That Darn Devil, Them Dang Details: What’s Really Driving Food Prices?
by Jim Lane (Biofuels Digest) In the new USDA long-term forecasts, rising global meat consumption stands out as a driver of rising food prices, exports.
…But you might ask yourself — in a world where you can find hyperbole linking hunger and biofuels about as easily as you can find eggs in a henhouse, why do policymakers generally stick to their overall goals of diversifying the transportation fuel mix?
… It’s because the “biofuels are the devil” viewpoint rarely squares with the detailed data. Pesky thing, data. The devil is in the details, as they say. You devil.
Let’s look at two charts, to illustrate.
…What we appear to be seeing is rising productivity. And, you might ask, where would all have that corn gone, had there not been a new market to absorb it?
Might have triggered a whole bunch of “don’t plant anything, please” farmer payments. Might have been dumped onto the export market, collapsing crop prices and sending most crop producers in the developing world right to the devil.
…So let’s look at this other chart. This looks at farm prices. Sure enough, you see a rising price trendline for corn. Of course, you see the same trend line for wheat, which is not used for biofuels, too. Hmmm.
…The charts shown above appear in the USDA’s latest long-term farm sector forecast, taking us through 2022, which was released this week, can be downloaded here — and is well worth a read.
It’s a valuable forecast, first of all, for biofuels producers in terms of expectations around feedstock — especially first-generation feedstock (alas, there’s nary a mention of algae anywhere — and nothing on crop residues or forest products).
…It gives you a very good look at the drivers for farm product growth. In turn, that gives you some insight into the debate over food versus fuels.
…Some key findings from the forecast.
• Global population is expected to rise by 1.0 percent per year, but global meat consumption is expected to rise by 1.8 percent per year.
• The projected growth rates of exports from major exporters of beef, pork, and poultry meat are 2.4, 1.4, and 2.0 percent per year, respectively.
• From the report: “Growth in coarse grain imports is closely linked to expansion of livestock production in regions unable to meet their own feed needs. Key growth markets include China, Mexico, the Middle East, Southeast Asia, and North Africa.”
• Elsewhere in the report, “China’s imports of corn are projected to rise steadily and reach 19.6 million tons by 2022/23. China’s strengthening domestic demand for corn is driven by its expanding livestock and industrial sectors. The increase in China’s imports accounts for 40 percent of the projected growth in world corn trade.” (Note to readers, China does not permit ethanol production from corn.)
• Elsewhere in the report, “Imports by Africa and the Middle East account for about 20 percent of the growth in world coarse grain trade through 2022/23, as rising populations and increasing incomes sustain strong demand growth for livestock products.”
• Elsewhere in the report, “Mexico’s corn imports are projected to rise from 9 million tons in 2012/13 to 17 million in 2022/23.
…You will find that, over the next decade, increasingly wealthy citizens in the developed and developing world will have more control over food prices and hunger via the meat counter than the biofuels pump. READ MORE and MORE (USDA) and MORE (Ethanol Producer Magazine) Download Growmark paper
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