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A G R I B U S I N E S S Food versus Biofuels Weather, water and economics have sent food prices soaring. Paul Creeney explains why, and what can be done to prevent it As the American harvest period passes, signs of the worst corn and soybean crop in over 20 years are looming over farmers, consumers and governments. July’s record-breaking temperatures across the Midwestern corn belt have left much of the crop in ‘thermal shock’ – where baking heat dries the crop out and scorches it brown, rendering the corn unable to photosynthesise or produce pollen. A report by the US Department of Agriculture estimated that by mid-August only 23% of the total corn harvest was ‘good to excellent’, with the rest rated between ‘very poor’ and ‘average’. The total corn harvest is expected to be 13% lower than last year, with corn bushels per acre at the lowest level since 1995. reducing carbon emissions has been called into question. Gernot Pehnelt and Christoph Vietze of Friedrich Schiller University in Germany have claimed that tests show that the carbon emissions from the production and use of rapeseed biodiesel are only 30% lower than for standard diesel. This in turn has led to calls from scientists and politicians for a reduction in the amount of US corn converted into biofuel. As the US is also responsible for a large portion of global corn stocks, reducing the amount of corn used for biofuel would also have a positive effect on food prices worldwide. Oxford Research Group has already predicted that the poor corn yield may result in “a period of high grain prices, exacerbated by speculative commodity markets, resulting in limited food intake among the world’s poorest communities”. Several top scientists have blamed the drought that has caused such massive and widespread damage to the corn crop on climate change. James Hansen, head of NASA’s Goddard Institute for Space Studies, has produced research analysing the frequency of freak weather anomalies occurring over the past 60 years. Publishing his results in the scientific journal Proceedings of the National Academy of Sciences, Hansen contends that the odds of such weather occurring between 1950 and 1980 were around 300 to 1. Today, he puts the odds of serious weather anomalies occurring in the last 30 years at 10 to 1. Hansen also claims that basing his study on previous weather records rather than on modelling templates created to predict future weather patterns greatly improves the reliability of his results. The key to avoiding water scarcity is to encourage small-scale irrigation In the longer term, already perilous market conditions caused by both drought and biofuel demands may also be intensified over the coming years by changes in China’s foodimport patterns. According to a report by GRAIN, the Barcelona-based organisation that supports smallscale farmers and food supplies, China will import more soybeans from abroad in 2012 and 2013 than in the previous 25 years combined. This boom has also led to the formation of Chinese agribusinesses – such as the state-owned COFCO and the privately owned New Hope Group. These businesses are lobbying the Chinese government to relax its import limits on other foods in the same way they have done with soybeans, in order to further maximise their profits. Paradoxically, as we move into winter, the already diminished corn crop will be further cut into by heightened demands from the biofuel industry, which uses corn to make ethanol, said to release less carbon dioxide into the atmosphere than regular petrol. Research by the Organisation for Economic Co-operation and Development suggests that in 2011 around 40% of the US corn crop was used to produce ethanol – a percentage that will likely only increase this year. Controversially, how effective biofuels are in GRAIN warns that this changing market could affect food prices in two ways. First, the global demand China adds to already strained international grain stocks could force food prices up. Second, agribusiness has become a profitable investment – making high grain prices favourable, as they create greater returns. The risk of freak events such as this summer’s US drought causing disarray to global food prices could also escalate, because lower harvests will affect global rather than local food-supply chains. 10 Resurgence & Ecologist November/December 2012
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Food prices will spike to record levels over the coming year Drought conditions in Eastern Nebraska, America, July 2012 © KeystoneUSA-ZUMA/Rex Features Drought aside, general water scarcity is also set to become a problem for the global population within the next four decades. A report authored by the Stockholm International Water Institute states that with 70% of all water withdrawals used in agriculture at the moment, attempting to feed the projected 9 billion global inhabitants in 2050 will simply not be possible without drastic changes to both diet and water use. Despite such pessimistic statistics and predictions, experts and organisations do offer solutions to the problems posed by this year’s poor corn crop, the future influence of Chinese grain imports and predicted future water scarcity. Calls have been growing in the United States throughout the summer for a change to the Renewable Fuel Standard – a mandate enforced by the US government that gives precedence to biofuel production over food-chain supplies. Writing in The New York Times, Colin A. Carter of the University of California and Henry I. Miller of the Hudson Institution have requested a 20% cut in the amount of corn used to produce ethanol. They claim that this reduction would compensate for around half the anticipated crop loss resulting from this year’s drought. Suggestions have also been made as to how China can both minimise the effect its imports have on world food prices, and improve Chinese food security. GRAIN has stated that Chinese farmers “are capable of producing the food necessary to feed their country, but face increasingly difficult barriers, most of which are associated with a corporate food system that is becoming evermore firmly entrenched”. China’s resistance to agribusiness lobbying provides employment for its 400 million farmers, and also avoids a massive influx of unemployed farmers into Chinese cities. The Director General of the International Water Management Institute, Colin Chartre, has recently proposed suggestions for how farmers can maximise water supplies more efficiently. Speaking on Radio Australia, he said that the key to avoiding water scarcity was to encourage smallscale irrigation schemes, as these are much more efficient than the large-scale irrigation favoured by agribusiness. Such solutions may not serve the needs of agribusinesses heavily invested in Chinese imports or biofuels, but their application may be needed to avoid serious food shortages and soaring future prices. As Lester R. Brown, president of the Earth Policy Institute, warns, “time is running out faster than most people realise.” Paul Creeney is a freelance journalist focusing on environmental and human rights issues. Issue 275 Resurgence & Ecologist 11

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A G R I B U S I N E S S

Food versus Biofuels Weather, water and economics have sent food prices soaring. Paul Creeney explains why, and what can be done to prevent it

As the American harvest period passes, signs of the worst corn and soybean crop in over 20 years are looming over farmers, consumers and governments. July’s record-breaking temperatures across the Midwestern corn belt have left much of the crop in ‘thermal shock’ – where baking heat dries the crop out and scorches it brown, rendering the corn unable to photosynthesise or produce pollen. A report by the US Department of Agriculture estimated that by mid-August only 23% of the total corn harvest was ‘good to excellent’, with the rest rated between ‘very poor’ and ‘average’. The total corn harvest is expected to be 13% lower than last year, with corn bushels per acre at the lowest level since 1995.

reducing carbon emissions has been called into question. Gernot Pehnelt and Christoph Vietze of Friedrich Schiller University in Germany have claimed that tests show that the carbon emissions from the production and use of rapeseed biodiesel are only 30% lower than for standard diesel. This in turn has led to calls from scientists and politicians for a reduction in the amount of US corn converted into biofuel.

As the US is also responsible for a large portion of global corn stocks, reducing the amount of corn used for biofuel would also have a positive effect on food prices worldwide. Oxford Research Group has already predicted that the poor corn yield may result in “a period of high grain prices, exacerbated by speculative commodity markets, resulting in limited food intake among the world’s poorest communities”.

Several top scientists have blamed the drought that has caused such massive and widespread damage to the corn crop on climate change. James Hansen, head of NASA’s Goddard Institute for Space Studies, has produced research analysing the frequency of freak weather anomalies occurring over the past 60 years. Publishing his results in the scientific journal Proceedings of the National Academy of Sciences, Hansen contends that the odds of such weather occurring between 1950 and 1980 were around 300 to 1. Today, he puts the odds of serious weather anomalies occurring in the last 30 years at 10 to 1. Hansen also claims that basing his study on previous weather records rather than on modelling templates created to predict future weather patterns greatly improves the reliability of his results.

The key to avoiding water scarcity is to encourage small-scale irrigation

In the longer term, already perilous market conditions caused by both drought and biofuel demands may also be intensified over the coming years by changes in China’s foodimport patterns. According to a report by GRAIN, the

Barcelona-based organisation that supports smallscale farmers and food supplies, China will import more soybeans from abroad in 2012 and 2013 than in the previous 25 years combined.

This boom has also led to the formation of Chinese agribusinesses – such as the state-owned COFCO and the privately owned New Hope Group. These businesses are lobbying the Chinese government to relax its import limits on other foods in the same way they have done with soybeans, in order to further maximise their profits.

Paradoxically, as we move into winter, the already diminished corn crop will be further cut into by heightened demands from the biofuel industry, which uses corn to make ethanol, said to release less carbon dioxide into the atmosphere than regular petrol. Research by the Organisation for Economic Co-operation and Development suggests that in 2011 around 40% of the US corn crop was used to produce ethanol – a percentage that will likely only increase this year.

Controversially, how effective biofuels are in

GRAIN warns that this changing market could affect food prices in two ways. First, the global demand China adds to already strained international grain stocks could force food prices up. Second, agribusiness has become a profitable investment – making high grain prices favourable, as they create greater returns. The risk of freak events such as this summer’s US drought causing disarray to global food prices could also escalate, because lower harvests will affect global rather than local food-supply chains.

10

Resurgence & Ecologist

November/December 2012

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