Burgeoning Food Demand, Not Biofuel Is Fostering Higher Food Prices

I was in Niagara Falls over the weekend.  Yes, it was basketball morning, afternoon and night for me.  The Ontario Basketball Association was holding its provincial cup over the weekend.  That found me running between Niagara Falls and Thorold cheering on the Wallaceburg Bantam Air Hawks.

In between times I find myself eating.  Not much mined you, just the odd bite of a muffin, snack mix and the proverbial coffee.  I’m an early riser, so that found me wondering into the Niagara Casino.  I had heard there was a Tim Horton’s there amid all the tacky splendour.  Gladly I found it at 6:30a.m. Sunday morning.

It was snowing as I drank my coffee and smorfed down the cinnamon raison bagel.  The news that morning was one of food riots in Haiti, Ivory Coast, Egypt and Bangladesh.  In the boorish splendour of the Niagara Casino food court, I found it hard to believe what I was reading.  While I sat there eating something I didn’t need, people are getting killed searching for something to eat.

In my other career as an agricultural economist I write about these things all the time.  However, usually it has to do with not getting paid enough for food.  “Cheap food” has always been looked upon as a “right” in Canadian society.  Governments have always maintained it by enacting policies to make sure the cheap imports of food are always possible.

The fight against that in farm country is legend.  In fact the whole of Canadian agriculture is set up to reverse that.  With the advent of “biofuels” several years ago, many in Canadian agriculture saw a way out.  It’s helped but biofuels are only part of the current run up in world food prices.  However, the hype in the urban media has reached hysteric levels.  They seem to blame biofuels for this whole run up in world food demand.  Many of these urban journalists imply that for every ethanol plant that goes up, more African and Asian children starve.  However, nothing could be further from the truth.

This past week I received a press clipping entitled Fuel Food Reality Check, from the Canadian Renewable Fuels Association.

Fuel Food Reality Check (Partial List)

– Over the past year, oil prices have jumped by nearly 100%.

-In 2007, food prices increased by about 4% overall.

-In 2007, the same year the U.S. produced a record amount of ethanol from corn, the U.S. increased it surplus of corn to more than 1.4 billion bushels.

-In a record ethanol year, the U.S. actually fed more of the world by increasing its exports of corn by 6%.

-Food marketing costs now account for 80% of the cost of food.

-The price of rice is now up 77% since October. Rice is not used is the production of biofuels. Corn for ethanol cannot be grown in rice paddies.

Increasing amounts of biofuels are produced from nontraditional feedstocks such as waste products from the beverage, food, and forestry industries. In the very near future, biofuels will be produced from agricultural residues such as grain straw, sugarcane bagasse, corn stover, municipal solid waste, and energy crops such as switchgrass and algae

As a press clipping, it may have been sell serving, like saying they can’t grow corn for ethanol in a rice paddy.  However, one thing they didn’t mention was corn planting is plummeting this year in North America, down 8% in the US and down at least 10-15% in Ontario.  The bottom line is corn ethanol is turning into a dirty word because society is equating it with a starving food rioting third world.  However, the real truth is western society is howling because they are decrying the sunset of “cheap food” in their own backyard.

Still, I don’t think it’s hitting pay dirt in places like the Niagara Casino.  The restaurants are full and they all add about 15% more than if those restaurants were in Hooterville Ontario.  It’s the Niagara surcharge, something I’ve grown used to.  Food riots and biofuel seem so far away.

Nobody feels worse about hungry people than me.  I’ve seen starving people and I’ve felt their touch as they’ve reached out for something to eat.  So now when I hear of food riots in places like Haiti and Bangladesh I know some of their pain.  The answer of course is more agricultural production with more equitable distribution to the world’s poor.

What’s not the answer is an urban media looking for “dog bites man” headlines while at the same time blaming biofuel for the world’s shortage of food.  It’s like they never knew anything about the world’s burgeoning food demand from places like China and India.  So the next time you find yourself in a place like the Niagara Casino scarfing down a bagel and sipping a coffee take solace.  You might have overpaid for that dalliance, but let me tell you.  It has much more to do with that corporate logo above the cash register than any farmer growing corn for ethanol.  However with all the hype, I’ll forgive you if you just don’t quite get that.