Higher energy costs are obvious every time you fill your vehicle, pay your home heating bill or buy fertilizer.
But a recent visit to an upholstery shop gave me an example of the pervasive impacts of costly petro products.
It seems that the cost of upholstery foam shot up about 75 percent in the wake of the hurricanes that damaged oil infrastructure in the U.S. Gulf Coast region last fall.
That made the cost of a couple of cushions a bit of a surprise.
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Food vs. fuel debate simmers in the background
The OECD/FAO are forecasting that 27% of the global cereals crop will go to biofuels and other industrial purposes by 2034.
The developed world’s economy is built on petroleum and petrochemicals and the prospect of long-term higher oil prices is causing a lot of adjustments and reassessments of where we get our energy and how we use it.
A lot of the fallout has the potential to benefit farmers.
It has prompted governments to create incentives for the ethanol industry, leading it to develop to the point in Canada where it will soon affect grain prices in some areas of the Prairies. It has also sparked the first moves toward biodiesel development.
Wind farms are being developed, generating lease payments for landholders where the towers are located.
Some livestock operations are benefiting from research and prototype development of methane-fueled electricity generators.
And there is the promise of switching part of the petrochemical industry into a biochemical industry. For example, manmade textiles from petrochemicals such as nylon, polyester and acrylic could be replaced with fibres made from grains and oilseeds.
Already, the giant DuPont company has a polymer fibre, Sorona, made from corn sugar.
DuPont has a goal of deriving 25 percent of its revenue by 2010 from non-depletable resources such as agricultural crops.
All of these developments have the potential to benefit farmers.
New fuel and industrial uses for grain increase overall demand, which should help to push prices higher.
But they do not guarantee higher grain prices because of the vagaries of weather, yield and world demand. Nor does a growing bio-economy guarantee improved farm income. Input suppliers tend to price products based on what the market will bear, so rising grain prices tend to generate higher herbicide and fertilizer costs.
Another issue for Canadian farmers is that a lot of the bio-economy research is focused on the major American crops of corn and soybeans, and much less so on prairie crops such as wheat, barley and canola.
Farmers would also be more likely to benefit from the growing bio-economy if they owned the processing companies and shared in their profits.
American farmers who invested in ethanol plants have enjoyed healthy dividend cheques in the last few years, but probably the future driver of the bio-economy will be huge multinational companies like DuPont, companies with pockets deep enough to fund the costly research and development necessary to take new products to the market.
So far in Canada, farmer ownership even in basic ethanol plants has been minor as federal incentives went to big companies like Husky Oil.
With farm incomes as low as they are, few producers could buy ownership in a plant even if it was possible.
None of this is to imply that I’m against the bio-economy.
But at this critical early stage, and particularly while so much of its development depends on government support, farmers must work with government to shape this new industry so that it directly benefits the primary producer. Farmers no longer have much power in the food industry, where profits seem to settle on processors and retailers, not primary producers.
The new bio-economy must not be allowed to go the same way.
