Monday, September 08, 2008

Demon Ethanol's Great Disruption: It Threatens to Push 100 Million People Back Into Poverty

The creation of politically popular biofuel mandates by many of the world’s biggest farming nations has been particularly disruptive. U.S. law, for instance, requires that ethanol make up at least 5% of vehicle fuel (rising to 22% by 2022), and 30% of U.S. corn went toward ethanol production last year (see chart above, with slightly different data).

The U.S. government has claimed that biofuel demand is responsible for only 3% of the increase in global food prices over the past year. But a recent World Bank report estimated that figure to be 75% once the resulting economic changes, such as shifts in land use, are considered.

High prices hurt poor, import-dependent nations the most. The price hikes of the past three years threaten to push 100 million people back into poverty, according to the World Bank, erasing seven years of progress.

~"The Great Disruption," September issue of The Altantic

4 Comments:

At 9/08/2008 12:06 PM, Anonymous feeblemind said...

Next year it will cost corn farmers about $1000/acre to grow corn. If prices fall to where they were a year ago. No one will grow corn. In 2007 we sold wheat and grossed about $250/acre and made good money. Next year it will cost $330/acre just to grow it.

 
At 9/08/2008 3:20 PM, Blogger randian said...

Why would the cost of growing corn go up? The ethanol mandates increase the price of corn, not its cost.

 
At 9/08/2008 4:18 PM, Blogger OBloodyHell said...

feeblemind, cite your sources, please.

None of those numbers jibe with what I know of agriculture, and they don't make a lot of sense on top of it -- the demand for corn syrup has been and is likely to stay pretty high. Sugar substitutes still have a taste to them that will always make "the real thing" preferable when one isn't looking to cut back on calories or pre-diabetic. Hence wee are talking about a guaranteed market.

> Why would the cost of growing corn go up?

Modern ag is highly mechanized, and thus substantially affected by fuel costs. But that's only one factor, and not likely to drive the numbers fm claims.

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Even more significant is the threat represented by a poor growing season, which is predicted for this year and the next, due to "global warming" and the fact that it's getting so notably colder as a result. :o/

The productivity in ag for the next year is expected to go down, since the colder weather means a shorter growing season and more crops destroyed by late frosts, etc.

 
At 9/08/2008 7:55 PM, Anonymous Mike said...

I'm not familiar with the ag sector to any great degree either.. but I do know that fertilizer and whatnot has increased in price compared to past years.

However, I was also under the impression such prices were coming down, at least based on the chart of POT.

 

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