EXCELSIOR!
Posted on 04/14/2008 12:49:16 AM PDT by Fred
We drive, they starve. The mass diversion of the North American grain harvest into ethanol plants for fuel is reaching its political and moral limits.
A demonstrator eats grass in front of a U.N. peackeeping soldier in Port-au-Prince A demonstrator eats grass in front of a U.N. peacekeeping soldier during a protest against the high cost of living in Port-au-Prince
"The reality is that people are dying already," said Jacques Diouf, of the UN's Food and Agriculture Organization (FAO). "Naturally people won't be sitting dying of starvation, they will react," he said.
The UN says it takes 232kg of corn to fill a 50-litre car tank with ethanol. That is enough to feed a child for a year. Last week, the UN predicted "massacres" unless the biofuel policy is halted.
We are all part of this drama whether we fill up with petrol or ethanol. The substitution effect across global markets makes the two morally identical. # The financial crisis in full # Read more of Ambrose Evans-Pritchard advertisement
Mr Diouf says world grain stocks have fallen to a quarter-century low of 5m tonnes, rations for eight to 12 weeks. America - the world's food superpower - will divert 18pc of its grain output for ethanol this year, chiefly to break dependency on oil imports. It has a 45pc biofuel target for corn by 2015.
Argentina, Canada, and Eastern Europe are joining the race.
The EU has targeted a 5.75pc biofuel share by 2010, though that may change. Europe's farm ministers are to debate a measure this week ensuring "absolute priority" for food output.
"The world food situation is very serious: we have seen riots in Egypt, Cameroon, Haiti and Burkina Faso," said Mr Diouf. "There is a risk that this unrest will spread in countries where 50pc to 60pc of income goes to food," he said.
Haiti's government fell over the weekend following rice and bean riots. Five died.
The global food bill has risen 57pc in the last year. Soaring freight rates make it worse. The cost of food "on the table" has jumped by 74pc in poor countries that rely on imports, according to the FAO.
Roughly 100m people are tipping over the survival line. The import ratio for grains is: Eritrea (88pc), Sierra Leone (85pc), Niger (81pc), Liberia (75pc), Botswana (72pc), Haiti (67pc), and Bangladesh (65pc).
This Malthusian crunch has been building for a long time. We are adding 73m mouths a year. The global population will grow from 6.5bn to 9.5bn before peaking near mid-century.
Asia's bourgeoisie is switching to an animal-based diet. If they follow the Japanese, protein-intake will rise by nine times. It takes 8.3 grams of corn feed to produce a 1g of beef, or 3.1g for pork.
China's meat demand has risen to 50kg per capita from 20kg in 1980, but this has been gradual. The FAO insists that this dietary shift is "not the cause of the sudden food price spike that began in 2005".
Hedge funds played their part in the violent rise in spot prices early this year. To that extent they can be held responsible for the death of African and Asian children. Tougher margin rules on the commodity exchanges might have stopped the racket. Capitalism must police itself, or be policed.
Even so, the funds closed their killer "long" trades in early March, causing a brief 20pc mini-crash in grains. The speculators are now neutral on the COMEX casino in New York.
What about the California state retirement fund (Calpers), the Norwegian Petroleum fund, the Dutch pension giants, et al, pushing a wall of money into the $200bn commodity index funds?
They have undoubtedly bid up the futures contracts, but the FAO says this has no durable effect on food prices. These index funds never take delivery of grains. All they do is distort the shape of the maturities curve years ahead, allowing farmers to lock in eye-watering prices. That should cause more planting.
Is there any more land? Yes, in Russia, Ukraine, and Kazakhstan, where acreage planted has fallen 12pc since Soviet days. Existing grain yields are 2.4 tonnes per hectare in Ukraine, 1.8 in Russia, and 1.11 in Kazakhstan, com-pared with 6.39 in the US. Investment would do wonders here. But the structure is chaotic.
Brazil has the world's biggest reserves of "potential arable land" with 483m hectares (it currently cultivates 67m), and Colombia has 62m - both offering biannual harvests.
The catch is obvious. "The idea that you cut down rainforest to actually grow biofuels seems profoundly stupid," said Professor John Beddington, Britain's chief scientific adviser.
Goldman Sachs says the cost of ethanol from corn is $81 a barrel (oil equivalent), with wheat at $145 and soybeans $232. It is built on subsidy.
New technology may open the way for the use of non-edible grain stalks to make ethanol, but for now the only biofuel crop that genuinely pays its way is sugar cane ($35). Sugar is carbohydrate: ideal for fuel. Grains contain proteins made of nitrogen: useless for fuel, but vital for people.
Whatever the arguments, politics is intruding. Food export controls have been imposed by Russia, China, India, Vietnam, Argentina, and Serbia. We are disturbingly close to a chain reaction that could shatter our assumptions about food security.
The Philippines - a country with ample foreign reserves of $36bn (Britain has $27bn) - last week had to enlist its embassies to hunt for grain supplies after China withheld shipments. Washington stepped in, pledging "absolutely" to cover Philippine grain needs. A new Cold War is taking shape, around energy and food.
The world intelligentsia has been asleep at the wheel. While we rage over global warming, global hunger has swept in under the radar screen.
Let them eat oil.
Things will be all better when the ice age comes.
There have been voices crying in the wilderness for more than a year now that this sudden surge of interest in ethanol made no sense financially and would result in less food grown.
It’s been a Ponzi scheme from the very beginning and it’s going to get worse before it gets better. Food prices are crazy now and going to get worse.
It's also time for Americans to demand a moon landing/manhattan type of project for our energy needs, to get the US to stop kissing the ring of the saudis and crazies like hugo chavez.
Use of orn for vehicles has nothing to do with climate change.
It is wlefare for farmers plain and simple. It is uneconomical pandering of the worst kind, but since the Iowa caucus is so important, it never ends.
This author seems quite myopic in his understanding and pretty much set out with a conclusion and tortured his subject to agree with him.
Stupid drivel worthy of a liberal.
Hey, at least Al Gore seems to be eating well: Ruth’s Chris, Le Cirque 2000 and Delmonico’s is a long way from eating grass, isn’t it?
bingo...
yep, more blame to throw at the big bad west and old whitey..
now i am responsible for starvation, responsible for destroying the environment, responsible for oil prices....
wow, how do i get up in the morning!
i notice they only mention grain, only ONE mention of rice ? strange that considering its the stable diet of most of the world and is where the real issue is. Of course the countries like India, Vietnam who export rice etc are not mentioned here that they have stopped the vast majority of their exports and are saving it for their local markets (and as it happens i have no issue with a country doing that). Yet its e-85 and obviously the big bad west thats the problem.
another issue, stop using oil, stop using replacements...care to mention what we should use? what people dont realise is fuel powers economies and if you want world hunger on a biblical scale...just keep screwing around with fuel. the issue here is the FAKE oil issue and the even faker global warming BS. there is no peak oil, we are awash in oil, there is no issue other then a mental one...thats what so sad...so if you want to blame anyone, blame the fake global warming crowd..oh and blame those poeple who blocked refining capacity..
The eco-weenies will say it is just the Malthusian Operator kicking in, and starvation is all for the good of Gaia.
Ignorant Evirocrats are to blame...they need to be roasted and exported to feed these starving masses. Congress, EUcrats, Chicoms, Al Gore and Hilldog could feed a village and finally they would have a useful purpose.
Is the UN now working for big oil?
We pay through the nose for oil. Let them bid the price of corn up a keep it away from the distillers. What they do not tell you is that most countries do not eat that much corn, it is Wheat and rice they consume.
What a load of horse hockey. You want to feed the masses? Abolish OPEC and drill in North America. That'll loosen up the grain stocks. Otherwise sit down and STFU Mr. Ambrose Evans-Prissie.
Ethanol is a scam!
The same is true of Haiti. Tons and tons of rice, beans and other foods have been allowed to rot in shipping containers while the populace eats dirt!
This article gave me a headache. I can’t deal with all these metric numbers so early in the morning.
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