Abstract
The purpose of this paper is to look at the current surge in biofuels and the effects that it could have on world food supply. In addition to focusing on supply versus demand and cost effects, alternate sources of biofuel will be examined.
Introduction
Increasing worldwide demand for oil as a fuel source has driven prices higher and higher over the past few years. Well before that, automakers and governments were considering alternative sources of fuel including solar, electric, and biofuels. The main focus of this paper is on corn and soybeans as a source for bio fuel and the effect it can have on worldwide food supply and cost.
Aside from corn, there are other sources for creation of biofuels. We will also discuss sugarcane, cassava, and other alternatives to the limited petroleum based resources.
Corn-Based Biofuels
Corn-based ethanol is the most popular alternative fuel in the United States with 75 refineries being built or expanded starting in 2008 (Biofuels, 2008, ¶ 1). This expansion has caused other problems, though. The increased price of corn coupled with lower supply in the food and feed markets causes higher prices in many areas of consumer goods. Let’s consider some of these.
If it costs more to transport a good to market the price goes up. By utilizing corn as a biofuel source this single factor may be remedied – it could cost less to get vegetables from the grower to the market. It will even cost less for the grower to cultivate these vegetables since fuel prices are lowered because of less dependence on fossil fuels and it costs less to operate the equipment.
Now the farmer realizes that there is a higher demand for corn and he can get a higher price for it so he only grows corn and sells it all into the ethanol market. Whereas he may have previously supplied the local fresh vegetables market and local dairy farmers, they now have to pay higher prices to purchase these from other locations. These higher prices are passed on to the consumers along with the local vegetable farmer who is no longer producing for them but still has to purchase locally. Although this is a somewhat small-scale example, the specifics presented here are quite applicable to real world situations.
Corn has an effect on much more than just the local market. As mentioned above, corn is used for feeding people and animals. The increased demand for corn coupled with a lower supply in the food and feed markets results in higher prices for all users. 20% of the corn grown in the U.S. is now dedicated to ethanol production (Nothstine, 2007 p. 9) and a study showed that even if all US corn land was used for ethanol production, it would only replace 12% of gasoline production (Biofuels, 2008, ¶ 6). One method to get more from ethanol production would be to increase the percentage of ethanol in our gasoline. Brazil produces 85% or 100% ethanol based fuels while we only mix 10% ethanol into the blended fuels (Biofuels, 2008, ¶ 3).
Negative Shocks
Corn may not be your favorite vegetable, so you could be thinking that a lowered supply or corn won’t matter. Do you like steak? Ham? Eggs? Grits? Corn affects all of these. The cows, pigs and chickens have to eat in order for these meats to be available. Therefore the prices of meat will increase. Additionally, grits, a favorite in the south, are made from ground corn. Higher corn prices will have a major effect on the local breakfast favorites.
Problems in the United States with ethanol production extend beyond the food and feed industries. Other problems center around distribution – getting it from the refineries to the distributor and finally to the consumer. Current pipelines are too strained and inefficient to carry the amount of ethanol that has been mandated by our government (Davenport, ¶ 2). New pipelines will have to be built along with modifying some of the old ones. In order to make the large cash outlay ($1 million per mile) required for this, distribution companies want some guarantees that the United States will support ethanol production in the long term (Davenport, ¶ 9). Additionally, of course, they want tax breaks to help absorb the negative effect that this initial expenditure will have on profit margins.
If these things don’t really matter, do riots over scarce food availability matter? The push for increased ethanol production, lower staple foods supply, and higher corn and rice prices have resulted in food riots from Jakarta to Rome. Pakistani troops have to guard the wheat stocks. Increased demand for grain-fed meat by the expanding middle class in China, India, and other fast growing economies adds additional price pressures (Christian Science Monitor, 2008, p. 8).
It is an interesting fact that it takes enough grain to feed one person for a year to fill up the tank of an SUV with ethanol (Christian Science Monitor, 2008, p. 8). Given this fact, is it worthwhile to produce 25 (or so) gallons of grain-based ethanol and deprive one person of a year’s supply of food? There is a “silver lining” in the approach being taken by the United States, at least. The “Energy Independence and Security Act” mandates the use of 36 billion gallons of biofuels by the year 2020 with 58% of that coming from a source other than corn (Biofuels, 2008, ¶ 6). Is it possible that the negative shocks being seen recently are only temporary and will fade away as other sources for alternative fuel are discovered?
Alternative Sources For Biofuel
Sugarcane is an excellent source of ethanol and was used by Brazil (the leading producer of ethanol until 2006) to produce 100% ethanol or gasoline/ethanol blends (Biofuels, 2007, ¶ 3). Sugarcane does not threaten food production and Brazil uses a mere 1% of their farmland for ethanol production (Lula da Silva, ¶ 2).
An alternative to diesel is called biodiesel. This can be used in vehicles requiring diesel fuel and will have the same environmentally positive effect as other alternative fuels. Biodiesel can be made from soybean, oil palm, or even restaurant cooking waste (Biofuels, 2007, ¶ 3). Giving restaurants a financial incentive to recycle their waste oils will produce benefits for biodiesel production along with lessening the amount of waste going into the landfills.
Asia is experimenting with cassava and sweet sorghum as a source of creating biofuels. China should be operating a cassava based biofuel plant as of early this year. That single plant has a potential annual capacity of 200,000 metric tons of fuel (Khorana and Bhattacharya, p. B.4l). Using lower maintenance crops should lessen the effect that biofuel production will have on world food supply. Additional advantages of using cassava as a biofuel source are that it is so easily grown and can be produced year-round. The Thai government is also investing in 45 ethanol plants in the near future, with half of them being cassava-based (Khorana and Bhattacharya, p. B.4l).
Some low-value sources for ethanol production are wood chips, grasses, crop residues, and municipal waste. These materials will enable cellulosic based ethanol due to the breakdown of large amounts of cellulose in them (Biofuels, 2007, ¶ 4). Since these do not affect food supply, as corn and soybeans do, they are a better alternative source.
Conclusion
The topic of ethanol production is something that will be front page news well into the future. Depending on which views that page espouses, you may read that ethanol will lower fuel prices and put “big oil” dollars back into U.S. pockets. On the opposite side of that fence you may read about the food shortages, riots, and negatives caused by increased ethanol production and governmental policies. The certainty is that it can have either positive or negative effects depending on the route taken to achieve the ethanol usage mandates invoked in many countries.
The cost per gallon of corn-based (and grain-based) ethanol does not seem to be efficient. Of course, there are more things to consider beyond the corn itself. Will biofuels be used in tilling the soil, planting the corn, and harvesting it? If not, that negates the environmental and economic gains even more. Considering sources that are easier to produce and more available is the best approach to achieve the fuel based mandates that have been levied in many countries. Using sources that can be considered lower-maintenance crops and not a main food source is another excellent approach to take in this matter.
If we don’t find an alternative source of fuel for transportation, vehicles ranging from the $100,000 (and more) Lamborghini to the little Volkswagen Beetle will be destined to be lawn ornaments. Whenever the sources for petroleum based fuels have been exhausted, there will be no more. Without an alternative we will have to drive a horse and buggy to work on these nice, big superhighways.
References
Biofuels – The Next Great Source of Energy?. (2008). In Britannica Book of the Year, 2008. Retrieved March 10, 2008 from Encyclopedia Britannica Online: http://search.eb.com/eb/article-9439156
Nothstine, Ray. (2007). In The Christian Science Monitor July 27, 2007 page 9. Retrieved March 10, 2008 from ProQuest: http://proquest.umi.com/pdqweb
Davenport, Coral. Ethanol Comes Up Short On Pipelines and Policy. (2008). In CQ Weekly Online (January 14, 2008) 121-122. Retrieved March 10, 2008 from http://library.cqpress.com/cqweekly
The Christian Science Monitor January 18, 2008 page 8. Retrieved March 10, 2008 from ProQuest: http://proquest.umi.com/pdqweb
Lula da Silva, Luiz Inacio. (2007). In The Washington Post March 30, 2007 page A17. Retrieved March 10, 2008 from ProQuest: http://proquest.umi.com/pdqweb
Khorana, Lakshme, Bhattacharya, Preasenjit. (2007). In The Wall Street Journal page B41. Retrieved March 10, 2008 from ProQuest: http://proquest.umi.com/pdqweb