by PAT CURRIE
A new study released by the Grain Farmers of Ontario has concluded that neither farmers nor the diversion of grain into production of ethanol can be blamed for persisting higher food prices that do not mimic any cyclic fall after each rise in world grain prices.
A comparison showed many similarities between the recent double price spike in 2008 and 2011 – when ethanol production boomed – and the double spike in 1974 and 1980, well before the ethanol industry was established.
Common factors were crop failure in key production regions caused by extreme weather, high oil prices and price increases for agricultural inputs like fertilizer. Both double spikes were followed by several decades of declining real grain and food prices.
"The truth is that farmers receive only about 19 per cent of the retail price of food," said GFO CEO Barry Senft.
The impact of bio-fuels on world food prices in 2007, according to the U.S. Secretary of Agriculture, was no more than three per cent.
In the 1970s and 1980, it was forecast that high food prices were permanent and that the world’s food-supplying capacity will have to increase by 70 per cent between 2000 and 2050, or about 1.1 per cent per year, just to keep pace.
But in inflation-adjusted dollars, crop and food prices moved to new lows after 1980 as the world food supply grew at a rate that exceeded population growth, the study found.
The GFO study noted that average world grain yield increased by 1.5 per cent per year from 1987 to 2007 and concluded that continued growth is achievable with modern agriculture. BF
Comments
As the price of corn keeps steadily rising, GFO, and ethanol advocates throughout North America are becoming increasingly desperate to try to make the preposterous case that having up to 40% of North American corn diverted into ethanol, doesn't significantly affect either the price of corn, or of food.
In addition, GFO seems overly-prone to citing only those references which support the ethanol cause. For example, GFO neatly, and conveniently, overlooks the claim made, if my memory is correct, by Stefan Tangermann, former head of Agriculture and Trade at OECD, who laid the blame for the food price spikes in 2007/2008 "squarely on biofuels".
Even the figures used by GFO, and its favourite son, Dr. Terry Daynard, don't seem to match. For example, in an article posted on this site on April 27, and in direct contrast to Tangermann's conclusions, Daynard claimed ethanol affected the world price of food in 2007/2008 by .5% to .8%, yet the un-named US Secretary of Agriculture cited in this most recent story claimed "no more than 3%" - I mean, really, from .5% to 3% is still a factor of 6 times, leaving the accuracy of any, and all, GFO claims, highly suspect.
Finally, experience should place the benefit of doubt squarely against GFO - after all, a few years ago, GFO actually commissioned a study to purport that since adjusted corn basis hadn't changed since ethanol came to Ontario, then ethanol hadn't harmed livestock feeders. Unfortunately, GFO completely wasted my money because if a "no change in basis" situation meant that ethanol hadn't harmed livestock feeders, then the same argument could be used to prove that ethanol hasn't helped corn farmers.
Do I trust/believe anything GFO says, and/or writes, about ethanol? - absolutely not!
Stephen Thompson, Clinton ON
If GFO actually believe that ethanol has not affected livestock feeders, then they are the only one that does believe it. Grain farmers know that ethanol has a huge part in the price increase, livestock feeders know it, the government.......well OK the government probably doesn't have a clue how their policies have hurt livestock farmers.
Grain Farmers of Ontario (GFO) is the province’s largest commodity organization, representing Ontario’s 28,000 corn, soybean and wheat farmers. These three crops cover 5 million acres of farm land across the province, generate over $2.5 billion in farm gate receipts, result in over $9 billion in economic output and are responsible for over 40,000 jobs in the province.
The European Commission released the results of a biotechnology report that explores public perceptions of biotechnology, including biofuels. Over all, the Eurobarometer survey found that 80 percent of Europeans are either in favor of, or unopposed to, biotechnology.
At the beginning of 2011 researchers from the University of Illinois performed a detailed land analysis to identify land available to grow biofuel crops with minimal impact on agriculture or the environment. The study focused on marginal land that was of low quality for agricultural uses. They found enough available land to meet half of the world's fuel consumption without affecting food crops or pastureland. They estimated the available land area was 2.7 million acres globally and would produce 26 to 56 percent of global current liquid fuel consumption.
I'll start showing respect for GFO when they stop being silent about, and/or dismissive about, the huge economic costs, and adverse re-distribution of wealth, caused by the subsidies, tariffs, and mandates on which corn ethanol depends for its very existence.
For example, instead of boasting about the 40,000 jobs created by GFO members, GFO needs to admit, and/or not be dismissive about, the jobs lost in the livestock sector because of subsidized corn ethanol.
More to the point, when GFO starts showing respect for people who have been harmed by ethanol, instead of wasting my check-off fees by commissioning one-sided reports purporting to show ethanol as being of no harm to livestock farmers, then GFO might deserve some respect, and might actually get some.
Stephen Thompson, Clinton ON
The GFO might represent 28000 grain growers but that is not by the choice of the farmers.
My fees to the board are clawed at the time of grain sale. I don't have a choice in the matter.
I do not want them speaking on my behalf at all.
Have you ever once cited a reference that supported ethanol ? You jump all over ethanol proponents that selectively choose the data and references that suit them but consistantly and always do it yourself.
When the Wall Street Journal, the New York Times, and the Economist, all slam ethanol, and for exactly the same reasons - bad economics, I, as an economist, pay attention.
In addition, I've never seen any study supporting ethanol ever once examine the adverse economic situation caused by the subsidies, mandates, and tariffs, ethanol depends on to survive.
It's like this - the only way one can support ethanol is by ignoring the always-negative economics of protectionism on which ethanol is completely based.
Stephen Thompson, Clinton ON
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