Thursday, April 24, 2008

More grist for the ethanol/agflation brew

My buddy Andrew, a former hutsman and current geographer studying Texan ranches, weighs in on the biofuels brouhaha by pointing out that the America's current shortage of corn for food isn't that bad in the grand scheme of things, and could actually have a few beneficial side effects for the environment.

Andrew argues that the sudden dearth of cheap American grains could prompt developing nations to diversify and develop their own local agriculture (as long as they don't starve in the meantime). Also, rising feed prices might drive more people to eat less meat: since it takes roughly 16 pounds of feed to produce one pound of beef, the prices of farmed animal products are going to rise faster than the prices of vegetarian products.

Still, Andrew makes it clear that he's no fan of the biofuels mandate - but he points out that "changes in supply are a natural feature of our economy," and we've weathered crop shortages before without too much trouble.

International Herald Tribute columnist Roger Cohen is a whole lot more defensive of ethanol in his column published in today's New York Times. He writes that "most of this [criticism of biofuels], to borrow a farm image, is hogwash and bilge."

Cohen blames rising oil prices (since farmers burn lots of oil to produce crops), the weak dollar (which buys less imported food than it used to) and increasing foreign consumption as the real causes of rising food prices.

Unfortunately, some of Cohen's arguments are circular. Biofuel production leads to diminishing food exports, which is one reason our trade deficit is growing and the dollar is getting weaker. And if, as I've written previously, we're going to replace foreign oil with biofuels, then rising oil prices will be more closely tied to rising food prices, since crops are now more likely to be turned into fuel instead of food.

The factors behind the global food shortage are certainly complicated, but it can't be denied that the American ethanol mandate isn't helping matters. Given the state of the world, why the hell are we diverting so many millions of calories away from human bellies and into western gas tanks instead?

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