Food AND Fuel: let’s do both

New report helps clear up confusion in the food versus fuel debate

WITH FOOD PRICES rising and increasing focus being directed to renewable fuels, there is no doubt we are entering into another period of debate over food versus fuel. But, a recent study released by Grain Farmers of Ontario shed some important light on this debate. According to the study, Ontario grain can and should be used for both food and fuel.

“The abundance of grain grown by farmers in North America can both protect the environment by limiting the use of fossil fuels for gas and feed the population,” says Dr. Terry Daynard, an author of this study in partnership with KD Communications. “Farm yields are climbing and we have enough corn in North America for both feed and fuel,” he continues.

The extensive report provides an overview of Canadian and global biofuel manufacturing and reviews publicly available information on the effects of biofuels and bioproducts on environmental quality, crop and food prices and global food supply and hunger.  The authors analyzed over 65 recent reports to develop this extensive report.

“As ethanol and bioproducts are important end uses of our grain, it’s important for Grain Farmers of Ontario to have a scientific understanding of the impact of these industries on the environment, the economy and society as a whole,” says Don Kenny, chair of Grain Farmers of Ontario.

environmental impact
The drive towards biofuel production has always been the environmental benefit of replacing non-renewable fossil fuels with fuels from renewable sources – like grain. However, the industry has recently been attacked on this front with opponents claiming that the fuels and inputs required to grow corn negate the benefits of corn-based ethanol.

“We’ve studied many reports analyzing this aspect of corn ethanol production; in Canada, the use of corn-based ethanol is very positive for the environment,” says Daynard. According to the report, including an average of five percent ethanol in regular gasoline reduces greenhouse gas emissions in Canada by 2.3 million tonnes annually – that is equivalent to removing 440,000 cars from Canada’s roads.

Efficiencies are generally higher for Canadian corn and ethanol production compared to US ethanol production. A lower use of synthetic fertilizer, less lime and irrigation use and the fact that all Canadian ethanol plants use natural gas rather than coal as their source of energy all contribute to the larger environmental benefit of Canadian ethanol.

“Fuel ethanol produced from corn creates 1.6 times more combustible energy than is required to manufacture it and the technology is constantly improving. Analysts expect the ratio to increase to 2.2 by 2015,” confirms Daynard.

impact of ethanol on corn prices
Beyond the environmental debate, the study also puts to rest more recent and aggressive concerns that biofuels are to blame for the rising price of food. There are many misconceptions and untruths being told about the relationship between corn prices and ethanol production.

“The data are clear” says Daynard. “Ethanol production did increase Ontario corn prices – compared with Michigan – from 2000 to 2007, but for the past four years the price relationship has returned to historic levels.” When you take these pricing changes down the value chain, the increase in corn price caused by biofuels has had less than a one percent effect on average Canadian food prices, even when corn prices have been at peak levels.

“The other factor that is often forgotten in this discussion is the impact of biofuel production on gasoline prices,” says Daynard. “Ethanol blending has reduced gas prices at the pump on average by $0.06 to $0.10 per litre which more than offsets the small food-price effect of ethanol on a family’s financial well-being,” he continues.

Although the long-term outlook shows relatively little effect of biofuels on corn and food prices, there is no doubt that there are more factors at play than biofuels when it comes to the price spikes of 2007-2008 and 2010-2011.

“Many analyses have been done on the causes of the spikes and there is broad agreement on the significance of several factors, including poor wheat crops in major grain growing areas, panic buying and hording, increases in oil and fertilizer prices, and a declining rate of exchange of the US dollar,” explains Daynard.

EXAMINING GLOBAL HUNGER
In addition to corn prices specifically, Daynard’s study also examined the relationship between biofuels and hunger.

“In Canada, primary prices paid for agricultural commodities only represent about 19 percent of prices paid for food by consumers. The average family earns enough money by January 9 to pay for the farmers’ share of all food purchases for the year,” explains Daynard.

Ultimately, Canadians have cheap food, even when you consider the increase in food costs during the commodity price spike years of 2007-2008 and 2010-2011.

However, hunger around the globe is another issue altogether. About 850 million people around the world were hungry in 2006 and the number has grown to 925 million in 2010. “Although the proportion of hungry people has declined significantly over the past 40 years,” says Daynard, “925 million hungry is still a major tragedy.”

The USDA has calculated that the amount of grain or equivalent (e.g. starchy root crops) needed to eliminate caloric food deficiency for 70 of the hungriest countries in 2010 was about 24 million tonnes. This represents about 1.1 percent of the current world grain production. In addition, the GFO-funded study points out, it should be recognized that 25 to 50 percent of food is wasted or spoiled throughout the world.

“There are so many major factors that contribute to hunger. Poor transportation infrastructure and storage that leads to spoiled food, declining government support for agricultural development and corruption all lead to hunger,” says Daynard.

LOOKING to the future
To feed this growing world, many project we will need to increase the world’s food supplying capacity by 70 percent between 2000 and 2050, or about 1.1 percent per year. “This is an entirely achievable rate of growth,” says Daynard. “Modern agricultural science has the capacity to achieve these numbers.”

On the global scale, people are sitting up and taking note. Africa has been identified as the primary target for $20 billion in new agricultural development assistance agreed to by the G8 group at its 2009 meeting. A common consensus among international leaders is that “we need to produce where the poor and hungry live,” as spoken by Jacques   Diouf, the director-general of the Food and Agriculture Organization of the United Nations.

In the study, the authors foresee developing nations focusing more on their own food security – and a future of static or even reduced demand for grain and oilseed exports to developing countries in years ahead.

“Under a long-term lens, there is potential to see decreasing export demand and increasing crop yields,” says Daynard. “In this scenario, biofuels and other bioproducts will become an increasingly important market for Ontario farmers.”

While it’s important to examine the long term future of Ontario’s grain crops, it’s also important to be engaged in finding a solution to the international issue of hunger. “As food and fuel growers, we are dedicated to growing a sufficient supply for Canadian families,” says Don Kenny. “But, at the same time, we are eager to be part of the discussion and the solution to the tragedy that is hunger.”

To review the full report, visit http://www.gfo.ca/FoodvsFuel. •