Grain Farmers say food/ethanol debate over

Tuesday, April 26, 2011

by BETTER FARMING STAFF

At a time when the United Nations Food and Agriculture Organization tells us there are 925 million undernourished people in the world, a news release from the Grain Farmers of Ontario says a new study they commissioned “should put an end to the ongoing debate of whether the grain we grow should be used for food or fuel” arguing “we can and should do both.”

The report’s author, Dr. Terry Daynard, notes he didn’t write the news release although he says he doesn’t disagree with it. “We wrote the report but the Grain Farmers who received it wrote the release, so all I can do is comment on the report,” Daynard said.

“What we were charged to do,” he said, “was to examine the whole situation, what are the environmental benefits of ethanol and biofuels which is mostly ethanol in Canada anyway and what’s the implications to grain prices and food prices and so on,” he said, adding he looked to existing reports and went with reports he believed were the most credible.

Daynard, a Guelph area farmer with a Ph.D. in crop production, agrees that ethanol production has increased the price of corn. He points out that was the reason farmers supported ethanol production in the first place, to create an additional market and increase the price. However, he maintains ethanol accounts for 20 to 40 per cent of the price spike in 2008 and about the same in 2011. Panic buying of wheat and rice particularly and hoarding, he said, have been the big drivers.

“When you work that through what that means in food prices it turns out that at its peak in 2008 that ethanol was probably responsible for about 0.5 to 0. 8 per cent price increase in food,” Daynard said. While that increase may have added $35 to $60 to food bills for average Canadian families, the savings at the pump amounted to $100 to $180. The reason for that is that ethanol added five per cent to world gasoline supply causing a damping effect on prices that the market would otherwise charge. “A small change in supply can have a large effect in gasoline prices,” he said.

Daynard said the real tragedy is Africa where most of the arable land is underused and where farming methods have not changed in generations. “If Africa and some of the other countries got more help,” he said, “they would be fully capable of feeding themselves and that’s the solution for them, not to ship it all from here.”

Daynard said studies show Canadians earn enough disposable income to pay for their annual food bill by Feb. 12. “When do they earn enough money to pay for the farmer’s share of that food?” he asked. “It comes out to about the middle of the day Jan. 9. If you took into account this maximum effect of ethanol on corn pricing at the peak of 2008 and the peak of 2011, it turns out it would change from about noon to 4 p.m.” BF