The Biofuel Backlash (Mexico:"tortilla crisis,France:"bread crisis",Italy:"pasta protest")

Stratfor-Public Policy Intelligence Report ^ | September 13, 2007 1825 GMT | By Bart Mongoven

[fight_truth_decay]

The Organization for Economic Cooperation and Development (OECD) released a scathing report Sept. 11 calling for a dramatic drawdown in the subsidies and preferential trade laws granted to biofuel producers in OECD countries.

In Europe, Friends of the Earth hailed the report, saying it has focused attention on the negative issues surrounding biofuels, while libertarian groups on both sides of the Atlantic applauded its call for a reduction in subsidies. The report is one of a number of efforts designed to deflate support for biofuels in the United States and Europe.

Increasing numbers of groups, especially in Europe, are beginning to question the wisdom of the current move toward biofuels as a replacement, at least in part, for gasoline and diesel in vehicles. They argue that these fuels offer little benefit and have serious drawbacks. Specifically, they question the wisdom of burning food crops for fuel. They point to a "tortilla crisis" in Mexico caused by rising corn prices and a "bread crisis" in France caused by rising wheat prices.

Inflation in China is now running above 6 percent, largely due to increases in the price of foodstuffs. In other words, the backlash against biofuels is in full swing.

[fight_truth_decay]

"bread crisis" in France caused by rising wheat prices

Price rise in Italy fueling Thursday pasta protest.

However, other world news outlets, such as the Independent failed, on its' coverage of this Pasta Protest, to mention this important included paragraph reported in the Nation & World story

The increase in the price of pasta is being driven by rising wheat prices worldwide, economists and producers say.

The demand for wheat is the result of several trends, chiefly an increasing demand for biofuels, which can be made from wheat, and improved diets in emerging countries where putting more meat on the table is raising the demand for feed for livestock, said Francesco Bertolini, an economist at Milan's Bocconi University.

As a result, wheat stocks worldwide are being depleted and grain prices are soaring. The U.S. Department of Agriculture said Wednesday that U.S. stockpiles are at their lowest level in 33 years.

Stratfor:The political support for biofuels already is paying dividends in both Europe and the United States. Corn prices are now more than 40 percent higher than they were a year ago, despite a 15 percent increase in planting. The rising price of corn meant reduced acreage of wheat planting, and this has coincided with a terrible drought in Australia and a falling dollar. As a result, wheat prices have doubled in the past year, to $9 per bushel for the first time ever (more than $10 in France). These are good times for THE farmers, and ethanol is playing a role in it.

[saganite]

Good news. Maybe ethanol will die a well deserved death.

[jim from nebraska]

maybe we could develop our own oil in alaska

[LasVegasMac]

"tortilla crisis"

Ok, now you have my full attention.

[NVDave]

If you look at wheat futures prices for next year’s crop, you see that we have a full-blown case of backwardation in effect, and such things are caused by short-term supply/demand imbalances.

Only people who know nothing about ag, crop yields in other countries (Australia, Russia, Canada, etc) and don’t know how to interpret commodity futures charts could leap to such an unfounded conclusion as “biofuels are responsible for wheat prices going up!”

Here’s a question: are they producing ethanol from corn (or wheat) in France? No, save for possible wheat beers.

Are they producing ethanol from corn or wheat in Italy? No.

Feh. Idiots abound. Everyone thinks that because they have a mouth and they eat food that they get to claim theirs is an ‘informed’ opinion on farming.

[Vigilanteman]

Maybe the hippies who oppose development of our own energy resources will die a well deserved death. But I'm not holding my breath.

I'd vote to legalize pot if they would legalize nuclear energy development.

[EGPWS]

In Europe, Friends of the Earth hailed the report, saying it has focused attention on the negative issues surrounding biofuels, while libertarian groups on both sides of the Atlantic applauded its call for a reduction in subsidies. The report is one of a number of efforts designed to deflate support for biofuels in the United States and Europe.

I pray that when I die I don't experience the hell of political idiocy for eternity.

[fight_truth_decay]

wheat beers!!

I never thought about WHEAT BEERS? ;( grrrr!

[fight_truth_decay]

I'd vote to legalize pot

So would I, so they could be taxed just like the person buying a pack of cigarettes with a $2.00 tax now and a possible $10 tax on cigars. Time the Pot smokers paid their Fair share of taxes!! ;)

[caveat emptor]

Even the scabrous NYT is getting in on the act, though not specifically in regard to more-corn-for-biofuels=>less-land-for-wheat=>higher-pasta-prices. Though they're sticking with the AGW mantra, the article concedes that the cost so outweighs any possible benefit that money would be better spent on more immediate problems.

“I don’t think our descendants will thank us for leaving them poorer and less healthy just so we could do a little bit to slow global warming. I’d rather we were remembered for solving the other problems first.”
The quote is from Bjorn Lomberg:‘Feel Good’ vs. ‘Do Good’ on Climate.

[NVDave]

A little factoid:

In centuries past, wheat was so precious for making bread in Germany, that making beer from wheat was outlawed. Hence the Reinheitsgebot making the only legal ingredients for beer to be barley, water, hops. Period, full stop.

You can make ethanol out of any grain (and even grass or hay, if you wish). The only reason why we use corn is that we have a lot of corn. Lots and lots of corn. And corn yields have been going up over the last century in the US.

[djxu456]

this story is crap.
corn is up about two cents a pound.

..............................
for every 1.3 gallons of ethanol produced,
(equivalent to one gallon of gasoline)

0.9 gallons less gasoline is needed from the ragheads

[NVDave]

The problem with the more-corn->less-wheat->higher-pasta-prices analysis is that it is being conducted by (once again) liberal arts majors who don’t know a thing about how the real world works.

I’ve been over this on other threads before. In the US, we tend to improve varieties of wheat. Non-farmers think “wheat is wheat is wheat” or “corn is corn is corn.”

Not so.

There is a constant improvement sought in yield from various seed varieties, and if you introduced a variety that gives a substantial increase in yield off the same acreage, you’ll have farmers beating a path to your door, dollars in hand.

Here is a USDA chart that shows you exactly what I’m talking about:

http://www.ers.usda.gov/Briefing/Wheat/2005baseline.htm

NB that the number of wheat acres was going down long before we got to the recent ethanol boom. See that? See how the red line on yield is going up?

There ya go.

Then look down on that page: See the per-capita wheat use in the US? Thanks to the atkins (and other anti-carb diets) people are eating less wheat.

Well, when that happens, and farmers keep growing the same amount, what happens? Well, prices go down as supply goes up. What is a farmer to do? All you anti-subsidy types howl “Respond to the free market forces!”

That’s what farmers did. All you idiots who are on some anti-carb craze sent an economic signal to farmers that you didn’t like wheat. So farmers listened. And they started finding other crops to plant.

And then when you get some big droughts in various wheat growing areas around the world, and you get a big surge in demand from India and China (curse those third worlders!) the limited supplies of wheat due to drought and signals you US consumers sent over the last five years result in what you see today.

[free thinker 03]

I do believe these soooo smart, elite people are incapable of taking an idea to its logical conclusions. Obviously these super brilliant people ( I know they are super brilliant because they keep telling me so!) were never taught Sir Isaac Newton’s Third Law …”For every action, there is an equal and opposite reaction.”
Oh, I forget they are public school and TV educated therefore, the only Newton they can relate to begins with fig. What a bunch of DA’s.

[caveat emptor]

I never thought about WHEAT BEERS?

IIRC there were riots in England over the displacement of wheat by sugar to make beer (liquid bread!) after cheap sugar became available with the use of slaves in the Caribbean.

[caveat emptor]

The problem with the more-corn->less-wheat->higher-pasta-prices analysis is that it is being conducted by (once again) liberal arts majors who don’t know a thing about how the real world works. I’ve been over this on other threads before. In the US, we tend to improve varieties of wheat. Non-farmers think “wheat is wheat is wheat” or “corn is corn is corn.” Not so. There is a constant improvement sought in yield from various seed varieties, and if you introduced a variety that gives a substantial increase in yield off the same acreage, you’ll have farmers beating a path to your door, dollars in hand. Here is a USDA chart that shows you exactly what I’m talking about: http://www.ers.usda.gov/Briefing/Wheat/2005baseline.htm NB that the number of wheat acres was going down long before we got to the recent ethanol boom. See that? See how the red line on yield is going up? There ya go. Then look down on that page: See the per-capita wheat use in the US? Thanks to the atkins (and other anti-carb diets) people are eating less wheat. Well, when that happens, and farmers keep growing the same amount, what happens? Well, prices go down as supply goes up. What is a farmer to do? All you anti-subsidy types howl “Respond to the free market forces!” That’s what farmers did. All you idiots who are on some anti-carb craze sent an economic signal to farmers that you didn’t like wheat. So farmers listened. And they started finding other crops to plant. And then when you get some big droughts in various wheat growing areas around the world, and you get a big surge in demand from India and China (curse those third worlders!) the limited supplies of wheat due to drought and signals you US consumers sent over the last five years result in what you see today.

Huh? Take a deep breath, and count to 10.

[Cicero]

In a strange way, I think we have to thank President Bush for this. (Perhaps it was even his intention?)

As soon as he came out strongly in favor of ethanol subsidies and percentage requirements in his State of the Union Address, I figured it would not be long before all the environmentalists turned against it.

Sure enough.

[353FMG]

A shortage of corn may result in a “bourbon crisis”. Not acceptable.

[Dahoser]

Good news. Maybe ethanol will die a well deserved death.

It won't so long as Iowa is so important to Presidential politics.

[ontap]

All you idiots who are on some anti-carb craze sent an economic signal to farmers that you didn’t like wheat.

I'm on a low carb diet because I don't want to die early. I don't think that makes me an idiot. Maybe you should calm down, Being on FR doesn't make you a genius and doesn't give you the superior intellect to be calling anyone an idiot. While I agree with some of your argument the name calling really hurts your case.