Green Meme Killers: Ethanol Is Causing The Food Crisis

I’m sure you’ve heard it, just as we have, from self-righteous sounding friends and family. You know the sort: they think that global warming is a Marxist conspiracy to take over the world, and that environmentalists must be stopped. “The reason food prices are so out of control is because we’re sinking so much into ethanol and biofuels.” Wrong, wrong, wrong.

The meme generally goes like this:

Last year, food-to-fuel policies led to ¼ of U.S. corn being turned into ethanol. That number will rise to over 30% this year. By 2012 as much as 40% of our corn and 30% of our vegetable oils could be be diverted to fuel production.

This diversion of food crops is reducing the supply of food and feed and contributing to food price inflation. Today, food prices in the US are rising at twice the rate of inflation. Globally, food prices rose 83% in the last 3 years.

Compelling evidence, right? Not quite. The reality is that while the U.S. is embracing ethanol on a growing scale, that’s not what is driving food prices through the roof. First, we have to consider that–and we don’t say this lightly, being a resident of a state the neither the midwest nor the south seems ready to claim–the weather in the farm belt has been batshit crazy lately. Why does that matter? It means that the 25% of corn that went to ethanol in 2007 isn’t the same 25% of corn that was cheaply available in, say, 2000. Last year it was the drought that almost killed Atlanta. In 2006? Another drought. 2005? A third goddamn drought. And of course, to make up for all of this in 2008, we so far have been having rains that would make Noah blush–if you think food prices are high now, wait until the next harvest–there’s 4 million acres of corn that didn’t get planted this year because the weather was too bad. The farmers have insurance and soybeans to fall back on. What do we have? Stocking up.

Which segues nicely to the second point: despite all of these shortages, food would still be cheap if it weren’t for futures trading. This is America, man! We make money off of everything, including corn crops that aren’t even in the ground yet. Shares of corn futures–bushels, just like a barrel of crude oil– are sold like stocks in a company, and the more crazy the weather acts, the more intense the demand is going to be for those shares. In 2004, futures closed at $2.4175. In 2008? $4.28. This isn’t about ethanol sucking up all the available corn–it’s about that corn being bought for, and in turn having to be sold for, way more money. Because the weather in the places that grow corn (see also: flyover country) has been biblically bad.

It’s not just corn, either–wheat is up, and so are soybeans, a reflection that this is a problem that’s striking in systemic fashion, not merely a symptom of the evil environmentalists convincing everybody that oil is bad. Not that we’re not trying to do that, too. But biofuels are innocent, and anybody that says otherwise has tunnel vision.

Consumption of High Fructose Corn Syrup Not Affected Much by High Corn Prices

It’s no secret that high fructose corn syrup (HFCS) has taken over America. It’s in nearly all processed foods. When my husband and I set out to eliminate high fructose corn syrup from our diet last year, we were surprised to see how many things it was hidden in. Luckily for those of us who want to avoid it, it’s mostly in stuff that’s not good for you anyway: cereals, condiments, juices and soft drinks. Consumers are getting more aware of the fact that HFCS is linked to obesity and diabetes, and recently asked Hansen’s ‘Natural’ Soda (emphasis mine) to stop using it. Despite more people trying to avoid it, though, HFCS isn’t going away, even though recent increases in the price of corn have lowered sales slightly.

From The Ethicurean:

Hansen’s says that 30% of consumer calls it received were asking for a change from HFCS to a more natural sugar. “Consumers asked and we listened,” is how one executive put it. This response is a refreshing change from the typical corporate doublespeak along the lines of “public pressure had nothing to do with our decision, it was planned long ago.”

Of course, cane sugar production is not without its flaws — workers are mistreated, fertilizer overapplied, ecosystems damaged, and so on, as an episode of the Deconstructing Dinner radio program explains in detail.

However, Hansen’s switch, along with record high corn prices, has me wondering if consumption rates of HFCS are changing, and if so, how fast.

There is a slight decrease of a few percentage points per year. Between 2006 and 2007 — when there was a 12% price increase — consumption dropped only 3.4%. Unfortunately, data for 2008 are not available, so we can’t tell whether the latest price rise is having similar effects on consumption.

The most likely reason for the relatively small decrease in consumption is that HFCS makes up only a tiny portion of the retail cost of even the most HFCS-intensive product like soft drinks. The February 2008 issue of Amber Waves estimates that a 2-liter bottle of soda contains 15 ounces of corn in the form of HFCS. At the 2007 average price of $3.40 per bushel (about 56 pounds of shelled corn), the value of corn in the soda is only 5.7 cents. So a 20% rise in the price of corn results in a raw material cost increase of only about a penny, an increase that the giant soft drink companies or fast-food chains can certainly absorb for a little while.

Unfortunately, American companies are hooked on HFCS, and that’s probably not going to change anytime soon even if prices continue to rise. Let’s say, for the sake of argument, that people did begin to switch to sugar instead of using HFCS: unfortunately, that opens a whole other can of worms, since Big Sugar has its own problems. Weaning ourselves off of the use of so many sweeteners would be a great step, but in sugar-crazed America, that just ain’t gonna happen.

You can see all of The Ethicurean’s charts and data here.

Link [The Ethicurean]
Photo credit: Flickr user graham

Excuse Me, I’m Going to Need This to Run My Car, Or The Insanity of Food Based Biofuels

I think this comic pretty much sums up the stupidity of using corn and other food crops to create ethanol to run in cars.

Cartoon by Michael Ramirez