do to go green. That is, when we both weren't critiquing what they were having these homeowners doing that actually caused more energy consumption.

One family owned a newer home that had recently remodeled baths and kitchen with newer appliances. They had this family buy all new appliances and the dual flush toilets. Sure, they will save fractionally more water going forward and the newer appliances will save some electricity over the model they previously had, but they could have accomplished the same thing - less power usage by simply turning off lights when leaving rooms, taking shorter showers, etc., without having to reconcile all those now disposed of toilets and appliances to the trash dumps. They replaced the low flush toilets that they already had with the dual flush toilets.

How green is that? What about the energy costs of making new items and the disposal costs? Somehow that doesn't get factored into the equation because there's money to be made by those pimping these supposed fixes. It's one thing to replace an older toilet that uses 3 gallons per flush with a dual flush system because the water savings will be significant, but what about the wasteful expenditure of power and water to install these new toilets?

Some of those things make sense when you've got old appliances or water hogging toilets, but to make switches simply because you want to go dual flush, you're kidding yourself.

The other house was older construction and had some serious issues. They had no insulation in their attic, and had windows that would not close. Those issues are more likely to be seen around the country and the fixes are more appropriate to what most people should do. That family will save serious money by blowing insulation into their attic, which previously had none. Repairing broken windows and sealing up windows and doors with improved gaskets will improve the insulation value and reduce drafts that can increase energy usage. Those are the kinds of fixes that will really make a difference and don't cost all that much - to say nothing of the immediate savings in energy costs.

They also went around replacing all their light bulbs with CFLs, and if you've been reading my blog for any length of time, you'd know that there are some issues with them - as some areas consider them to be hazardous materials when they break. They're also not meant for every lighting situation and other lighting solutions are on the horizon that promise more efficient and safer lighting.

Still, the things that can save people the most money don't involve actually spending more than $15 bucks. Replace shower heads with low flow ones (such as this one). You'll cut down on water usage, to say nothing of the energy needed to heat the hot water for those showers.

Even better - take shorter showers. I know, it's a tough thing to do, especially if you like your long hot showers, but for no money, you get to reduce your energy bills and water consumption.

For a little more money, you can add insulation to your home, which will not only make your home more comfortable year round, but it will add to resale value, improve air quality in your home, and reduce your energy costs - sometimes quite significantly in a short time to recoup your expenditures.

And if your name happens to be Al Gore or Leo DiCaprio, you could give up your second and third homes, your multiple vehicles, and private jet trips around the world crowing about how you need to save the environment by buying hybrid vehicles and browbeating folks to stop using gas and to stop emitting greenhouse gases (like carbon dioxide, the same stuff you exhale naturally with every breath). Just imagine how much energy would be saved each year if those two fools simply stopped flying around the world pushing their eco-pablum. But you knew that already, didn't you?

It's the same thing with biofuels. Supporters claim that they're good for the environment, and yet all that they've accomplished is reduced fuel mileage when blended with gasoline, more energy must be consumed to transport biofuel to market because they cannot be delivered via pipeline, and the destruction of the environment is actually hastened especially in the Third World as farmers attempt to cash in on selling crops that could be used to feed people to energy concerns to be transformed into fuel by cutting down forests at an increased rate. Higher food costs have resulted, and those least able to afford food price increases are suffering greatly. It's gotten to the point where even the UN and other international organizations are realizing the folly of imposing biofuels on the world.

To be clear, biofuels that are derived from waste matter are a completely separate issue and don't have the same food cost consequences though they still have issues of delivery to the marketplace. Using food stocks for fuel makes absolutely no sense, but companies like ADM see plenty of green - in the form of billions in subsidies to turn corn into ethanol. And they'll continue to get those subsidies until such time that governments realize that they've not only distorted the market for food, but energy markets as well - and not for the better.

Biofuels Bust

So much for the claims that biofuels are good for the environment. They actually increase emissions and increase the amount of land cleared for development - whether it is scrubland or rain forest. I can't say that I'm surprised. Biofuels, though touted by everyone from Archer Daniels Midland (for the corn subsidies in the US) to the IPCC (UN's global warming purveyor), aren't the panacea. They're just as bad or worse than the fuels their supporters hope to replace.

The destruction of natural ecosystems — whether rain forest in the tropics or grasslands in South America — not only releases greenhouse gases into the atmosphere when they are burned and plowed, but also deprives the planet of natural sponges to absorb carbon emissions. Cropland also absorbs far less carbon than the rain forests or even scrubland that it replaces.

Together the two studies offer sweeping conclusions: It does not matter if it is rain forest or scrubland that is cleared, the greenhouse gas contribution is significant. More important, they discovered that, taken globally, the production of almost all biofuels resulted, directly or indirectly, intentionally or not, in new lands being cleared, either for food or fuel.

“When you take this into account, most of the biofuel that people are using or planning to use would probably increase greenhouse gasses substantially,” said Timothy Searchinger, lead author of one of the studies and a researcher in environment and economics at Princeton University. “Previously there’s been an accounting error: land use change has been left out of prior analysis.”

These plant-based fuels were originally billed as better than fossil fuels because the carbon released when they were burned was balanced by the carbon absorbed when the plants grew. But even that equation proved overly simplistic because the process of turning plants into fuels causes its own emissions — for refining and transport, for example.

The clearance of grassland releases 93 times the amount of greenhouse gas that would be saved by the fuel made annually on that land, said Joseph Fargione, lead author of the second paper, and a scientist at the Nature Conservancy. “So for the next 93 years you’re making climate change worse, just at the time when we need to be bringing down carbon emissions.”

The Insanity of Using Food For Fuel

The push to use ethanol and other food based products as fuel is as inane and insane as one can get. It not only increases the costs for food - consider that corn-based products have seen significant price increases because more corn is being devoted to produce ethanol, but it reduces availability of those food products, especially in the Third World.

It also gets those regions that are already distressed environments, like in Central and South America, to expand cutting down forests to plant crops with the purpose of growing them to use as fuel. How exactly is that environmentally conscious? It isn't.

The use of food crops for fuel has turned into the worst of all possible solutions - skyrocketing prices for both fuel and food:

This is the other oil shock. From India to Indiana, shortages and soaring prices for palm oil, soybean oil and many other types of vegetable oils are the latest, most striking example of a developing global problem: costly food.

The food price index of the Food and Agriculture Organization of the United Nations, based on export prices for 60 internationally traded foodstuffs, climbed 37 percent last year. That was on top of a 14 percent increase in 2006, and the trend has accelerated this winter.

In some poor countries, desperation is taking hold. Just in the last week, protests have erupted in Pakistan over wheat shortages, and in Indonesia over soybean shortages. Egypt has banned rice exports to keep food at home, and China has put price controls on cooking oil, grain, meat, milk and eggs.

According to the F.A.O., food riots have erupted in recent months in Guinea, Mauritania, Mexico, Morocco, Senegal, Uzbekistan and Yemen.

“The urban poor, the rural landless and small and marginal farmers stand to lose,” said He Changchui, the agency’s chief representative for Asia and the Pacific.

A startling change is unfolding in the world’s food markets. Soaring fuel prices have altered the equation for growing food and transporting it across the globe. Huge demand for biofuels has created tension between using land to produce fuel and using it for food.

You could reduce the amount of land disturbed for fuel production by relying on oil and gas wells using modern technology. For example, an oil rig facility only a couple of acres in size could actually pump oil for many miles around.

The same goes for a nuclear power plant, but those facilities are opposed by many environmental groups, not to mention the NIMBY types.

So, the end result is an energy policy of bad choices forcing even worse choices on economies that can ill afford to make any bad choices - such as those in the Third World.

Just the Beginning

Higher prices for beer? Say it isn't so.

Beer prices will rise as the demand for biofuel increases. For beer lovers in Germany, farmers are switching from barley to crops that are currently in favor for biofuel production. Beer lovers are getting hit every which way: not only is the cost for barley increasing because of less supply, but the costs for food are also increasing. Even the UN has realized that biofuels aren't the cure to the "problem":

However, in its first major report on bioenergy, the United Nations tried to temper enthusiasm over biofuels last week, warning that the diversion of land to grow crops for fuel will increase prices for basic food commodities.

That is what happened in Mexico, when increased demand for corn to make ethanol in the United States pushed up the price of tortillas.

The German government subsidizes biofuel crops at the rate of $24.60 per acre, according to the Agency for Renewable Energies, part of the Agriculture Ministry.

Barley production in Germany went down by 5.5 percent in 2007, according to the Bavarian Farmers Association. On the other hand, the production of corn for biofuel more than doubled last year and the production of rapeseed for biofuel grew by 3.4 percent.

Biofuels, which reduce the emission of greenhouse gases believed to cause global warming, have been seen by many as a cleaner and cheaper way to meet the world's soaring energy needs than with greenhouse-gas emitting fossil fuels. European leaders have decided that at least 10 percent of fuels will come from biofuels by 2020.

The problem with that is that there simply isn't enough corn to go around for the already existing demand - food and food products. Prices have spiked for many corn-based products in the US and Mexico. It's even caused a shortage in tequila production. As a result of the increased demand and limited supply, prices have jumped on everthing from beef to soda to bread and everything else that is derived from corn and corn products.

Sugar cane, which is behind the biofuel produced in places like Brazil offers a better alternative to ethanol based on corn, but the US tarriffs on the sugar cane limit its availability here in the US because it is an ongoing remnant of protectionism for the US sugar industry and US agrobusinesses that have obtained ethanol production credits.

That has got to come to an end.

Biofuels may be a partial solution, but they only delay the problem since you have ongoing costs associated with the biofuel. For every acre of a former food crop now dedicated to fuel production, you're not only increasing costs for foodstuffs, but increasing the likelyhood of food shortages, distribution problems, and price spikes.

Those most affected by the run on biofuel? The very people who can least afford it - the poor and those living in the Third World.

Open up the market to allow sugar cane based ethanol to enter the market and stop the ethanol subsidies for companies like ADM. The market distortion caused by the existence of the subsidies and tarriffs has increased the prices of foodstuffs and done next to nothing to actually reduce reliance on petroleum based gasoline.

Also, consider the fact that ethanol produces less energy per gallon than a gallon of gasoline, which translates into higher production, distribution, and use costs that are often ignored by the proponents.

Offset This?

All those proponents of carbon offsets as a cure to global warming might want to hold on to their money just a little longer. It's nothing more than a scam to part you from your money.

Companies and individuals rushing to go green have been spending millions on “carbon credit” projects that yield few if any environmental benefits.

A Financial Times investigation has uncovered widespread failings in the new markets for greenhouse gases, suggesting some organisations are paying for emissions reductions that do not take place.

Others are meanwhile making big profits from carbon trading for very small expenditure and in some cases for clean-ups that they would have made anyway.

The growing political salience of environmental politics has sparked a “green gold rush”, which has seen a dramatic expansion in the number of businesses offering both companies and individuals the chance to go “carbon neutral”, offsetting their own energy use by buying carbon credits that cancel out their contribution to global warming.

You may be purchasing carbon offsets with the idea that you're saving the environment, but all you're doing is padding the bottom line of some energy companies that are already making a hefty profit on what they were already doing.

You'd be much more successful in cleaning up the environment and reducing emissions by taking real steps to reduce energy consumption - switching to CFLs or driving less or purchasing/using cars that are more gas efficient. Dropping opposition to cleaner energy production systems, like nuclear, wind, solar, and tidal would be a major help. Of course, you get a combination of NIBMYiots who think that these projects are fine just as long as they're located somewhere else, but that ignores the fact that power generation is most efficient when it located nearest to the end users.

UPDATE:
In a move that was supposed to reduce reliance on petroleum, the EU is now finding that biofuels may be destroying the rainforests as people chop down the trees to make way for fields devoted to producing biofuel. The costs of foodstuffs - like corn and soybeans are also rising because biofuels - ethanol - has meant that farmers make more money from biofuel than they do by selling it as food. Once again, the laws of unintended consequences comes to bear on the marketplace and everyone ends up paying for poor choices.