Today on Listen Up – the Global Food Crisis. As food prices
climb,
millions around the world are pushed deeper into poverty and hunger.
It’s
been called “the silent tsunami.” A crisis
unprecedented in the last
half century. Food prices are going up. And while that may represent an
inconvenience to most of us in the wealthy West, for the already poor,
it can mean catastrophe. Today, we'll uncover some of the causes of the
crisis and explore solutions, as we seek a Christian response.
THE
CONTEXT
Canadians
typically spend only one-tenth of their income on food. Not so, the
bottom billion of the world’s poor, who live on a dollar a
day or less.
They normally spend from 60 to 75 percent of their incomes on food. So
when prices soar, even the basics become unaffordable.
And
prices have skyrocketed. Prices of nearly all food commodities have
risen since the beginning of the year. Wheat alone has gone up by more
than 130 percent. More than 3-dozen countries are in crisis. And calls
for action are gaining momentum after riots in Haiti, Pakistan, Egypt
and the Philippines as families struggle to feed themselves.
Andrew Heintzman understands our global food crisis – he and
Evan Solomon have compiled a book called “Feeding the
Future.” We caught up with Andrew in Toronto.
As food prices rise here at home, some families seem almost not to
notice. Others adjust by changing their diets – resorting to
cheaper, less nutritious foods. But there’s also a growing
move to revitalize local food economies. Melinda Estabrooks paid a
visit to the Toronto Food Share, for a picture of what that looks like.
Using food sources to make fuels, like ethanol, has come under tough
criticism for contributing to rising prices and market shortages. The
criticism matters deeply to the Christian view that we are each
other’s keeper. Here’s how one Christian
who produces ethanol tackles the problem.
Ethanol’s
Helpful Approach to the Food Crisis –
from Collingwood Ethanol
This
paper was prepared for members of the Environment and Sustainable
Development Committee in response to discussion over
biofuels’ role in the food vs. fuel debate. What follows is
our perspective on the debate and then a response to a debate paper
between Oxfam Canada and the Canadian Renewable Fuels Association,
which was released by Oxfam Canada on May 5th, 2008.- used by permission
The world has been rocked in the recent months with escalating prices
in a variety of commodities that affects everyone on earth. Record
pricing in oil, rising prices on cement, steel, natural gas and
virtually all food stocks have caused concern around the globe. Ethanol
and biofuels have, unfortunately and incorrectly, been blamed as the
primary cause of this global problem. We are optimistic that the
information contained in this paper will be helpful in properly
assessing the situation.
Discussion papers regarding biofuels have been sent to Members of
Parliament by many groups including the Canadian Renewable Fuels
Association and Oxfam Canada. Oxfam Canada has weighed in on this
debate, largely drawing its arguments from a paper issued by Oxfam
International in November, 2007 entitled, “Bio-fuelling
Poverty: Why the EU renewable-fuel target may be disastrous for poor
people”. It is important to note that Oxfam International
uses the words “may be disastrous”, as opposed to
“will”. In its paper Oxfam International discusses
the social principles that are needed to ensure biofuels offer new
market and livelihood opportunities to poor southern hemisphere
countries, while cleaning the air in the northern hemisphere countries.
Oxfam Canada, however, seems to have taken a different tact by
demeaning biofuels’ proven pollution-reducing properties and
blaming them for singularly causing a global food crisis.
We contend that when one takes into account the value of
Distillers’ Dried Grains and Solubles (DDGS), the main
co-product generated in ethanol production as livestock feed, the
starch in corn that goes into the production of ethanol does not have
significant impact on global food production supply. We maintain that
rising demand in the developing world, particularly China and India, is
the driver behind increasing food prices.
The other items we highlight in this paper are;
• The starch component of wheat
and corn are the fermentable components of the grain. The remaining
portion is protein which is a highly sought after protein feed for
livestock called distillers’ dried grains and solubles (DDGS).
• DDGS production has increased
in step with ethanol production, meaning the protein quantities
available from corn for livestock feed are indifferent to ethanol
production
• Protein demand by humans in
developing countries, particularly in China and India, has increased
dramatically in recent years. This increased demand along with rapid
growth of an already large population, has driven up the price of all
the world’s commodities, not just agricultural ones.
• Biofuels production has
increased the demand for corn, wheat, soybean and canola but is not the
culprit behind recent food shortages in developing, highly populated
nations; explosive population growth and higher protein diets are.
• In light of the above, it is
becoming increasingly apparent just how important it is for
highly-developed nations like Canada to promote politically and
socially stable institutions in developing countries. In order to
ensure the world can feed itself in the future, impediments to
small-scale farming and investments into agricultural must fade away.
Collingwood
Ethanol Opening Comment:
The main item we see lacking from the current food vs. fuel debate is
that neither party has recognized that corn does not make ethanol;
starch or sugar, broken down into glucose does. So immediately we have
to understand what happens to this starch when we pull it out of the
food chain and put it towards ethanol production. This question can be
uniquely answered by our company which operates a corn wet mill.
What
is a corn wet mill?
A corn wet mill fractionates the corn kernel into its 4 constituents:
starch, corn germ, fibre (the shell of the corn kernel) and corn meal
(corn meal makes corn yellow):
• Corn germ is crushed and makes
corn oil.
• Fibre is cellulose and is
often referred to as ‘corn feed’ as it is a
low-protein (20% protein) feed product for cattle and other livestock.
• Corn meal is very high protein
(>60%) and is also used to feed cattle and livestock; it is also
used in both human and pet food.
As well, because a corn wet milling ethanol plant sends through a very
clean stream of starch to fermentation, the yeast that is propagated to
ferment starch can be retrieved. Yeast is another high-protein feed
(50%) that is very robust in amino acids and is used in human,
livestock and pet food.
Starch from a traditional corn wet mill is used to make specialty
starches such as dextrose (baked goods, coffee sweetener, canned
fruits, cheese spreads, jams and jellies), high fructose corn syrup
(soda pop, fruit fillings) and baked goods. Corn starch is also used in
many highly specialized industrial applications (adhesives, spark
plugs, wallpaper and wallboard, paper products, pharmaceuticals),
albeit in relatively small quantities.
The corn wet milling industry, at least in Canada, is experiencing a
change in the market which has been evolving over the past 5 years; a
global decrease in demand for high fructose corn syrup, which is
primarily used in soda pop. We believe this is symptomatic of a global
trend moving away from sugary, carbonated beverages. As a result,
starch is looking for new markets and prices have decreased.
What
is a corn dry mill?
The vast majority of ethanol plants in North America are corn dry
mills. A corn dry mill does not fractionate the corn kernel. It grinds
the corn kernel and sends the “mash” to
fermentation. In fermentation, the starch is fermented and the
remaining components of the corn kernel (germ, fibre, meal), plus the
yeast from fermentation, are harvested altogether as a mid-protein,
high-energy feed product called Distillers’ Dried Grains and
Solubles (DDGS). Once again, only starch is fermented and made into
ethanol. DDGS are sold into all facets of the livestock market and are
often pelletized for easier shipment into overseas agricultural markets.
Protein
and starch:
As a consequence of the North American ethanol industry, the starch
component of the corn kernel has likely decreased in global supply, but
the protein portion (DDGS) has increased dramatically. To be clear, the
USDA reports that US Dried DGS production has jumped from 3.5 million
tonnes in 2000 to 17 million tonnes in 2007. This figure does not
account for Wet DGS, which are sold in a wet form and sold to feedlots
local to ethanol plants.
So
what?
Protein is a big deal. The Food and Agricultural Organization of the
United Nations reports that from 1981 to 2001, the per-capita daily
protein consumption in China increased from 54 grams to 82 grams, a 52%
increase. In light of the dramatic increase in Chinese incomes since
2001, that caloric consumption has grown appreciably. That’s
a lot of protein considering China’s 1.3 billion population.
The Chinese experience was not singular in nature and India (1.1
billion), with its growing economy, has also seen a large increase in
per-capita protein consumption (vegetarians still eat eggs, fish and
dairy products; Muslims don’t eat pork but do eat
meat).
World economies have historically grown as a result of a large middle
class which drives the economy. This was not the case during the last
century in Africa, Asia and India but this has dramatically changed in
the last 10 years. One simply cannot ignore that when the economies of
two countries representing 36% of the world’s population
explode, demand will outstrip supply. This has occurred in the past
four years in a variety of other commodities (cement, steel, oil) as a
result of the growth in China and India and is now happening in food
commodities.
We believe that these large increases in the middle class and
corresponding protein demand have had the overwhelmingly greatest
impact on global food prices and the biofuels’ food vs. fuel
debate has become a convenient scapegoat.
The following are our comments to the debate between the CRFA and
Oxfam. Please find attached the respective arguments from the two
groups.
1.CRFA Assertion: There are no credible scientific studies to back up
any of Oxfam Canada's statements on biofuels. Oxfam has no biofuels
expertise or scientific studies of its own in regard to the biofuels
industry in Canada.
Oxfam Response: There are countless peer-reviewed scientific papers
which show that biofuels produced under the conditions that prevail in
Canada will accelerate climate change. One such paper was published
this year by Nobel Laureate Paul Crutzen and colleagues, who
investigated emissions of nitrous oxide, a greenhouse gas 296 times
more potent than carbon dioxide, released through the decomposition of
nitrogen-based fertilizers commonly used in the production of corn
destined for ethanol and canola destined for biodiesel. They found
release rates for the gas were typically three to five times higher
than had been assumed in earlier lifecycle analyses, tilting the
cost-benefit balance against the use of biofuels produced from corn or
canola.
Collingwood Ethanol comment:
We would suggest that Oxfam Canada produce these countless scientific
papers showing that biofuels accelerate climate change.
Ethanol is an oxygenate and has a very high octane rating. An oxygenate
cleans up tailpipe emissions by more completely combusting gasoline.
This helps to reduce smog and volatile organic compounds in our air,
and in our cities, in particular.
In addition Oxfam also stated:
“…who investigated emissions of nitrous oxide, a
greenhouse gas 296 times more potent than carbon dioxide, released
through the decomposition of nitrogen-based fertilizers commonly used
in the production of corn destined for ethanol and canola destined for
biodiesel.”
Is there a difference between corn destined for ethanol production and
any other corn? The corn is going to be grown regardless, making this
argument moot.
2.CRFA Assertion: Oil and gas prices are up 100 per cent in one year.
Oil at over $100/barrel has a disproportionately negative impact on the
developing world, where annual incomes are dramatically lower than in
the developed world.
Oxfam Response: We would agree that the soaring price of oil represents
a huge barrier to development in the global South but there is no
evidence to suggest the solution to this challenge lies in deep
subsidies to promote accelerated production of biofuels in the
industrialized North.
Collingwood Ethanol comment:
Oxfam’s suggestion that biofuels was thought to be the
solution to development barriers in the global South is phenomenal.
Instead, the CRFA is implying that catapulting oil prices have had an
enormous effect on much more than transportation costs, particularly in
the developing world.
Bill C33 is proposing a 5% blend of ethanol or biodiesel in
transportation fuel to decrease emissions from motor vehicles in
Canada, not as a panacea for the global South, as Oxfam suggest.
Furthermore, deep subsidies are not what Canada is promising. The
government is helping to jump start the biofuels industry, a policy
that has helped a variety of new business technologies in Canada.
Canada’s ecoEnergy for Biofuels Program guarantees that
operating assistance appears only when agricultural prices are high and
biofuels prices are low.
3.CRFA Assertion: The price of rice is at an all-time record high. Rice
has no relation to biofuels production, as biofuels are not made with
rice, and corn is not grown in rice paddies.
Oxfam Response: Food prices in general are at record levels. The IMF
estimates biofuel demand explains 20 to 30 per cent of recent food
price rises. Prices have a knock-on impact from one commodity to
another due to substitution and allocation effects within global
agriculture. The prices of food stuffs do not move in isolation.
Moreover, in many countries including Indonesia the price of rice has
risen as lands that had been dedicated to rice production are diverted
to biofuel production.
Collingwood Ethanol comment:
We agree with Oxfam that there is a definite long-term correlation of
all food prices but disagree with the IMF assertion about
biofuels’ impact on food price rise. As mentioned previously,
when people by the hundreds of millions switch from a diet of rice and
bread to three meals a day, their protein consumption rises rapidly;
prices have inevitably followed.
Protectionist food measures by many grain producing countries
exacerbate an already difficult problem and drive food commodities even
higher. In January, Russia quintupled the duty on wheat exports, while
China has introduced a battery of new duties on wheat, soybeans and
rice (FAO: Crop Prospects and Food Situation, February 2008). In
addition, Argentina issued a decree in March increasing taxes on
soybeans and grains, which have resulted in well-publicized strikes and
blockades by Argentine farmers, who have effectively blocked exports
for many of the country’s agricultural products.
4.CRFA Assertion: Countries such as Haiti have untapped biofuels
potential in crops like sugarcane. Biofuels would help Haiti and other
developing nations grow a sustainable economy and free them from the
regressive over $100/barrel oil tax.
Oxfam Response: This may in certain countries and under certain
conditions prove true. But the subsidy costs are huge as is the risk
that small farmers will be displaced from their lands and that carbon
sinks such as rainforest and peatlands will be lost. It should be noted
that it has taken Brazil 30 years for its biofuels program to become
self-sufficient and it collapsed in the 80s when the cost of subsidies
became too great to bear. Moreover, it is naïve to suggest
that biofuels production in Haiti or other countries in the global
South would be restricted for local use. Market pressures will grow
inexorably for low-cost biofuels production in the world’s
poorest countries to be used to provide low cost biofuels for use in
northern industrialized countries such as Canada. Over time this will
mean that the temporarily high prices being enjoyed by Canadian farmers
will plummet.
Collingwood Ethanol comment:
It’s a little hard for us to follow either argument in this
case; both make highly speculative assumptions about the future.
Oxfam’s comments about plunging Canadian agricultural prices
due to low-cost southern biofuels seem particularly out of touch with
biofuels policy in the US and Canada, which encourage local production
from local feedstock. What we do know is that high agricultural prices
translate to higher profits for Canadian farmers and decreased
transfers from the government.
However, high agricultural prices do not necessarily mean higher
incomes for farmers in developing nations due to political instability
and land mismanagement; Haiti is a prime example. We believe Oxfam
needs to continue focusing its efforts in this area, where the core
problem remains the lack of sound institutional frameworks, without
which both foreign agricultural investment and small-scale farming are
stifled.
5.CRFA Assertion: Last year, the US produced a record amount of ethanol
(8 billion gallons). In the same year where they produced a record
amount of corn ethanol, they actually increased the amount of corn for
export. In fact, they had so much corn, that after all of their corn
commitments, the US had a 10 per cent corn surplus.
Oxfam Response: The ethanol program consumed a quarter of the entire
corn harvest last year, and this year it is expected to consume close
to a third. The IMF estimates that, along with the European Union,
ethanol production accounted for half the increase in demand for food
crops last year. The rising price of corn is also pushing up the price
of other commodities, for example, as farmers switch from soy to corn.
Collingwood Ethanol comment:
It should be noted that the commodity trading markets largely associate
consecutive wheat droughts in Australia and the Ukraine from 2004 to
2007, which saw production in these countries fall by as much as 80%,
as the primary trigger for the 2007-08 agricultural commodity run. It
should also be noted that the EU experienced a 20% drop in corn and
wheat production in the same period due to droughts in some regions of
the EU (see the USDA’s Foreign Agricultural Service Crop
Explorer website for regional crop production by year). These droughts
and production shortfalls are direct contributors to price increases.
No one can deny that there has been a global run on commodities. Gold
and oil prices have traded at all time highs in recent months. All of
these commodities are priced in US dollars, a commodity in its own
right. The US dollar has been hammered in the past 24 months, losing
much of its value over the Euro and other major currencies. As the
dollar falls, US-dollar denominated commodities rise; that’s
just simple economics.
6.CRFA Assertion: Over 80 per cent of the cost of food is marketing
costs including energy and labour. Corn accounts for less than 5 per
cent of the price of a box of corn flakes.
Oxfam Response: That farmers are not getting their fair share of the
consumer price of foods is undisputed. But the poor of the global South
don’t buy processed and packaged foods, so for them the
impact of the biofuels boom on the spike in food prices is both dire
and direct.
Collingwood Ethanol comment:
The theme in the last 3 arguments surround high food price. Once again,
high agricultural prices have been sparked by a number of events such
as high oil prices, droughts, a global run on all commodities and some
blame may be laid upon increased biofuels production. But, by far the
biggest contributor to high prices is rapidly rising global demand for
food products and protein. As mentioned previously, the corn consumed
by ethanol production still gives back its full value of protein to the
food chain in form of DGS, feed, germ and corn meal.
7.CRFA Assertion: Government of Canada studies and the peer reviewed
science is clear. Ethanol and biodiesel reduce harmful greenhouse gas
emissions and air pollution, and have a positive energy balance.
Oxfam Response: Four years ago, this may have been the case. But
further research and deeper analysis have discredited those early
studies. No credible scientist would make this case today.
Collingwood Ethanol comment:
Oxfam’s comment is categorically incorrect and, in our view,
erodes their credibility as a contributor to this debate.
Oxfam
Closing comment:
Oxfam Canada has no financial or partisan stake in the biofuels debate.
We raise these concerns because we are working day to day on the front
lines around the world to confront the scourge of poverty and hunger
and to help women and men, girls and boys protect their rights and
build their capacity to thrive and prosper. We are committed to
tackling the policies and the practices that create and perpetuate
poverty and inequality, promoting alternatives that are environmentally
and socially sustainable.
Collingwood
Ethanol closing comment:
Oxfam’s contribution to the international aid is undisputed
but we believe their efforts to dismantle the Canadian biofuels
industry are misguided and misinformed. Oxfam is not an expert on
energy nor in corn ethanol wet milling.
According to the USDA, the US produced 332 million tonnes of corn in
2007. In 2008, ethanol plants are expected to consume 30% of all US
corn production, or approximately 100 million tonnes. This amount
represents 10% of global coarse grains output (corn and other feed
grains) and 5% of total global grains (see table below, made by the
USDA Economic Research Service). What would happen if all 100 million
tonnes were sent back to the food chain? Not much. The protein
available for livestock consumption would not change; in place of DGS,
corn and soybean meal would fill in the livestock protein feed
requirement, basically leaving us in the same boat. In the instance
that a fresh, unallocated 100 million bushels of corn came on-stream,
the table below tells us that it would probably take about 3-4 years
for the world to fully consume that fresh supply due to increasingly
larger annual demand. So should Oxfam turn its attention to biofuels,
which regardless of all the negative recent attention unequivocally
cleans the products of combustion coming out of the tailpipe, or should
we focus on stabilizing third world governments that currently act as
agents to poverty and corruption? The real threat is that the food vs.
fuel debate will take the public’s collective eye off the
true culprit of third world poverty: the lack of stable political and
institutional infrastructures.
Conclusion:
Taking into account the value of DDGS to livestock feed, the starch in
corn that goes into the production of ethanol does not have significant
impact on global food production supply. We maintain that rising demand
in the developing world, particularly China and India, is the driver
behind increasing food prices and decreasing ending stocks of grains.
Consider the table above, looking at years 1999/00 to 2003/04: there
was no biofuels boom during this period but ending stocks decreased 40%
regardless, and have only fallen slightly since then.
We empathize and agree with Oxfam’s frustrations regarding
international poverty. The shareholders of Collingwood Ethanol have
been active in significantly funding a variety of African health and
food issues for many years.
Here's a perspective I had on the
world food crisis when I travelled with my son to India. In
all
the pictures notice how much larger North Americans are. I saw
the difference good diet makes in healthy
growing bodies; my
son at 18 was nearly twice the size of many adults he
met. As
we worked with Christian Blind Mission, we saw malnutrition
threatens to harm not only this generation, but the generation to
come. Physical and intellectual development are impeded in growing
children, undermining the progress of
their
communities and nations. So - there's no
argument. If the
growing economies in India and Asia are now letting millions eat more
and that's part of the reason the food crisis is upon us, that's a
problem we must handle. One practical thing
I'll try
and do is buy locally, eat less red meat, and more vegetables at my
home. And I'll think deeper about Bible stories of Jesus and
the sharing of food. In those famous stories, like the
feeding
of the 5,000 or breakfast on the beach with Jesus, we find that the
character of Christ is revealed in a new way when food is shared.
That should motivate us to work toward a better table for the world.
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On April 30, 2005 Lorna was privileged to receive an honorary Doctorate of Christian Ministries from Canada's largest Christian university, Trinity Western University. Lorna was recognized for the witness and leadership that Listen Up TV has provided in public messaging: "a leader in the voice of evangelical life in Canada."
