THE FUEL versus food debate is taking on the doomsday tone of previous worries about trade liberalization, population growth and pollution.
The Chicken Littles who are always prepared to cry that the sky is falling have found a new threat to whip up hysteria. In talk shows, magazines and books, they paint a horrifying picture of out-of-control subsidized biofuel production gobbling up grain to the point where food costs soar and poor people starve.
The arguments are specious, the conclusions run counter to the fundamental economic laws of supply and demand and the conclusions are unlikely.
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They also take the spotlight from where it should be, on the need to increase the income of the world’s poor, many of whom are farmers, so they can feed themselves and meet their other daily needs.
Lester Brown is a leading proponent of the argument that biofuel will cause hunger. The founder and former head of the Worldwatch Institute and now head of the Earth Policy Institute says biofuel promotion sets up an epic competition between the world’s 800 million vehicles and two billion poor people.
Brown notes that in the last year, ethanol demand caused corn prices to double and expectation of continued biofuel production growth could push it even higher. With competition for acreage, that will push all crop prices higher.
But he neglects to mention that in most of the decade before the recent run up, grain prices were so low that growing many crops was a losing proposition, leading to years of underinvestment in agriculture and government intervention, which created its own problems.
Even with such low grain prices, many people around the world went hungry. Keeping farmers in a permanent state of penury does not solve hunger.
Doubling prices gives farmers the first opportunity in years for profits needed to create a sustainable industry. It also presents the opportunity for the marketplace, instead of the taxpayer, to support farmers.
In the short term, higher crop prices will migrate through the food chain, pressing the price of meat and processed food higher, but in the developed world this should be hardly noticeable.
Canadians and Americans now spend less than 10 percent of their incomes on food, down from 13 percent in 1980 and 17.5 percent in 1960. When millions of people think nothing of spending $3 for a latté or cappuccino, it is hard to get worked up about adding a few pennies to the price of a steak or a box of cereal.
As for the poor in the developing world, hunger has much more to do with lack of income, conflict and inappropriate policy than a shortage of food.
The countries identified by the United Nations as food deficient are largely places suffering from authoritarian and corrupt governments, regional conflict, botched development projects supported by the developed world and inadequate education.
Government reform, peace, better schools and appropriate trade and development policy will improve the poor’s diet and health regardless of whether Canadians put a 10 percent ethanol mix in their fuel tank.
In the longer term, biofuel development has the potential to lead to greater food security for all, if its profits are fairly shared with farmers.
As is the case whenever shortages develop and grain prices rise, farmers will draw on all their resources in pursuit of a profitable crop and production will grow.
Farmers will reinvest their profits to improve their productivity, allowing them to keep pace with the demand for food and fuel.
The pursuit of profit will also cause the agricultural industry to invest more in research and development.
Such research will lead to greater crop yields and more efficient processing techniques that produce more litres of biofuel from the same amount of land.
More importantly, it will also refine the potential of the new bioeconomy where agriculture is able to harness the sun’s energy to grow the raw material for products like plastic and chemicals now produced from fossil fuels.
This bioeconomy is important because it holds a partial solution to petroleum’s problems, namely that the resource is finite and it is increasingly expensive to extract, and that there is strong evidence that burning fossil fuels contributes to global climate change.
If we develop biofuel in a way that returns farming to an attractive, profitable and sustainable profession, we will help rather than hinder the goal of a plentiful global food supply.
Bruce Dyck, Terry Fries, Barb Glen, D’Arce McMillan and Ken Zacharias collaborate in the writing of Western Producer editorials.
