It's Foolish to Blame Ethanol for World Hunger

May 5, 2008

BY Susanne Retka Schill

Welcome to "Taking Stalk," a new blog I will post each Monday afternoon with timely commentary on the multitude of complex challenges ethanol is now besieged with. From "land use change" and "food vs. fuel" to trade policy and water usage, I'll pin down one contentious topic at a time, often drawing on questionable weekend headlines from the mainstream media. There's been no shortage of those lately.

The idea, of course, is that this site will become a forum for honest, vigorous dialogue that pivots around the multifarious scientific, environmental and socioeconomic issues ethanol—corn ethanol in particular—now finds itself mired in. Your responses will create a lively, informed dialogue about the industry's latest image and public opinion threats.

It might be a bad idea to start with a discussion about world hunger, but I'm doing it anyway.

Late last week and through the weekend, we witnessed a relentless barrage of headlines online that threatened to cast another shadow on ethanol. As if it isn't enough that ethanol is being unjustly blamed for the accelerated destruction of the world's rain forests (a topic we'll discuss another time), it's now also the leading cause of world hunger, according to about a dozen op-ed writers who, no questions asked, overzealously latched on to the World Bank's recent conclusions that increased biofuels production is one factor—one factor—in higher food prices.

Many of the articles appeared to follow the same script, leading with a shock-and-awe story about Haitians eating "mud cookies" because, well, ethanol production gave them no other choice. That's right—and it's no joking matter. While Americans struggle with price spikes at the grocery store, food riots are taking place around the world—and, yes, some Haitians are reportedly eating cookies made of mud, salt and whatever other ingredients they can scrounge up.

We shouldn't deny that world hunger is a serious problem. In fact, a grave crisis is at hand. Despite the presence of that rising middle class we keep hearing about in China and India, the number of hungry, malnourished and starving people on the planet has grown by almost 10 percent in the last decade. There are now more than eight-tenths of a billion people—over 200 million of them children—who don't have enough to eat. Food prices have soared by 45 percent since the middle of last year, and 80 percent since 2005. World cereal stocks are low, and that's got many governments panicky.

Ethanol is to blame, of course, because … well, it's an easy target. The media is quick to admit that a perfect storm of factors coalesced to create the situation we're now in: The growing middle class in Asia is eating more beef and dairy than ever; droughts caused by extreme weather (itself, ironically, possibly caused by global warming); a steady uptrend in all commodity prices; and of course, the skyrocketing price of crude oil, gasoline, diesel fuel and fertilizer (all at or near record highs).

So why is ethanol to blame for global hunger? Because, says New York Times columnist Paul Krugman—who last week called "the rise of demon ethanol . . . a terrible mistake"—ethanol is the one thing we can control. All those other factors—high oil prices, for example—"aren't anyone's fault," Krugman says, and they aren't subsidized by taxpayers (as if oil and beef have never benefited from a government handout).

Here's what Krugman and other journalists conveniently ignore.

  • Yes, the United Stated used nearly 20 percent of its corn for domestic, renewable fuel production last year. However, the corn used to make ethanol—yellow No. 2—is not directly consumed by humans. Outside of ethanol production, 95 percent of U.S. corn is used to feed animals, either domestically or abroad. Only the starch component of corn is used to make ethanol. The rest is made into protein rich distillers grains, the fastest-growing new feed ingredient in the world. Distillers grains is now being shipped all over the planet. Minor details, right.
  • Yes, we use a lot of our corn for ethanol production. So what? We also increased our surplus of corn to more than 1.4 billion bushels last year—and we fed more of the world by increasing corn exports by 6 percent. Krugman and the others dismiss that, I guess.
  • The high cost of oil is arguably the leading cause of high food prices. Oil traded at over $112 a barrel last week. Diesel prices are so penalizing that independent truck drivers are staging strikes and refusing to take jobs. The cost of oil and gas is, hands down, the predominant force driving up food prices worldwide. Over the past year, oil prices have jumped by nearly 100 percent. Food prices jumped just 4 to 7 percent. The U.S. corn surplus grew. Logic says fuel costs, not corn ethanol, are to blame. Yes, corn is currently $6 a bushel—and we all hope it comes down—but it's no surprise that grain prices are skyrocketing when crop and food prices were artificially low to begin with and the cost of farming (fertilizer, running tractors and transporting farm products to consumers) is at unprecedented highs. Can the high cost of corn be linked to the high cost of oil? Yes, it can … it is. The media acknowledges, but underplays that impact.
  • China and other rising economic powers are competing with us for scarce resources (oil, food, land), driving up the price of just about everything we consume. The rising middle class in China and India are eating more beef and dairy. When people start making money, they want two things: cars and red meat (… and, yes, maybe an occasional vanilla latte from Starbucks). It takes 700 calories worth of animal feed to produce a 100-calorie piece of beef. Krugman made that that point for me (thank you). In fact, beef consumption worldwide is thought by many experts to be one of the chief driving forces behind land-use-change, deforestation and global warming. And I think it's safe to say that ethanol production isn't causing people to eat red meat. If all ethanol production halted tomorrow, the world would continue to eat more and more beef every day … and grain and food prices would ultimately end up close to where they are at now, in my opinion.
  • Poor harvests caused by drought and bad weather played a huge role in driving up global food prices. Ironically, global warming induced by our dependence on fossil fuels might be to blame. The UN's World Food Programme says the single most important factor contributing to food insecurity worldwide is drought.
  • High food prices are also a result of the marked uptrend in all global commodities. Everything from precious metals to rice—neither of which are related to biofuels production (rice is not used for, or impacted by, biofuels production).
  • If it's true that the world's poorest people are hurt most by high food prices, than surely putting a little money in the pockets of farmers in developing nations is a good thing. The International Monetary Fund (which is not super friendly to ethanol) says farmers in poor countries stand to benefit from higher grain prices. "Higher commodity prices should elicit a supply response, with some lag, and almost all developing countries have benefited on net from the increase in global economic activity. So part of what we're observing is perhaps an unavoidable side effect of rising prosperity worldwide," one IMF analyst recently said.


Finally, the U.S. energy bill ensures that all new biofuels production in the United States will be increasingly sustainable, with greenhouse gas reductions of 20 percent to 60 percent above current standards. It's also vital to point out that the U.S. corn ethanol industry's rate of growth has slowed dramatically in the past few months as it nears the 15-billion gallon pseudo-ceiling prescribed in the new renewable fuels standard. As we move ahead, an increasing amount of biofuels will be produced from nontraditional feedstocks such as waste products and dedicated energy crops grown on marginal lands.

In an attempt to set the stage for this blog, I've touched on many (probably too many) points. In the weeks ahead, we'll isolate and discuss these and other issues—one by one—more narrowly. I look forward to your comments.

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