CGIAR projects 20 percent corn price decline by 2009-10 if biofuels moratorium imposed immediately
April 30, 2008
In Washington, the global agricultural research consortium CGIAR said that an immediate biofuels moratorium would lead to a decline in corn prices of 20 percent and a 10 percent decline in wheat prices by 2009-2010. President George W. Bush said, “In terms of the international situation, we are deeply concerned about food prices here at home, and we’re deeply concerned about people who don’t have food abroad. The truth of the matter is, it’s in our national interest that we — our farmers — grow energy, as opposed to us purchasing energy from parts of the world that are unstable or may not like us.”
Agricultural experts warn that US corn farmers are exposed to a potential “crash” owing to ethanol subsidies. “U.S. energy policy has been friendly to ethanol in the last couple of decades. The question is, will it continue to be. It’s running up food prices and that’s causing pressure on Congress to limit mandates for ethanol usage,†Neil Harl, an emeritus professor of economics at Iowa State University, told the Boston Herald.
The resulting rise in corn prices has increased land values, and prompted large-scale borrowing for new land acquisition by famers. A similar increase in land prices in the 1970s, prompted by food price increases and tight supplies, led to a farm crisis in the 1980s when US agricultural policies changed. More than 300 agricultural banks failed in the 19080s when land prices dropped dramatically.
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Biofuel moratorium, that makes perfect sense! Oh but wait, the worst biofuel, corn ethanol, only consumes 12% of the US corn crop, so all a moratorium can do is a 12% reduction in consumption. How about if the cost of petroleum came down 12%? Maybe we can get the Chinese to curtail their escalating taste for beef by 12%. No, I have it! Since the vast majority of US corn goes into US livestock feed, lets have a moratorium on beef!!!!
I’m not a big fan of corn ethanol, but this whole food vs. fuel debate is either being spearheaded by idiots or they are on Big Oil’s payroll. Instead of a biofuel moratorium, let’s figure out how to steer the industry away from corn and soybeans toward next generation biofuels like waste-to-fuel, jatropha and algae. The whole reason for starting the biofuel movement was to get rid of surplus food production and increase the value of Ag products (and we thought they were trying to save the planet). Farmers now have a strong, escalating market as China, India and other countries pick up our bad habits, like eating beef.
It’s now time to accelerate the decoupling of biofuels from food. Big Ag is turning out to be almost as bad as Big Oil, but that doesn’t mean that biofuels are bad. We just need to cut back on crazy subsidies and stop letting Big Ag push us around. You don’t need a PhD to figure out that a biofuels moratorium is pure hogwash. Actually, it appears that for some reason having a PhD may cause you to believe this crap.