MitsuStyle - Understanding World Food-Fuel Crisis

Here's another one....

Quote:

FOOD “And” FUEL

A firestorm of negative media about the ethanol industry seems to have become the current rage. The issue is usually presented as a moral controversy by casting it in terms of “food vs. fuel”. To portray a complex issue in simplistic moral terms is to trivialize it.

Any one who has spent any amount of time considering a world with both a growing population and expectations that are rising dramatically understands that it will demand a lot more of both “Food and Fuel” in the future, not one exclusive of the other.

So for those who wish to enter the debate, please consider the following:

a) Less than 2 % of the US corn crop is used for human consumption as cereal grain. We use almost as much for pet food as we do for cereal consumption. About 6 to 7% of the corn crop is used to make fructose and sweetners. (It’s cheaper than sugar, and sugar is surplus)

b) The corn to ethanol industry only uses the starch portion of the kernel. All of the protein, oil, fibers, minerals, vitamins, and other components remain and are available for utilization as food for either human consumption, or for their traditional use as livestock feed. This remaining portion is commonly referred to as DDGS.

c) The world is not short of starch for human nutrition. The need is for proteins and digestible fiber. Soybeans traditionally carry a much higher value in the marketplace because they contain a much higher percentage of proteins and oils, and a much lower percentage of starch.

d) Rice is the one high starch cereal grain that is widely consumed by humans directly as a cereal grain. Corn acres and rice acres are not fungible. One is not produced at the expense of the other.

e) Since the early 1970’s, the Consumer Price index for food, meat, and poultry has risen at a steady rate of 3.5 to 4% per year. (About 4.5% during the 80’s). That is about the same as the current rate of increase. During that entire 40 year span of time, we have experienced both world hunger and such a consistent surplus of corn that the US government had to invent a variety of different methods to keep the surplus manageable.

f) From 2000 to 2005, there were 11 countries in the world in which 46% or more of their populations were listed as undernourished. Those countries received less than one hundredth of one percent of US corn exports. If we broaden that to include the 24 countries in which at least a third of the population is considered undernourished, the number is still less than one tenth of 1% of US corn exports.

g) In the dry mill ethanol industry, less than 2/3rds of the energy in a bushel of corn ends up as a liquid fuel. The remaining Btu’s/calories are in the protein, fiber, oil, etc. (DDGS). When those products are priced by the marketplace, it pays four times as much for the liquid fuel as it does the food portion.

h) When you read or hear that it takes almost as much energy to produce ethanol as it yields, the 136,000 Btu’s per bushel remaining in the DDGS is conveniently or mistakenly overlooked.

i) We Americans spend, on average, 10% of our disposable income on food. It takes 6 to 7 lbs of the nutrition from cereal grains to produce the equivalent amount of nutrition in meat & poultry. We gladly pay more for meat and poultry because pork chops and steaks taste better, and, we can afford to. The net loss of nutrition to convert cereal grains to meat is considerably higher than in the corn to ethanol industry.

j) The marketplace is paying three times as much for energy in the form of liquid fuel as it is in the form of food, not because of the Renewable Fuels Standard, but because crude oil is $120 a barrel.

k) My company currently exports DDGS to various Asian countries. The freight alone is equal to or greater than the price of the product. Asia, as the most densely populated region of the world, uses it for the same purposes as we do, livestock production.

No one in the renewable fuels production business has ever suggested that ethanol is the total solution to the current problems of fossil fuels. But we do view our industry as being able to provide tools that can further the development of a better agriculture and fuel system that provides benefits to farmers, communities, public health, and the environment.

Ben Brown
CEO
Heartland Corn Products
Winthrop Mn