Re: Cars grabbing World’s grain supply…

A really weird artcile, this – Cars are grabbing world’s grain supply

…Cars, not people, will claim most of the increase in world grain consumption this year. The US Department of Agriculture projects that world grain use will grow by 20 million tons in 2006. Of this, 14 million tons will be used to produce fuel for cars in the United States, leaving only 6 million tons to satisfy the world’s growing food needs.

….As the price of oil climbs, it becomes increasingly profitable to convert farm commodities into automotive fuel, either ethanol or biodiesel. In effect, the price of oil becomes the support price for food commodities. Whenever the food value of a commodity drops below its fuel value, the market will convert it into fuel.

…The profitability of crop-based fuel production has created an investment juggernaut. With a US ethanol subsidy of 51¢ per gallon in effect until 2010, and with oil priced at $70 per barrel, distilling fuel alcohol from corn promises huge profits for years to come.

…The US investment in biofuel production in response to runaway oil prices is spiraling out of control, threatening to draw grain away from the production of beef, pork, poultry, milk, and eggs. And, most seriously, the vast number of distilleries in operation, under construction, and in the planning stages threatens to reduce grain available for direct human consumption. Simply put, the stage is being set for a head-on collision between the world’s 800 million affluent automobile owners and food consumers.

Probably, a bit of scare mongering in this, but I find the whole thing warped beyond disbelief.

Posted on July 24, 2006, in Uncategorized. Bookmark the permalink. 15 Comments.

  1. this article was probably right next to the one where it said that rats would drink up all the petrol and diesel….

    • They didn’t say that actually 🙂

      Personally, I find this site quite informative, and fairly sane. While they might exaggerate sometimes, I think they highlight issues that do need addressing, if not right away, in some time to come. The thing is there are always ecological consequences to most things we do, one can’t therefore not do anything, but it’s good to be informed, and act, if required. But yes, that pinch of salt is needed too. 🙂

  2. That Ethanol can be reliably used as a gasoline replacement is known now for some 25 years. Brazil has had an ethanol program for that long.

    The idea that ethanol will outstrip food supply is not very well thought out. For one, I believe that oil isn’t anywhere near over – the threat of Ethanol replacing oil will surely drive the oil companies to reduce the price of oil – there is an elegant market solution to this after all.

    Furthermore, if world food production is really at stake an easy solution would be for all of us to turn vegetarian. The pasture area needed for the meat required to feed a non-vegetarian is a couple of orders of magnitude of the area needed to grow all the necessary food grains for a vegetarian.

    • Oh, I do know the ideal of ethanol as fuel is pretty old. I also agree with you that the argument is probably flawed, though I really have no real way to say if it is or not.

      The reason I posted that was not so much because I found it scary, it’s just the idea of transferring crops for fuel production at such a scale, that I find strange. Very similar to how pasture has been diverted for livestock in such large scales in the US, in a sense, as you have already pointed out.

      It was more an uneasy observation on the way things happen. Call it my personal disconnect with the way the world functions. 🙂

      But yeah, on one point I don’t quite agree. I don’t think there is a direct market solution, elegant or otherwise, for the price of oil. Either we reduce dependency, or find alternative sources. Of course, only time will tell.

  3. Somewhat OT

    Hey, would you know how I can verify the facts behind this one:

    If 9 million HNWI out of 6 billion is correct, it implies that 0.13% of the world owns 33 trillion out of 44 trillion. That’s. fucking. skewed.

    • Re: Somewhat OT

      A fair bit of that is paper money, I imagine. I have no idea they computed that 33 trillion and 44 trillion. Also, I don’t think it takes into account the black economy, which is fairly significant in less developed countries. Maybe you should read the Cap gemini report if you are really interested! 🙂 The article itself just assumes that HNWIs control 75%.

      But yes, the distribution of wealth is very very skewed, that is certainly true. I don’t think that skew/inequality is such a bad thing in itself, as wiser people have said. I suppose it’s a question of what we do with the wealth? Can we reduce poverty, can we address health issues, can we develop people? So on and so forth…

      • Re: Somewhat OT

        Thanks for the thoughtful comments.

        I suspect that the fact that the skew of wealth distribution being not a bad thing by itself is theoretically correct but doesn’t reflect current practice. For example,

        “There’s no nice way to say this: The world’s richest countries are deliberately, and as a matter of policy, promoting poverty and starvation in the world’s poorest countries. Here’s how I found out about it. My Dad was a farm boy who got his Ph.D. in Agriculture, specializing in Crop Production and Plant Breeding. He spent his working life in the Third World: Lebanon, Jordan, Morocco, Tanzania, and Zambia (in that order). In his African postings, he was working on bringing lessons from the “Green Revolution” to African food production.”

      • Re: Somewhat OT

        Nice article. Much of it is true, too. The WTO talks collapse every time, and the single biggest reason for that is that the Western hemisphere refuses to cut agricultural subsidies. This time, all the developing countries, India included, categorically refused to go ahead on trade talks till this issue was resolved. I am hopeful it will get fixed in the next 3-5 years.

        One of my classmates, a SCM consultant, did a project with a very large US animal farming organization. He was pretty much aghast with what he saw, though he was a non-vegetarian. So yeah, subsidizing agricultural corporations does lead to a fair bit of ugliness.

        But I still think a high degree of skew will always be there, unless we all turn communist/socialist. And the thing is beyond a point, individual wealth is irrelevant to the individual. Think Bill Gates, Warren Buffet’s gifting their wealth to their foundations.

        On the other hand, I suppose it’s equally true, that there probably need to be some limits. For e.g., in the US, a few companies have adopted a policy that the difference between the pay of the top executive and the bottom-most guy should not exceed some factor. Say, 10X. Problem is, at a large scale, these are difficult to implement in a capitalist environment. I wonder if even one investment bank will consider anything like that 🙂

        Anyway, my take is wealth skew is not an issue you can win in a capitalist environment.

      • Re: Somewhat OT

        On the other hand, I suppose it’s equally true, that there probably need to be some limits. For e.g., in the US, a few companies have adopted a policy that the difference between the pay of the top executive and the bottom-most guy should not exceed some factor.
        This sounds interesting…I guess if one can identify the point at which a corporation or person has become a juggernaut that wants to roll over the small fry, you can set a limit. The comment “beyond a point, individual wealth is irrelevant to the individual” point out that limits on wealth acquisition are most probably morally correct, too.

        In the context of limits, does it make sense to say, “No firm in X sector can have more than Y employees”?, the purpose being to prevent the abstraction of a company as being separate from the people it is composed of. So I’m talking about 100s of small companies with only around 10 employee-partners each. The concept of a company-as-an-entity-that-is-separate-from-the-individuals seems to be in some part responsible for the insecurity and manipulation, even the *creation*, of the midde class. (The objectifying term “human resource”, as used in, “We need 3 resources for this project for 1 year”, comes to mind).

        Instead, we erase the word employee. You own 1/10th of the company you are part of. Let’s say you make biscuits. Or software. Or offer web hosting <– Last example being the one I know most familiary as being representative of the idea. Most web hosting companies are small and there are 1000s of them. All companies retain the feel of the local bakery. Consumers have a LOT of choice. No one is allowed to make more than $10 million in personal wealth. You get some kind of award for making that (You "go platinum").

        Let me know if I’m talking crap. I have just started thinking about these issues from purely personal (“This sucks”) experience, and am wondering if we can change the rules so that a “works-out-well-for-all” system is possible to create without ending up with exploitative hierarchies, whether you call them capitalism or communism.

        Investment Banks, in my uneducated opinion, are value parasites. If there no companies to merge, go public in general, there would be no IBs to offer capital markets advice.

      • Re: Somewhat OT

        So I’m talking about 100s of small companies with only around 10 employee-partners each.

        It’s not really possible. Most things manufactured in the modern world depend on scale. If you want reasonable prices, you need scale. Besides, without the incentive of competition and growth, in many things, quality and attitudes will deteriorate. That’s just human nature. Some things can function with the feel of a local bakery (in general, most artistic endeavours), not all.

        My point is not that you cannot have a society like you desire, but it requires a very different sort of social structure, a change in what we consider important and valuable, most of all a very real and a very active change in our attitudes. For instance, you and I, quite a few of us here, have a different attitude in some things, but it’s largely a passive change. Maybe you can read E.F. Schumacher’s essay on Buddhist Economics.

      • Re: Somewhat OT

        Funnily, the moment I posted this, I got to this article through a mail I just received.

        A cooperative solution

  4. My take is different – when grains are converted into fuel and a food shortage occurs, prices of grains will shoot up and the market will try to profit by increasing supply of food grains instead of conversion into fuel… So in the long run, i don’t think there will be too much of a change is food grain supply.

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