By Rich Kozlovich
Since I have been going to therapy for my knees I now have more pain in my knees than ever and now I have intense pain in my left hip. My wife says that is a good thing because it is part of the healing process. She also says that everyone says it is a good thing. I wonder how many of them have actually gone to therapy? I know…whine, whine, whine, but there is one upside to this; I haven’t done anything the last two days except sleep, eat and stay home. That has given me some time to work on a little project that I have intended to do since from about two weeks ago.
One of the effects of ethanol production is the cost of food worldwide….and the resulting social consequences, i.e., starvation and anarchy. To me this was a given, so I was surprised by the comments of one of my colleagues who adamantly denied this. I am of course right, but I thought I should write an article dealing with this for any others who may have an incorrect understanding of this issue.
The green movement has been as deadly to humanity as any fascist or communist monster that has ever lived. The greenies love technology that doesn’t exist. Once some poor fool of a businessman adopts the very schemes they promoted the greenies then protest it. Unfortunately they usually get the government to mandate their schemes and then it becomes almost impossible to get rid of it. We do really need to get this; greenies are great at finding fault, but they are clueless when it comes to finding solutions, especially when they are looking for solutions to non-problems such as global warming or peak oil production. We now know that their global warming claims are fraudulent and we have enough oil, coal and natural gas (that we know of) to last 200 years. One of the great crusades of the green movement has always been a drive to go away from “fossil” fuels and to alternative energy sources. Ethanol was one of the darlings of that movement until the impact of ethanol was seen. As usual the green movement then attacked those who adopted the scheme they loved so intensely a few years ago.
In 2004 Iowa
“livestock farmers are demanding a change in the nation's ethanol policy, claiming current rules could lead to spikes in meat prices and even shortages at supermarkets if corn growers have a bad year” and were “demanding a change in the nation's ethanol policy, claiming current rules could lead to spikes in meat prices and even shortages at supermarkets if corn growers have a bad year.”
“The ethanol industry argues such scenarios are unlikely, but farmers have the backing of food manufacturers, who also fear that a federal mandate to increase production of ethanol will protect that industry from any kind of rationing amid a corn shortage.” “The subject of debate is the Renewable Fuel Standard, a 2005 law requiring the nation to produce 7.5 billion gallons of renewable fuel by 2012. The standard was changed in 2007 to gradually increase the requirement to 36 billion gallons by 2022.”
So who is right? As we follow the stream of time we see that the price of livestock feed corn went from about $3.00 bushel in 2006/07 to around $6.oo a bushel in 2011. They also expressed concerns over the fact that because of ethanol mandates the ethanol industry would not "participate in rationing and the brunt will fall on livestock and poultry". Although a bill introduced last month by Rep. Bob Goodlatte, R-Va. will waive this in case of a crop shortfall (failure) of any kind. “The Grocery Manufacturers Association, which represents more than 300 food and beverage makers” supports this bill.
In response to this “Senator Charles E. Grassley (R) from Iowa wrote to the Grocery Manufacturers Association, referring to the debate as a ‘smear campaign’ and criticizing the organization for having linked price increases of grocery market food to increased ethanol production. He implied that it was in fact a strategy to “increase the bottom line of grocery manufacturers”.
Yet no one can deny that ultimately these subsidies received by the entire alternative energy industries are now, or will be, a hidden tax of food.
Of course the EPA can grant waivers to states “under certain circumstances, including inadequate domestic supply or harm to the economy or environment of a state’, but Texas Gov. Rick Perry’s request was denied in 2008, because the “quota for renewable fuel wasn't causing severe economic harm to the state.” And the EPA knows this how; and who defines “severe”?
According to the Labor Department,
“wholesale prices jumped last month (April 2011) by the most in nearly two years due to higher energy costs and the steepest rise in food prices in 36 years. In February USA Today claimed
that we need to “get ready for higher food prices, which appear to be just around the corner for U.S. consumers and potentially a crippling burden for the world's poor.” The article claims that “a combination of natural calamities and congressional mandates has come together to drive world food prices to levels that make some governments in developing nations nervous, because higher costs can mean political instability.” (Editor’s note: In my opinion the USA Today is notorious for its inflammatory rhetoric, and normally I don’t get too worked up about anything that appears there, so I don’t really like quoting them. So in order to maintain consistency I intend to use other sources to back this up.)
This whole ‘cost of food’ issue is more complex than many realize. First and foremost I believe that ethanol is the primary issue because it is the only factor that isn’t necessary. As I have followed this over the years the whole picture has been outlined. When it comes to actual production weather is first and foremost. That has impacted many types of crops all over the world. Second is the cost of energy. When the price of fuel goes up so too does the cost of everything else; fertilizer, gasoline, diesel fuel, transportation and then eventually the added cost of inflation and speculation. Those are normal factors in all business.
Corn farmers have seen the handwriting on the wall as to where the money is and they have changed from planting wheat, soy beans and other crops to planting corn. Others have bought more land, but they are still planting corn. This is having an effect on the world’s hungry. Does all of this have the same impact at the same time everywhere? No, but ultimately it drives the cost of food up universally because all costs for all things are eventually spread out in our international market system.
A paper entitled the, Board of Governors of the Federal Reserve System - International Finance Discussion Papers,
“Over the past two years (ending June 2008), we estimate that the increase in worldwide biofuels production pushed up corn, soybean and sugar prices by 27, 21 and 12 percentage points respectively. The countries that account for most of the upward pressure on these prices are the United States and Brazil. Our best estimates suggest that the increase in U.S. biofuels production (ethanol and biodiesel) pushed up corn prices by more than 22 percentage points and soybean prices (soybeans and soybean oil) by more than 15 percentage points, while the increase in EU biofuels production pushed corn and soybean prices up around 3 percentage points. Brazil’s increase in sugar-based ethanol production accounts for the entire rise in the price of sugar.
Although biofuels had a noticeable impact on individual crop prices, they had a much smaller impact on global food prices. Our best estimate suggests that the increase in worldwide biofuels production over the past two years accounts for just over 12 percent of the rise in the IMF’s food price index. The increase in U.S. biofuels production accounts for roughly 60 percent of this effect, while Brazil accounts for 14 percent and the EU accounts for 15 percent. The key take-away point is that nearly 90 percent of the rise in global food prices comes from factors other than biofuels.”
What I find amazing is the conclusion they draw. The paper goes on to conclude that none of this matters. A twelve percent price in food is huge in some areas of the world and this 12 percent is an unnecessary increase. As I have said, weather, cost of fuel and inflation…and of course speculation are issues that need to be addressed, but they are always with us. Although I don’t have a great deal of confidence in this organization regarding anything they promote anymore than I trust the Intergovernmental Panel on Climate Change (IPCC) to discuss climate change honestly, but perhaps we can take into account that this paper appeared in 2009. Perhaps events would have changed their minds.
So what is the worldwide impact? According to the World Bank
“Global food prices continue to rise. The World Bank’s food price index increased by 15% between October 2010 and January 2011 and is only 3% below its 2008 peak. The last six months have seen sharp increases in the global prices of wheat, maize, sugar and edible oils, with a relatively smaller increase in rice prices. Higher global wheat prices have fed into significant increases in local wheat prices in many countries. Higher maize, sugar, and oil prices have contributed to increase the costs of various types of food, though local maize prices have largely been stable in Sub- Saharan Africa. Local rice prices have increased in line with global prices in some large rice-consuming Asian countries. These food price rises create macro vulnerabilities, particularly for countries with a high share of food imports and limited fiscal space, as well as increases in poverty. Estimates of those who fall into, and move out of, poverty as a result of price rises since June 2010 show there is a net increase in extreme poverty of about 44 million people in low- and middle-income countries. In the immediate term, it is important to ensure that further increases in poverty are curtailed by taking measures that calm jittery markets and by scaling up safety net and nutritional programs. Investments in raising environmentally sustainable agricultural productivity, better risk-management tools, less food intensive biofuel technologies, and climate change adaptation measures are all necessary over the medium term to mitigate the impact of expected food price volatility on the most vulnerable.”
An article in “greentechmedia”
was published in March stating that cost increases were the result of a number of factors such as “an increase in demand and natural disasters. Floods in Australia, drought in Argentina, fires in Russia, and frost damage in the U.S. and Europe contributed to the spike in food prices in December 2010, according to the Food and Agriculture Organization (FAO). These events resulted in export bans and short-term speculation, causing riots and political instability in more than 30 countries worldwide."
They went on to say that;
“part of the problem derives from ethanol production. In the U.S., 40% of corn production from food and feed is used for ethanol fuel production, putting stress on corn supplies in a year when stocks are at the lowest level in decades. People living in the 52 high-risk countries -- 750 million of them already malnourished -- rely on 83 billion tons of imported food a year, much of it corn, soybeans and wheat exported by the United States.
(Editor’s note: For those who didn’t read the entire article Falcon goes on to claim this ultimately won’t matter. I recommend reading the whole article. Even those who outline the danger can’t help claiming there is no real danger, and you will find this pattern in many of the articles. I linked those because I want everyone to see how this can be twisted.)
“The problem is particularly acute in developing nations. “Economically, prices have a small impact on the food prices in the U.S., though this cannot be said for the developing countries,” said Sheila Karpf, legislative and policy analyst at the Environmental Working Group (EWG).”
“Corn prices are higher than they’d be if we didn’t have the biofuel industry. People who primarily subsist on corn make $2 a day or less and spend 60% of their budget on food and are seriously hurt by higher prices,” said Walter P. Falcon, deputy director of the Food Security and the Environment Program and Farnsworth professor of International Agricultural Policy at Stanford University.” Corn prices are higher than they’d be if we didn’t have the biofuel industry. People who primarily subsist on corn make $2 a day or less and spend 60% of their budget on food and are seriously hurt by higher prices,”
“Biofuels makers often stress that they use a mere 3% of the global grain supply. Still, the additional demand causes more profound ripples in the price of staples.”
One of the reasons the greenies are now against their dream energy source is the ecological effect of production. You may wish to peruse this Power Point presentation.
In an article by Chris Charles of the Global Subsidies
Initiative (GSI) he stats;
“identified biofuels as the most important driver of food price volatility, responsible for 75% of the recent price increases, although recognizing that other factors were also important, including weather-related production shortfalls, market speculation and economic growth in developing countries leading to increased grain consumption.” Others argue that it is the weak U.S. dollar and the direct and indirect effect of high petroleum prices”. Yet the “Organisation for Economic Co-operation and Development (OECD)….established the same basic relationship between increased biofuel production and higher food prices for some grains, such as wheat and maize.” “Jean Ziegler, the United Nations Special Rapporteur on the Right to Food, had spoken out against the increasing practice of turning crops into biofuel as "a crime against humanity", which left millions of poor people hungry.”
The article goes on to say;
“the biofuels industry claims it was speculation that caused the increases and as far as they were concerned the biofuels issue is a closed case. However, prices are once again spiking this year. Many have blamed the Middle East uprisings on the price of food and fuel, and they are interconnected in many complicated ways.
The food crisis of 2008 never really went away. True, food riots didn’t break out in poor countries during 2009 and warehouse stores like Costco didn’t ration 20-pound bags of rice…but supply remained tight. Prices for basic foodstuffs like corn and wheat remain below their 2008 highs. But they’re a lot higher than they were before “the food crisis of 2008” took hold. Here’s what’s happened to some key farm commodities so far in 2010…
• Corn: Up 63%
• Wheat: Up 84%
• Soybeans: Up 24%
• Sugar: Up 55%
"What was a slow and steady increase much of the year has gone into overdrive since late summer. Blame it on two factors…Drought has wrecked the harvest in Russia, Ukraine and Kazakhstan – home to a quarter of world production…..the Agriculture Department cut its forecast for US corn production. The USDA predicts a 3.4% decline from last year. Damage done by Midwestern floods in June was made worse by hot, dry weather in August. "
When the rest of the world gets sick the burden to provide needed food stuffs falls on the real bread basket of the world. The United States farmer! What happens when there is a drought destroys the Russian or Australian wheat crops or the Argentine soybean harvest, and those “record harvests” we have experienced “no longer materialize”?
In The Renewable Energy Disaster by Christopher Calder
he states that;
“It is a mathematically provable fact that you cannot replace oil, coal, and natural gas with windmills, solar panels, and biofuels.”…,”Contrary to popular belief, solar, wind, wave energy, and biofuel schemes are not "energy efficient," and their ultra-high cost is an accurate measurement of that inherent inefficiency. If they were efficient they would cost less than using fossil fuels, not dramatically more than using fossil fuels.”
He goes on to say;
“Biofuel crops include corn, soybeans, rapeseed (canola oil), sugarcane, and palm trees (palm oil). The majority of the world's corn is grown in the United States, and an ever increasing percentage of that crop is ending up in gas tanks instead of stomachs. Increasing amounts of soybean and rapeseed are being diverted to biodiesel production, and world supplies of cooking oil are now low. Corn and soybeans are the foundation of America's food supply, because they feed our farm animals which give us dairy products, eggs, and meat. When the cost of animal feed is pushed up by biofuel production, the price American families pay for essential high protein foods also rises.
Biofuels require large amounts of nitrogen fertilizers to produce, and the price of fertilizer rose by more than 200% in 2007 alone. Nitrogen fertilizers are largely made from natural gas, which experienced no significant price gain in 2007, so the main driving force of fertilizer price hyperinflation is undeniably biofuel production. Biofuels are pushing up the cost of all foods that require fertilizers, including rice, wheat, potatoes, tomatoes, lettuce, and broccoli. Corn and most food products remain at historically high price levels despite the drop in oil prices, so the biofuel advocates claim that only the price of oil is a significant factor in food cost inflation is profoundly incorrect. To make matters worse, the world is gradually running out of economically obtainable phosphates, a prime ingredient in fertilizers. If we use up our supplies of phosphates growing fuel instead of food, we bring closer the global collapse of the human food supply, which will likely happen sometime in the second half of this century.
According to the United Nations Food and Agriculture Organization, global food prices rose an incredible 40% in 2007. The World Bank states that the cost of staple foods rose by 83% during the 3 year period from 2005 to 2008. The International Food Policy Research Institute states that biofuels are responsible for rapid grain price inflation, and a detailed analysis by Don Mitchell, an internationally respected economist at the World Bank, stated that biofuels have forced global staple food prices up by 75%.
The United Nations states that its charity programs can no longer afford to feed the starving peoples of the world because of the high cost of staple foods. Mr. Jean Ziegler, the former United Nations Special Rapporteur on the Right to Food, repeatedly denounced biofuels as "a crime against humanity." The new UN food envoy, Mr. Olivier De Schuster, has called for United States and European Union biofuel targets to be abandoned, and said the world food crisis is "a silent tsunami affecting 100 million people." Oil price increases have not shrunk the human food supply, but biofuel production has. The more biofuels we produce, the less food we have to eat, because we grow biofuel crops using the same land, water, fertilizer, farm equipment, and labor we use to grow food."
He then goes on to list ten top reasons to oppose biofuel, including starvation. He also notes that; Biofuel advocates ignore the fact that when we pump up grain prices through biofuel production, we raise grain prices all over the world, which gives other countries a strong financial incentive to burn down more rainforests in order to plant more food. United States corn-ethanol production is a major driving force in the rapid destruction of the Amazon basin. The environmental degradation caused by biofuels is staggering. Please read his whole analysis. We must not lose sight of this;
“It's politics and greed, not science.” The biofuel hoax was created by domestic American politics and corporate greed. Ambitious young biofuel entrepreneurs and giant agricultural corporations smelled the money to be made, and lobbied Congress in hopes of turning the farm belt into the Saudi Arabia of renewable energy, even if the energy they supply comes at the cost of human starvation and accelerated environmental damage."
Even the High Priest of the Church of the Warming Globe, Al Gore states that;
"It is not a good policy to have these massive subsidies for (U.S.) first generation ethanol.
1. First generation ethanol I think was a mistake.
2. The energy conversion ratios are at best very small.
3, It's hard once such a program is put in place to deal with the lobbies that keep it going.
3. The size, the percentage of corn particularly, which is now being (used for) first generation ethanol definitely has an impact on food prices.
4. The competition with food prices is real.
5. One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president."
"Translation - Al Gore ignored numerous warnings by responsible scientists that ethanol production harms the environment and raises food prices because he wanted to win the Iowa Caucus. According to Goldman Sachs analysts, the United States used 41% of its corn crop in 2010 to make ethanol."
Everything that we are told should bear some resemblance to what we see going on in reality. In my reality the more demand there is for a product the more it will cost. There is a huge demand for American corn and the prices are going up. Much of that corn is going into biofuel. That must be a large part of that price increase. We stop growing other foods in order to grow corn, which is now more profitable. Those countries that relied on our crops now must not have any downturn in their harvests or someone starves. Is it our responsibility to feed the rest of the world when they have problems? That isn’t my argument. My argument is that using all this corn for ethanol causes food prices to soar and eventually will cause people to starve, which, when it happens, will have been a politically mandated disaster and nothing I have read substantiates any other conclusion.
I do have an absolutely fool proof way of finding out the truth. Stop making ethanol out of food and see what happens to the price of food worldwide.