Friday, February 27, 2009

Food versus Fuel: Corn

CORN CUPS

At a recent lecture on campus, I was surprised to find that the cup that I had filled with punch was not actually made from plastic, as I had assumed. The label on the cup proudly proclaimed that it was made from corn, and that it was 100% compostable. I thought this seemed appropriate, since the lecture was on sustainable “green” architecture and design, but as I sat down for the lecture, I began to question the benefits of using corn to produce disposable cups. Since it was compostable, I thought, at least it wouldn’t be sitting in a landfill for years to come, and as disposable items go, maybe this was a good thing. And of course, the alternative would most likely have been made from plastic, which would have been derived from petroleum, which, as we are all aware, we are rapidly running out of. So that sounds better, but then I watched as the trash can by the door filled with these cups and I began to wonder if this corn-based “plastic” needed to be composted in a specific way.

As it turns out, if you put your cup in a personal compost pile, you aren’t going to be able to watch it decompose at the rate that an ear of corn would. That said, it will break down eventually, and certainly before a petroleum-based plastic cup, but the benefits of a compostable cup that isn’t composted are minimal, the “100% Compostable” label is somewhat misleading. If you don’t recycle recyclable plastic, is it any better? The answer to that is no, though composting is a more complex issue.

That was only my first concern, though, as I held this cup in my hand, you couldn’t have convinced me that it was actually made of corn without the label, it certainly didn’t look like corn, and I certainly couldn’t have eaten it, and yes, I did try to bite down on it after my last sip. So my next concern was why the corn that was used to make my compostable cup hadn’t been used for food. Well, in reality, I realized that this wasn’t a substantial issue, but considering all of this led me to a more important issue: food versus fuel. As anyone who drives will have noticed, it’s nearly impossible to purchase fuel from a gas station that doesn’t contain some level of ethanol: “Contains Up to 10% Ethanol” read the signs on most pumps. Much of this ethanol is produced from corn, so the next question is why that corn isn’t being used as food.

ETHANOL

As it turns out, the debate over food versus fuel is an extremely complex one that derives from many factors outside of the common oversimplification of the issue. The major issue of whether or not corn should be used to produce ethanol is an important one that uses a number of significant concerns as the basis for debate. The two most prominent of these concerns are that by using corn to produce fuel the United States is significantly contributing to the issue of world hunger and that by taking corn that could be used as food off the market, those of us in the United States and elsewhere will be paying much more at the grocery store for the ever increasing selection of food items that derive from corn. Although these are both valid concerns, in reality, neither of them is significantly impacted by the use of corn to produce ethanol fuel. That said, I am not necessarily promoting corn ethanol, it is in fact an extremely inefficient biofuel, and hardly reduces the environmental impact of our dependence on the automobile as our primary mode of transportation in the United States. But I do believe that the debate of food versus fuel is the wrong way to address the issue.

WORLD HUNGER

By proposing that the use of corn to produce ethanol is having a significant impact on the world hunger crisis, one false assumption is made. This assumption is that a major portion of the corn produced in the United States, in some way, currently benefits the world's hungry. This, however, is not the case. According to the Institute for Agriculture and Trade Policy (IATP), of U.S. corn production in 2006, only 19.3% was exported, and of that, less than .1% was exported to the “24 countries in which at least a third of the population is undernourished,” while 55% was exported to some of the most prosperous nations of the world (Muller et al.).

Even if more of U.S. grown corn was exported to developing nations with large malnourished populations, though, this would be an inefficient means of addressing the problem. Another related concern, though, is that increased commodity prices resulting from the use of corn for ethanol production, have driven down the amount of U.S. aid to these countries. Currently, “the U.S. requires that the majority of its food aid [, 75%, in fact,] be in the form of food produced and processed in the U.S. itself. A recent report from the U.S. Government Accountability Office (GAO) found that nearly two-thirds (65%) of U.S. food aid expenditures are spent on transportation and business costs—not food—and that increases in these costs have contributed to the declines in food aid shipments” (Muller et al.). The issue here has nothing to do with corn at all.

There is also some reason to believe that by decreasing the amount of corn that is available on the food market, ethanol production may actually benefit the world’s hungry. Current levels of production in the United States have been so high, that much of the corn has been sold at well below cost prices, both in the U.S. and abroad, which has had a significant impact on the livelihoods of small and rural farmers. It has also resulted in the phenomenon of agricultural dumping. “In 2003, U.S. corn was exported (dumped) at an average price of 10% below the full cost of production” (Muller et al.). This phenomenon has two major impacts on farmers in developing nations, according to the IATP. “First, below-cost imports drive developing country farmers out of their local markets. If the farmers do not have access to a safety net of tariffs or subsidies and/or credit—which in most poor countries they do not—the under priced competition can drive them out of business. When this happens, the local farm economy shrinks, in turn shrinking the rural economy as a whole and sending rural people into trade-related migration. Second, developing country farmers who sell their products to exporters find their global market share undermined by a depressed global price” (Muller, et al.).

HIGHER FOOD PRICES

The second major argument of those opposed to the use of corn to produce ethanol is that devoting a significant portion of the corn produced in the United States to the production of ethanol will inevitably raise food prices for the average American shopping at their local supermarket. To address this, I think it is important to understand how the usage of corn in the U.S. breaks down. According to the IATP, only 11.7% of corn grown in 2006 was used directly for domestic food, while 19.3% was exported for various purposes, 50.3% went toward livestock feed, and 18.5% was used in ethanol production. This is a rather small proportion, but to take it a step further, of corn used for food, 4.4% is used for high fructose corn syrup, 2.1% for alternative sweeteners, 2.4% as starch, 1.2% in production of alcoholic beverages, and only 1.6% in cereals (Muller et al.).

After considering this breakdown, it is important to realize that the amount of corn we actually purchase directly as consumers is very small in relation to the amount of corn grown in the U.S. That said, the amount of corn produced in the U.S. is currently reaching all-time highs, while prices of corn have dropped by almost 50% over the past year (RFA). If this is true, shouldn’t prices for products that contain corn be dropping similarly? Well, as represented in the breakdown of corn use, it should be acknowledged that the amount of corn in retail food items is actually relatively low. And past that, the percentage of the value of such food items that attributable to corn is even smaller.

The cost of the food that we purchase in the grocery store is composed to two parts, the “farm value” and the “marketing bill;” here corn falls into the “farm value” category. “In the U.S. food supply overall, the farm value has been declining while the marketing bill has continued to increase. The farm value now stands at an average of only 19%; in other words, for every dollar spent on food, an average of 81 cents goes toward non-food components” (Muller et al.). Similarly, “when corn is $4.50 per bushel, the value of corn in an 18-ounce box of corn flakes is just 6 cents,” which is to say that the price of corn has minimal impacts on the price we pay for corn-containing products.


What, then, are we paying for? Well, one of the most significant portions of the cost can be attributed to transportation, because in most cases that food has traveled large distances. In fact, recent drops in the price of corn can be greatly attributed to lowering transportation costs, which relate to both the rapid decline in gas prices and, although minimally, the production of biofuels. Despite these trends, though, food prices have continued to rise, and it is estimated that they will continue to do so at a rate of 2.5-3.5% per year in the near future according to IATP (Muller et al.). This trend has been enough to convince many that the use of corn to produce ethanol has no negative impacts on the prices of food felt by consumers. The truth is that despite increasing production of ethanol, the price of corn as a commodity has continued to drop, and the prices of food have continued to rise, so it is impossible to blame ethanol production for the price of food.



SOURCES

Boyle, Rebecca. “The great corn-cup conflict.” Greeley Tribune. 4 Nov 2007. <http://www.greeleytribune.com/article/20071104/BUSINESS/111040212>

Carey, John and Adrienne Carter, with Assif Shameen. “Food vs. Fuel: As energy demands devour crops once meant for sustenance, the economics of agriculture are being rewritten.” BusinessWeek. 5 Feb 2007. <http://www.businessweek.com/magazine/content/07_06/b4020093.htm>

Muller, Mark, Tammy Yelden, and Heather Schoonover. “Food versus Fuel in the United States: Can Both Win in the Era of Ethanol?” Institute for Agriculture and Trade Policy. Sept 2007: Minneapolis, Minesota. <http://www.iatp.org/iatp/publications.cfm?accountID=258&refID=100001>

Renewable Fuels Association. “Will the Plunge in Grain Prices Mean Lower Prices at the Supermarket?” Renewable Fuels Association. 15 Oct 2008: Washington, D.C. <http://www.ethanolrfa.org/objects/documents/1945/will_the_plunge_in_grain_prices_mean_lower_food_prices_at_the_supermarket.pdf>



OF INTEREST


http://www.youtube.com/watch?v=j9QQcP_Y1II

1 comment:

  1. This is a well-reasoned, thought-provoking post. It directly challenges the claim that Raj Patel has been making, and it definitely shakes up my understanding of the relationship between ethanol and high food prices. The argument about the benefits of high food prices for producers is well taken. However, I do take issue with your final sentence. Corn prices, in fact, have risen dramatically (more than doubling) over the past year or so. I noticed that the IATP report you use here was published in 2007, so that was before the food crisis (high food prices) became extremely acute. How have the IATP's predictions played out since the report was written?

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