❱❱Editor’sComment BY GARY THORNTON
Time for a more balanced US biofuels policy
ommodity trading houses around the world are ‘stress
testing’ to be sure their ;nances can withstand oil at
The economic stress being placed on food consumers
around the world is catching the attention of policymakers.
Food security of individual households, and of nations, is
under close scrutiny.
Reserves of corn, for one thing, have dropped to their
lowest levels in more than 15 years, re;ecting tighter supplies that will result in higher food prices in 2011. Demand
for corn for the production of ethanol is a major reason for
these tight supplies. What’s more, the recent rise in oil prices
is likely to increase the demand for ethanol, resulting in the
diversion of even more corn for ethanol.
C
for ethanol production.
Olivier Dubois, a bioenergy expert at
FAO, told the New York Times that it is
dif;cult to quantify the extent to which the
diversion of corn for ethanol has driven up
food prices but it does. “We have to move
away from the thinking that producing an
energy crop doesn’t compete with food,” he
was quoted as saying. “It almost inevitably
does.”
A more balanced ethanol policy
U.S. corn-for-ethanol policy is ;awed – and has been from
its inception – and it is time for Congress and the Obama
administration to take action to ;x the policy.
WATT PoultryUSA columnist Dr. Paul Aho in 2009
proposed a policy that would accommodate the needs for
ethanol production while providing more stability in corn
prices. The proposal included a variable subsidy for ethanol
plants that would increase as the price of ethanol declines
and decrease as the price of ethanol increases.
Dubois and others have also suggested that countries
revise their policies so that rigid fuel mandates can be
suspended when food stocks get low or prices
become too high. Adopting more flexible
corn-for-ethanol policies that
neither set rigid fuel mandates nor rigid
subsidies would be a first step in restoring
stability in prices and markets.
‘What problem with ethanol?’
USDA of;cials and corn-ethanol proponents like to focus
on high oil prices and weather events as driving record-high
food and grain prices. They don’t like to acknowledge that
allocating 40% and more of corn supplies to ethanol production drives up prices and makes markets vulnerable to
recurring price spikes and ongoing volatility. This is where
food security concerns come into play – and a reason why
corn-for-ethanol policies are under scrutiny.
‘Food first’ policy in order
Current U.S. renewable fuels policies tilt in
favor of fuel production over food production. At
the very least, U. S. renewable fuels policies should
be more balanced between food and fuel.
An of;cial at the World Bank goes a step further
in the assessment of the priority for foods. “The
policy really has to be food ;rst,” Hans Timmer,
Adopting more ;exible corn-for-ethanol policies that
neither set rigid fuel mandates nor rigid subsidies would be
a ;rst step in restoring stability in prices and markets. It's
time for more balance in biofuel and food policies. ■
