An analyst with a major agricultural financial institution says “food versus fuel” is basically a misleading sound bite.
According to Karol Aure-Flynn, executive director of the Rabobank Food and Agribusiness Research and Advisory department, “The fallacy of the headline is that there is a direct competition between the two; that it’s either/or. The reality is that strong global economic growth has changed the demand equation for U.S. commodities.”
Aure-Flynn also noted in a recent Rabobank podcast that while prices at the farm level have increased this year, they have been outpaced by production costs for farmers.
“Farmers’ profitability doesn’t change retail prices. And farmers’ profitability isn’t guaranteed by high grain prices. The same factors that are lifting grain prices are lifting production costs,” said Aure-Flynn. “So, yes, the farm price index is at 162 percent of what it was 1990-1992, but at the same time the price index measuring what farmers pay — for services, farm wages — is 189 percent of base.”
Rabobank is a global financial services leader providing institutional and retail banking and agricultural finance solutions in key markets around the world.
The head of the National Corn Growers Association (NCGA) is calling for the formation of an ethanol “truth squad” to “patrol for inaccurate information” about ethanol.
In his weekly editorial column, NCGA CEO Rick Tolman said, “When the U.S. Environmental Protection Agency turned down a request for a one-year cut in the renewable fuels standard on Aug. 7, we hoped it would silence the outspoken few who spread inaccurate and incomplete information on the issue. Unfortunately, within moments, they were out there talking their talk.”
“We believe farmers and food producers should be working together, not driving stakes in each other’s hearts. We also know that not everyone agrees on this issue and dissenters may never understand or accept the facts. Yet, we plug along trying to help people see the truth about corn supply, ethanol’s impact, and more.”
I just visualized Rick, Bob Dinneen of RFA and Toni Nuernberg of EPIC as the “Truth Squad.” This graphic is the best I could do late on a Friday afternoon. Of course, the truth is that everyone who supports ethanol is a member of the squad and should be out daily patrolling the news media, the internet and every other venue on the lookout for inaccurate information about ethanol to correct.
Let’s be careful out there.
Renewable Fuels Association President and CEO Bob Dinneen has written a blog post up on Huffington Post, where he talks about the food vs fuel debate.
He brings up some good points, including the USDA’s newly released WASDE study.
In the agency’s August 2008 World Agriculture Supply and Demand Estimates (WASDE), a clear picture of the resiliency and productivity of American farmers emerges. Farmers in the US have faced obstacles of historic proportions this year as flooding threatened to severely hamper crop production in the American Midwest. As should have been expected however, American farmers have once again stepped up to the plate demonstrating that they can meet the feed and fuel needs of our economy.
Dinneen goes on to discuss the fact that ethanol critics continue to ignore evidence that ethanol is not significantly causing food prices to rise:
Despite numerous studies documenting that the role of ethanol was minimal and the impact of skyrocketing oil prices was far greater at every level of the food chain, these critics have kept up their drumbeat.
They ignored a study from Texas A&M University which found that reducing the level of ethanol production would have little, if any, impact on corn prices and that high oil prices were the dominant driver. A more recent study by economists at Purdue University found that skyrocketing oil prices, not ethanol production, accounted for 75% of the increase in corn prices.
He wraps up with a thoughtful conclusion on the state of American farming and food production.
World agriculture is more than capable of fulfilling its traditional role as food and feed providers, while also contributing significantly to a renewable, sustainable energy future. Our nation’s energy crisis will not solve itself. It will require bold action and thoughtful collaboration. Together with America’s ethanol industry, American farmers stand ready to play our role in helping to feed America and other parts of the world while reducing America’s dependence on foreign oil.
Read the entire post here.
There’s an interesting story gaining some traction in Canada this week.
According to Reuters, officials in India are encouraging people to eat rats instead of rice to alleviate some food shortage concerns. But that’s not the most intriguing part:
“Eating of rats will serve twin purposes — it will save grains from being eaten away by rats and will simultaneously increase our grain stock,” Vijay Prakash, an official from the state’s welfare department, told Reuters.
Officials say almost 50 percent of India’s food grains stocks are eaten away by rodents in fields or warehouses.
The story has been picked up by the Canadian media. Here’s some commentary from Kevin Hursh that runs on the daily ag radio in western Canada:
It’s estimated that nearly 50 per cent of India’s grain stocks are eaten by rodents, either in the field or when the crop is being stored in warehouses. According to a report this week by Reuters news service, authorities in Bihar, one of India’s poorest states, are calling on everyone to eat rats. There are even plans to offer rats on restaurant menus. Rat meat is already eaten by some people in India. The Bihar government argues that more people dining on rats will lower human consumption of grain. Plus, there will be fewer rats to eat grain. Cultural differences pertaining to animals and food are amazing. Depending upon your faith, you may not eat pork or you may not eat beef. Most people in North America are turned off by the idea of eating dogs and horses because they’re companion animals. The aversion to rats is because they’re dirty rodents. It is an amazing statistic though that nearly 50 per cent of the grain in India is destroyed by rodents. Makes you wonder why there are so many people who obsess about the amount of grain used to produce biofuels. I’m Kevin Hursh.
Senator Sam Brownback of Kansas was out filling up cars with fuel early Monday morning at the grand opening of a new ethanol blender pump station in Colwich that was held in conjunction with the announcement of a new initiative in Kansas that will help fuel station retailers obtain funding and the equipment needed to sell higher blends of ethanol. The new initiative introduced by the Ethanol Promotion and Information Council (EPIC), ICM and the Kansas Corn Commission aims to install a minimum of 100 blender pumps around the state over the next year.
Brownback also helped ICM president Dave Vander Griend cut the ribbon for TJ Convenience store’s new blender pumps, which offer ethanol in four different flavors - E10, E20, E30 and E85. The higher blends can only legally be used in flex-fuel vehicles.
Back in Washington, the senator is working on legislation that would increase the number of flex-fuel vehicles that can use those higher blends with the Open Fuel Standard Act, which he introduced last month along with Senators Salazar of Colorado and Lieberman of Connecticut. The act would require half of new automobiles to be flex-fuel by 2012, and 80 percent by 2015.