Sometime next year, as the food-price crisis evolves into a food-availability crisis, we may have to choose between feeding our cars and feeding the world’s poor.
So far, feeding cars, SUVs and trucks is winning. Canada, the United States, Europe and other agriculture-rich regions are devoting ever-increasing amounts of their crop land to the feedstock that produces ethanol (made from corn or sugar cane) and biodiesel (generally from canola, soy, sunflower oils and animal fats).
Turning food into fuel was always a morally dubious proposition; now it is a crime against humanity, as the war in Ukraine and the sanctions, embargoes and Black Sea blockades that accompany it raise food prices to unaffordable levels and create shortages in some poor countries. Basic economics says that grinding up food to make fuel both decreases the amount of food that can be exported and raises its price.
The UN’s food price index, produced by the Food and Agriculture Organization (FAO), reached a record high in March before declining marginally in April and May. Wheat prices in May were 56 per cent higher than they were a year ago. Dairy prices rose 17 per cent over a year.
Cuba is desperately short of milk and running out of cash to buy other imported food. Somalia, the Sahel and the Horn of Africa – regions already suffering from drought – face dire food shortages. Expanding biofuel production can only raise food insecurity for such places.
Ethanol and biodiesel are nothing new. They came on strong in the U.S. about two decades ago and played a role in the food-price crisis of 2007 and 2008 that triggered political and economic instability, including riots, in many countries. The Arab Spring revolutions that began in Tunisia were partly due to rising prices. Droughts – climate change – and soaring oil, which peaked at US$147 a barrel in early 2008, took a bad situation and made it far worse.
Americans, Europeans and Brazilians, among others, denied that turning food into fuel had contributed to the food crisis, and the FAO was loath to criticize any country that produced a lot of biofuels, probably because those same countries funded the FAO and its projects – don’t bite the hand that feeds you, so to speak.
But a 2008 World Bank report said that “large increases in biofuels production in the United States and Europe are the main reason behind the steep rise in global food prices” (the bank said Brazil’s sustainable sugar-based ethanol actually had little to do with the food price increases).
Today, 40 per cent of the U.S. corn crop is devoted to making ethanol. Most gasoline in the U.S. contains 10 per cent ethanol, and President Joe Biden is setting new requirements that would increase that amount. Never mind that the environmental benefits of ethanol-laden gasoline are dubious at best, partly because corn-based ethanol has a lower heat value, so a car’s fuel economy suffers. But ethanol refineries create jobs and reduce the overall dependence on oil. In the Corn Belt of the Midwest, promoting ethanol is a vote-winner.
Canada is charging ahead with biofuels, too. Last year, Imperial Oil, the country’s largest refiner, announced it will build a renewable diesel refinery at its Strathcona site near Edmonton. The new refinery will be fed by locally grown vegetable oils and “blue” hydrogen (made from natural gas with carbon capture and storage). The goal is to decrease the overall carbon intensity of Imperial’s fuel. The refinery will produce about one billion litres of biofuel a year.
The federal and provincial governments, too, are introducing clean-fuel mandates. Whether they will truly reduce overall carbon emissions is an open question. Biodiesel might just push the equivalent amount of regular diesel out of the Canadian market, to be burned in Central and South America.
No one much worried about biofuels and their effect on food production between 2015 and 2020, when prices for cereals, meat, dairy, vegetable oils and sugar were mostly in decline. That changed two years ago, as climate and conflict shocks, population growth and distribution problems put prices on an upward trajectory again – even before the war in Ukraine started.
Now price and availability problems are multiplying by the month as the war drags on. The FAO says Russia and Ukraine account for almost a third of global wheat exports – or at least did until last year. Several highly populated countries, among them Egypt and Eritrea, usually buy almost all their wheat from Russia and Ukraine.
The Russian naval blockade in the Black Sea is preventing most Ukrainian seaborne wheat shipments. Reuters reported this week that the invasion will create global wheat shortages for at least three seasons, according to Ukrainian Agriculture Minister Mykola Solskyi.
The UN’s World Food Programme says some parts of the world are now “marching towards starvation.” It estimates the number facing “acute food insecurity” has doubled to 276 million since 2019 and that almost 50 million “are facing emergency levels of hunger.”
The midst of a food crisis – one with no end in sight – is no time for the West to boost biofuel mandates. The world needs less ethanol and other biofuels for cars and more food for humans. Any government that thinks otherwise is morally bankrupt.
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