Expert: Biofuel Crisis Looms

July 14, 2006 —The surging demand for corn, sugar cane and vegetable oils to make Earth-friendlier biofuels is pitting hungry cars against hungry people, and trouble’s brewing, says sustainable development pioneer Lester Brown.

Biodiesel and ethanol, both made from food crops, have been recently touted as the way to free America of its addiction to foreign oil and to stem the rise of greenhouse gases in the atmosphere.

But the growing demand for biofuels is beginning to adversely affect food supplies worldwide, and could eventually lead to serious economic and political instability, warned Brown, president of the Earth Policy Institute.

"In effect what we have are 800 million motorists who want to maintain their mobility and two billion people who want to survive," he said in a press conference on Thursday, announcing the release of a new report on the problem.

Those two billion are the same people who already spend more than half their annual income — in most cases less than $3,000 — on food, he said.

The competition between corn and ethanol struck home to Brown recently, he said, as he was reading U.S. Department of Agriculture grain production numbers.

"I was looking at USDA grain estimates and two numbers jumped out at me," he said.

World grain demand is projected to grow by 20 million tons this year. Some 14 million tons of that demand is expected to be for biofuels for cars in the United States.

That leaves just six million tons to satisfy the food needs of many countries that import U.S. grain — at a time when grain stocks are at a 34-year low and climate change and water shortages are making it harder than ever to grow grain, he said.

What’s driving the demand for biofuels is the high price of oil, said Brown, which has made biofuels economically attractive. At the same time, it’s becoming clear that the price of a basic staple food like corn is no longer based on its demand as a food, but also as a fuel.

"Everything we eat can be converted into ethanol or biodiesel," Brown explained. "As a result, the line between the food economy and energy economy has become blurred."

That means fuel prices can drive up food prices, bad news for the two billion people whose food may fetch a higher price if it fills a gas tank.

Already the world market for sugar is seeing reduced supply and rising prices because Brazil has shifted huge amounts of sugar cane from export markets to making domestic ethanol, Brown explained. Brazil is one of the world’s top sugar producers.

"In Europe the margarine producers are complaining because they’re having difficulty getting vegetable oil because biodiesel is sucking it up," Brown noted. The problem will also affect meat, dairy and egg production, Brown pointed out, since just about all animal feed can be made into fuel.

What’s needed, he said, is an international body to oversee the biofuel/food problem. Right now, he noted, "in effect no one is in charge."

And that, said Brown, could lead to economic instability, civil unrest and even the collapse of governments.

Brown’s dire outlook is not shared by those in the ethanol fuel trade, however.

"No one’s saying we’re going to take every kernel of corn and turn it into ethanol," said Mat Hartwig, spokesman for the Renewable Fuels Association in Washington, D.C. "In the fuel versus food debate it’s not an either or situation. We can do both."

Even individual kernels of corn can be used in both food and fuel, Hartwig explained. Corn can be processed to extract the sugars for making ethanol, leaving behind a high-protein "distiller’s grain" that can then be used for animal feed, he said. "It’s not as though we’re taking that entire kernel out of the food process."

There is also the future prospect of cellulosic ethanol to consider, said Hartwig. That’s ethanol that can be made from cellulose — the husks and other inedible parts of plants. It’s harder to do, but there is a lot of investment and work going on now to make cellulosic ethanol viable by 2015, he said.

As for the economic implications, so far it’s been good for U.S. farmers and reduced the need for federal subsidies, said Hartwig. "This is a growing market that’s creating economic activity in rural areas that are the last to feel economic up turns and the first to feel slow downs."