May 2, 2012
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It all comes down to sound reasearch and careful analysis.
On Feb. 8, Gord Surgeoner, president of Ontario Agri-food Technologies (OAFT), presented Food Versus Fuel: The Debate is Over at the Canadian International Farm Show. The presentation comes in the wake of a 57-page report released by the George Morris Centre on the impact of Canadian ethanol on the livestock and meat industry in Canada. The report, which pits livestock farmers against grain farmers, has been highly criticized by corn expert Terry Daynard, who calls it "much weightier in opinion than analysis." Surgeoner's presentation was based on information compiled by the Grain Farmers of Ontario. Food versus Fuel makes a strong argument for biofuel, refuting concerns about rising food, grain, and gas prices, and world hunger, using sound research and careful analysis.
Despite evidence that clearly says otherwise, there have been concerns that ethanol has had an impact on food prices, and its production has been blamed for the grain price increases Ontario has seen both this year and in 2008. "Yes, we have affected corn prices," said Surgeoner, "But let's stop and put it into perspective."
Ethanol production amounted to 1.8 billion litres in 2010, using 3.5 million tonnes of corn and 1 million of wheat, of which two-thirds was grown in Ontario. "Currently, 15% of the world's corn and 5.7% of the grain is now going into that," says Surgeoner. "When you take the byproducts, only 3.7% of the world's grain supply is going into global ethanol production."
Surgeoner says that while biofuels are an easy target, there is a multitude of factors that contribute to the rising price of grain. Even though global totals were up, poor wheat crops in Australia and parts of Europe helped create spikes, as did export restrictions on wheat and rice. Other contributing factors include panic buying, hoarding, and rising oil prices. As oil prices rose, the costs of both production and transport rose as well. Finally, one must also consider the shrinking US dollar as a contributing factor.
Ethanol isn't just blamed for the rising price of grain; many accuse its producers of contributing to rising food prices, and therefore, world hunger. It's true; biofuels are responsible for food price increases, but not as much as one would think, says Surgeoner. In actuality, biofuels are responsible for only 0.5 to 0. 8% of the price increases seen in 2008. "Food prices went up by 5.1% [in 2008]; we may have been responsible for a half-percent of that."
"The key thing that's forgotten is that we don't just make ethanol," he says. "That becomes a very important factor when you look at the food versus fuel debate."
When calculating for the available feed supply, the George Morris Centre didn't consider that ethanol production creates distillers dried grains and solubles (DDGS), a byproduct that is used as animal feed. DDGS is not the same as grain feed; actually, it's higher in both protein and fibre, making it a more desirable feed.
If calculations had considered DDGS, they would have appeared much different. Despite six times more ethanol production in 2011, with the inclusion of DDGS, there has been little to no reduction in the amount of feed available.
What was far more important to price increases was the increase in energy prices. "Our costs, as farmers," says Surgeoner, "are attached to oil prices." So what happened to gas prices in 2008?
Gas prices in 2008 were relatively elastic. "A 5% increase in supply should mean a 10% price reduction," says Surgeoner. According to one study, the retail effect may be minus 6-10 cents per litre, meaning that without ethanol, the price of gas would be six to 10 cents higher.
The overall effects of fuel ethanol on Canadian families, therefore, should be seen at the pump. "In my opinion, a 0.5-0.8% increase in food prices, which costs the average consumer between $35 and $60 a year, and a 6-10 cent per litre reduction in gasoline means about $100 to $180 less per year," says Surgeoner. If you didn't drive a car, you lost out; but if you did, you saved.
Not only that, but "the addition of 10% ethanol to gasoline means a 62% reduction in net GHG emissions on a per-litre of ethanol basis," says Surgeoner. He notes that Canadian fuel ethanol usage is equivalent to removing 440,000 cars from the road, so there's a positive effect on the environment as well. In fact, a 10-percent ethanol blend effectively reduces greenhouse emissions by 62%.
As for global hunger, Surgeoner is careful to note that ethanol has had minimal effect on Third World food prices and hunger. "Hunger is not a production issue," says Surgeoner. "Hunger is a distribution of wealth issue."
Surgeoner points out that rice and wheat are far more important to Third World diets – 50% of their caloric intake – and spikes were higher for those grains than they were for corn and soybeans.
"And it's not just biofuels," says Surgeoner. "If we want to get the highest value, what we should be doing is extracting as much value before we eventually create fuel, or we burn as pellets. So how we get value all the way through the system is going to be a key aspect."
So what does Surgeoner propose as a solution to the biofuel problem? He suggests that biomass producers focus on finding new bioproduct markets, as well as come up with an aggressive communication plan to explain the benefits of ethanol production to the rest of society. "Biofuel production," he says, "offers a strong alternative market for their grain. Without ethanol, corn prices would drop by 15% in North America."
"The greatest risk to food security," concludes Surgeoner, "is farmers not getting fair return for labour and investment."