mm260: The other oil shock

January 20, 2008

MUDGE’S Musings

We’ve had several occasions in this nanocorner of the ‘Sphere©

Fuel from Food: Just a bad idea all around

mm233: Corn in the news – and not just in Iowa!
mm194: Friedman: Coulda, Woulda, Shoulda
mm193: Fuel without oil, or corn
mm084: Food versus fools – Salon.com
mm053: The case for turning crops into fuel – Saletan
mm015: Welcomed back to the guild

…to consider the growth of the use of traditional food crops to create alternative fuel stocks – ethanol from corn is the U.S. wrongheaded approach.

Such is the triumph of our interconnected world that bad ideas from the U.S. are reproduced just as predictably as are many of our other famous cultural artifacts: rock and roll, blue jeans, cellular telephones.

January 19th’s NYTimes brings to our attention the food crisis in Asia caused by conversion of food crops to petroleum substitutes.

nytimes

A New, Global Oil Quandary: Costly Fuel Means Costly Calories

By KEITH BRADSHER | Published: January 19, 2008

KUANTAN, Malaysia — Rising prices for cooking oil are forcing residents of Asia’s largest slum, in Mumbai, India, to ration every drop. Bakeries in the United States are fretting over higher shortening costs. And here in Malaysia, brand-new factories built to convert vegetable oil into diesel sit idle, their owners unable to afford the raw material.

Cooking oil? A cheap commodity in the west. What’s the big deal?

Cooking oil may seem a trifling expense in the West. But in the developing world, cooking oil is an important source of calories and represents one of the biggest cash outlays for poor families, which grow much of their own food but have to buy oil in which to cook it.

The focus of this story is on palm oil, until recently rather disreputable nutritionally here, but back in favor as an option to trans fats, increasingly seen as unhealthy, and even legislated against in trendy places like New York City.

Now, everyone everywhere wants palm oil. But as petroleum prices rise, and vegetable based oils are viewed as attractive components of biodiesel, palm oil is suddenly in short supply, and skyrocketing in price.

[Please click the link below for the complete article — but then please come on back!]

An Oil Quandary: Costly Fuel Means Costly Calories – New York Times

The interconnectedness of the world never fails to astonish. In this instance, the result isn’t merely inconveniently high prices for traditionally low-cost commodities, it’s starvation in Asian slums.

Stranger yet the instructive example of the palm oil refinery in Malaysia, built alongside sizable palm forests, prepared to convert palm oil to biodiesel. Now frantically attempting to come up with a new plan, as its machinery was idled because the demand for palm oil as food has ratcheted up its price beyond economical use as a feedstock for mere fuel.

In the rush to pander to Midwest growers of corn and soybeans by subsidizing the use of ethanol for fuel; in the rush to protect U.S. citizens from the unhealthy effects of oil their potatoes are fried in; we initiate chains of events that results in a crisis of shortages and starvation on the other side of the globe.

Farmers, always the hardest working and often the least compensated link of the food chain, naturally seek to get the highest price possible for their output, and biofuel has supercharged demand, thus prices are higher.

Seems clear that in the rush to embrace biofuels the law of unintended consequences has landed square into the battered cooking pots of Mumbai.

Can’t cook the week’s scrap of mutton with unintended consequences.

It’s it for now. Thanks,

–MUDGE

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mm233: Corn in the news — and not just in Iowa!

December 26, 2007

MUDGE’S Musings

We’ve frequently commented (most recently here) on how often connections can be drawn from disparate news sources. It happened to us again today.

Read over breakfast this depressing story in the best magazine on the planet, The Economist:

economist

The beer crisis | Trouble brewing

Dec 19th 2007 | ST LOUIS | From The Economist print edition

A shortage of hops threatens Christmas

JUST as the festive season gets going, drinkers in America are finding their favourite beer suddenly more expensive or even—horrors!—not available at all. Hit by price increases and shortages, many breweries, particularly the small “craft brewers” and the even smaller microbreweries, are being forced to raise prices, make do with modified recipes or shut off the spigots altogether.

The humble hop, the plant that gives beer its distinctive flavour, is the main problem. Many farmers in the Pacific north-west, where America’s hop production is concentrated, have turned to more profitable lines—especially corn, which can be made into ethanol. The decrease in hop production, put at some 50% over the past decade, has sent prices through the roof. Brian Owens, the brewmaster of the O’Fallon Brewery near St Louis, Missouri, says that the variety he once bought for $3 a pound (0.45kg) now costs five times that. Many smaller breweries cannot find what they need at any price. Industry giants like Anheuser-Busch and Miller are better off, thanks to long-term contracts. But even Anheuser-Busch has been forced to raise prices for its six-packs.

A crisis of tragically epic proportions: beer unavailable, especially the increasingly popular craft or microbrews, or priced higher due to the newly high price of hops and barley.

Yr (justifiably) humble svt is somewhat cavalier about beer, as he doesn’t drink it very often (the carbs, don’t you know), but in tough times (and they seem to be inching toward tough in these parts) one takes solace where one can, and beer is the solace of choice for many. A shortage, or a significantly higher price, could wreak havoc with the social order.

And, what’s the cause of this potential unrest? Corn.

Corn is supplanting hops and barley for many farmers, since the government has made it increasingly attractive to grow corn for ethanol, totally wrongheaded though that is wrongheaded government! Go figure!

See some previous posts on the use of ethanol as fuel: starting here in the earliest days of this nanocorner of the ‘Sphere©, and here, here, here, here.

[Please click the link below for the complete article — but then please come on back!]

The beer crisis | Trouble brewing | Economist.com

Ethanol, inefficient as it is as fuel, causing shortages and price increases of one of the major food groups (for many): beer. Talk about the law of unintended consequences…

Thus corn was on my mind when we encountered this article in the NYTimes today. The European Union is once again (still?) grappling with the high intensity issue of the advisability of growing genetically modified corn.

GM foods is a topic we’ve handled quite eloquently (MUDGE’s humility gene must have gotten in the way of an X-ray machine, sorry) in a previous post. But, news is news.

And the Times is quite thorough covering both points of view. Interestingly, there’s actual science supporting both, as opposed to the recent cases where science is called into question on this side of the water and those callers into question can hardly spell the word science (guess the word doesn’t appear in the King James edition) much less accept its findings.

nytimes

Both Sides Cite Science to Address Altered Corn

By ELISABETH ROSENTHAL | Published: December 26, 2007

BRUSSELS — A proposal that Europe’s top environment official made last month, to ban the planting of a genetically modified corn strain, sets up a bitter war within the European Union, where politicians have done their best to dance around the issue.

The environmental commissioner, Stavros Dimas, said he had based his decision squarely on scientific studies suggesting that long-term uncertainties and risks remain in planting the so-called Bt corn. But when the full European Commission takes up the matter in the next couple of months, commissioners will have to decide what mix of science, politics and trade to apply. And they will face the ambiguous limits of science when it is applied to public policy.

Europe has embargoed seed and food products grown from genetically engineered plants for a decade; very convenient excuse for protectionist trade barriers. Now the World Trade Organization is pushing the EU for a change in policy. But the EU is pushing back, citing scientific studies counter to those presented in favor of GM food:

Ms. Hilbeck says that company-financed studies do not devote adequate attention to broad ripple effects that modified plants might cause, like changes to bird species or the effect of all farmers planting a single biotechnology crop. She said producers of modified organisms, like Syngenta and Monsanto, have rejected repeated requests to release seeds to researchers like herself to conduct independent studies on their effect on the environment.

The give and take on this is interesting.

[Please click the link below for the complete article — but then please come on back!]

Both Sides Cite Science to Address Altered Corn – New York Times

So it’s your scientists vs. my scientists, and because it’s science, there’s room for opposing theories. But the EU’s science has that slightly moldy odor of politics.

As mentioned in the post cited at the top, because of our employment at the time we were close to this debate 10 years ago in the U.S. That battle was hard fought, biotechnology vs. the Monarch butterfly (talk about a public relations nightmare for the suits!), and ultimately won in the U.S. by Big Ag, although as the Times makes clear, the Monarch’s well-being is still closely studied.

In the United States, where almost all crops are now genetically modified, the debate is largely closed.

“I’m not saying there are no more questions to pursue, but whether it’s good or bad to plant Bt corn — I think we’re beyond that,” said Richard L. Hellmich, a plant scientist with the Agriculture Department who is based at Iowa State University. He noted that hundreds of studies had been done and that Bt corn could help “feed the world.”

But the scientific equation may look different in Europe, with its increasing green consciousness and strong agricultural traditions.

And, if you let your farmers start to grow GM foods, it will be more difficult to rationalize the artificial protectionist barriers against other modified crops.

The hungry of the world (and there are so many!) can’t eat paper; unfortunately paper seems to be the chief crop of most of the world’s governments.

It’s it for now. Thanks,

–MUDGE

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