Kansas City Star, MO
04-07-07
It’s food vs. fuel in the battle for corn
As more of the grain goes toward ethanol, less of it may make its way to the
hungry.
By SCOTT CANON and JACK CHANG
The Kansas City Star
OSBORN, Mo. | The world wants more corn — to make snack chips, to sweeten
soda, to fatten livestock. And, increasingly, to pump into your gas tank.
So Gene Millard and his son Brian are shifting more of their northwest Missouri
acreage from soybeans to corn to stoke new, nearby ethanol plants and cash in
on the world’s insatiable appetite for energy.
“We’re trying to go where the demand is strongest,” Gene said. “Ethanol’s a big
factor.”
As farming becomes more about fuel and less about feeding people, prices — for
corn, for crops shoved aside to make room for corn, for fertilizer and other farm
supplies needed to grow corn on an industrial scale — go up.
That could make the world’s hungry even hungrier.
World prices for corn, rice and wheat have already shot up 33 percent to 57
percent this decade in response to the economic boom in Asia and India. Now
that the planet’s energy appetite is in competition for the same crops that fill its
bellies, the global aid pantry runs low.
“We’re able to provide less and less food to a growing number of hungry people,”
said Neil Gallagher, a spokesman for the U.N.’s World Food Program in Rome.
“In any situation where there are rising prices, the ones who get screwed are
always the ones who are poor and on the edge.”
With the upcoming harvest in southern Africa looking thin, he worries that aid
groups won’t be able to buy enough food to prevent famine.
At the same time, the ethanol-driven cost of corn is flipping an old gripe about
U.S. farm policy on its head.
For decades, much of the world has blasted the United States and Europe for
price supports that safeguarded farmers against price collapses that can come
with overproduction. Poorer countries complained that that depressed
international commodity prices.
Such subsidies did result in cheaper food for consumers — rich or needy. But
poor growers could not compete and move beyond subsistence-level farming.
Now, however, the other face of the dilemma is showing: higher food costs,
whether it’s cornmeal in an African slum or corn-fed sirloin in a Midwestern
steakhouse.
“The increase in commodity prices has completely reversed the criticisms that
the United States has been facing,” said Bruce Babcock, who heads Iowa
State University’s Center for Agricultural and Rural Development.
“Now it’s almost the same set of critics saying the Third World consumer is
getting hammered.”
Where people struggle to grow enough for themselves, soaring crop prices mean
they’ll be less able to afford food or even the seed to grow it.
“We’re filling our tanks with biofuels that are rationing staple foods away from the
mouths of the poor,” said C. Ford Runge, at the Center for International Food and
Agricultural Policy at the University of Minnesota.
In the upcoming edition of Foreign Affairs magazine, Runge and a co-author note
that filling a vehicle’s 25-gallon fuel tank with pure ethanol would eat up 450
pounds of corn and burn enough calories to feed one person for a year.
Ethanol boosters agree it’s not the most efficient way to make fuel, but they note
that unlike oil, it is renewable. Ethanol also reduces certain kinds of air pollutants.
And if prices spike today, they argue, such increases will level off as more acres
are planted to corn.
Today, corn-based ethanol may be marginally more efficient than gasoline.
Once technology finds systems to draw ethanol out of cellulosic substances like
perennial grasses and wood chips, the industry could see a five-fold increase in
the efficiency of renewable fuel production and ease pressure on foodstuffs.
In the meantime, the dueling cravings for food and fuel are being felt in our own
hemisphere.
Brazil is the undisputed king of sugar-cane-based ethanol and second only to the
United States in ethanol production.
Currently the price of sugar is linked to that of biofuels, which means Armando
Alexandre dos Reis, the co-owner of a Rio de Janeiro bakery and restaurant,
was taken for a wild ride last month between harvesting seasons. Before the
dramatic growth of ethanol, sugar prices would hardly blip.
Brazilians like their food sweet, and the bakery uses about 440 pounds of sugar
a week to sweeten pastries and countless cups of coffee and caipirinhas, a
cocktail made from lime, sugar and the sugar-cane-based alcohol cachaca.
When wholesale prices rose from about 25 cents a pound to nearly 40 cents a
pound, dos Reis said, the restaurant’s weekly sugar bill ballooned by more than
$60. Since then prices have dropped.
“When ethanol goes up, sugar goes up, too. That’s the law we work with now.”
And in oil-exporting Mexico, the corn tortilla, mostly made from locally grown
white kernels, is a staple.
But 80 percent of the corn that Mexico consumes is grown in the United States.
The cheaper yellow variety went to industrial users and cattle feeders.
Now, desperate for supplies, Mexican cattlemen have turned to white corn.
And the price of tortillas doubled.
In the United States, it’s tax law that drives the ethanol engine. A 51-cent per
gallon tax credit for ethanol producers artificially lowers the cost of the fuel, while
a 54-cent tariff on imported ethanol keeps out foreign competition.
That’s good news for U.S. corn growers. And some commercial farmers in poor
countries surely will see a windfall as their crop prices follow the global market.
And over time, a relative increase in those prices could allow small-scale farming
to move beyond mere subsistence.
“It may help in the long run the development of agriculture in many parts of the
world,” said David Kauck, a senior technical adviser to the aid group CARE. “But
it will have uneven effects in different places. There will be winners as well as
losers. Price spikes will cause acute hunger.”
In 2006, U.S. ethanol production rose 33 percent to almost 5 billion gallons, and
increases this year are projected up to 6.5 billion gallons. (For context, consider
that Americans chug through 140 billion gallons of gasoline a year.)
With corn topping $4 a bushel an estimated 90.5 million U.S. acres will be
planted to corn in 2007. That would be the most since World War II.
Mark Kelley is a longtime cotton grower near Dexter in Missouri’s southeast
corner. But this year he plans to increase his corn to 1,800 acres from 300.
“A year ago, it seemed you couldn’t hardly pay somebody to grow corn,” Kelley
said. “Ethanol changed that.”
The U.S. Department of Agriculture and the U.S. Agency for International
Development are holding their annual International Food Aid Conference in
Kansas City on April 17-18. On April 16, officials from the World Food Program
and USAID will speak at the Kansas City Food Aid Symposium at 3 p.m. in the
Chicago Room at the Hyatt Regency Crown Center hotel. Admission is $5 for
adults, students with I.D. may attend free.
To reach Scott Canon, call (816) 234-4754 or send e-mail to
scanon@kcstar.com.