The last decade saw the end of cheap oil, the magic growth ingredient for the global economy after the second world war. This summer’s increase in maize, wheat and soya bean prices – the third spike in the past five years – suggests the era of cheap food is also over.
Price increases in both oil and food provide textbook examples of market forces. Rapid expansion in the big emerging markets, especially China, has led to an increase in demand at a time when there have been supply constraints. For crude, these have included the war in Iraq, the embargo imposed on Iran, and the fact that some of the older fields are starting to run dry before new sources of crude are opened up.
The same demand dynamics affect food. It is not just that the world’s population is rising by 1% a year. Nor is it simply that China has been growing at 9% a year on average; it is that consumers in the big developing countries have developed an appetite for higher protein western diets. Meat consumption is rising in China, India and Brazil, and since it takes 7kg of grain to produce 1kg of beef (and 4kg to produce 1kg of pork), this is adding to global demand.
Farmers have been getting more efficient, increasing the yields of land under production, but this has been offset by two negative factors: policies in the US and the EU that divert large amounts of corn for biofuels and poor harvests caused by the weather.
If the World Bank’s projections are anything like accurate, further massive productivity gains from agriculture are going to be needed over the next two decades. There will be an extra 70m mouths to feed every year
U.S.D.A. Approves Pro-Ethanol Corn Over Food Industry’s Objections
A corn that is genetically engineered to make it easier to convert into ethanol has been approved for commercial growing by the Agriculture Department.
The decision, announced on Friday, was made despite objections from corn millers and others in the food industry, who warned that if the industrial corn accidentally got into corn used for processed foods, it could lead to crumbly corn chips, soggy cereal, loaves of bread with soupy centers and corn dogs with inadequate coatings.
“It is going to contaminate the food and feed system, and why they are going to take that risk over the objections of a major American industry, I just don’t understand,” said Margaret Mellon, director of the food and environment program at the Union of Concerned Scientists, a group that has been critical of genetically engineered crops.
The corn contains a microbial gene that causes the corn to produce an enzyme that breaks down corn starch into sugar, part of the process for making ethanol fuel. Ethanol plants now buy this enzyme, called alpha amylase, and add it to the corn at the start of their production process.
Syngenta, the company that developed the new corn, asserts that corn containing its own enzyme will increase the output of ethanol per bushel while reducing use of water, energy and chemicals in the production process.
`AINA KOA PONO asked the state Legislature yesterday to support a 15 percent tax credit for building a refinery here in Pahala. Chris Eldridge, who also owns American Mattress stores around the state, is an `Aina Koa Pono partner. His testimony for yesterday’s hearing describes former sugar lands, now largely used by the cattle industry between Pahala and Na`alehu, as “fallow,” and says that using land for a biofuels farm and factory would help fend off a rise in fuel prices statewide. “Building agriculturally based biofuel refineries in Hawai`i has the potential to reinvigorate Hawai`i’s struggling agriculture industry while also helping to meet the renewable energy goals of Hawai`i’s Clean Energy Initiative,” said Eldridge.
THE NUMBER OF JOBS projected for the proposed biofuels refinery and farm here in Ka`u was increased in the testimony that asks for the 15 percent tax credit. Eldridge said that in addition to 300 construction jobs over two years to build the refinery in Pahala, `Aina Koa Pono now projects 150 to 200 jobs created for the 20 to 30 years that the biofuel refinery would be in operation.
HE ALSO SUGGESTED that the tax break bill be amended to provide tax credits within 60 days after the refinery becomes operational. “We cannot emphasize enough the need for these incentives to attract private capital to invest in these projects for Hawai`i.
By WILLIAM NEUMAN
First it was heat and drought in Russia. Then it was heat and too much rain in parts of the American Corn Belt. Extreme weather this year has sent grain prices soaring, jolting commodities markets and setting off fears of tight supplies that could eventually hit consumers’ wallets.
In the latest market lurch, corn prices dropped in early October, then soared anew, in response to changing assessments by the federal government of grain supplies and coming harvests.
The sudden movements in commodities markets are expected to have little immediate effect on the prices of corn flakes and bread in the grocery store, although American consumers are likely to see some modest price increases for meat, poultry and dairy products.
But experts warn that the impact could be much greater if next year’s harvest disappoints and if 2011 grain harvests in the Southern Hemisphere also fall short of the current robust expectations.
“We can live with high commodity prices for a period without seeing much impact at the retail level, but if that persists for several months or a couple of years, then it eventually has to get passed on” to consumers, said Darrel Good, an emeritus professor of agricultural economics at the University of Illinois.
The 25-passenger van slammed into a deep trench. Rotarians and court reporters bounced out of their seats. The abused van’s windows rattled while keeping heat and dust at bay. A small air conditioner at the rear of the vehicle provided marginal cooling.
Driver Tony Vierra – one of only two men allowed to take Roberts Hawaii vans into the fields – tried to miss the biggest holes in the sugar fields’ “roads,” but there was no way to avoid them all. The benign jostling and, later, the heat in the mill were the most uncomfortable parts of a slick, six-hour Hawaiian Commercial & Sugar Co. tour Saturday.
It began at 8 a.m. in a conference room in the old Puunene headquarters. Despite the hour, tour coordinator Linda Howe radiated city energy. She and agronomist Mae Nakahata had come over from Alexander & Baldwin’s Honolulu headquarters. Howe attended to the sign-in sheets, name tags, liability waivers and menus for lunch.
The Rotarians were from Kihei. The court reporters had come to Maui for a meeting of the Court Stenographers and Captioners Association. It was a convivial group sincerely interested in learning more about HC&S. One Mainland retiree liked to talk about his experiences as an employee at a sugar beet operation. It was somewhat annoying and definitely off the point of the tour – lobbying on behalf of the sugar company via candid education. The syllabus centered on sustainability and the production of energy.
SAN DIEGO — In a laboratory where almost all the test tubes look green, the tools of modern biotechnology are being applied to lowly pond scum.
Foreign genes are being spliced into algae and native genes are being tweaked.
Different strains of algae are pitted against one another in survival-of-the-fittest contests in an effort to accelerate the evolution of fast-growing, hardy strains.
The goal is nothing less than to create superalgae, highly efficient at converting sunlight and carbon dioxide into lipids and oils that can be sent to a refinery and made into diesel or jet fuel.
“We’ve probably engineered over 4,000 strains,” said Mike Mendez, a co-founder and vice president for technology at Sapphire Energy, the owner of the laboratory. “My whole goal here at Sapphire is to domesticate algae, to make it a crop.”
two surviving ventures face high hurdles
Ask just about anyone involved in the effort to start a home-grown ethanol industry in Hawaii and invariably the word "challenging" comes up.
Challenging, it turns out, is an understatement.
Four years ago companies were lining up to build ethanol production facilities in Hawaii after the state launched a program that offered generous tax credits and set a mandate that most gasoline sold in the state must contain 10 percent of the renewable fuel. Soaring ethanol prices, which hit a record $4.23 a gallon in the summer of 2006, also spurred interest. On the mainland, dozens of corn-based ethanol plants sprouted up across the Great Plains.
In Hawaii, meanwhile, plans were moving forward to erect ethanol plants that would mostly use sugar cane or sugar cane byproducts as a feedstock. Before any of the companies could get their permits approved, however, the price of ethanol collapsed, falling as low as $1.40 a gallon in late 2008. In addition to falling prices, difficulty in securing land to grow feedstocks and dwindling investor interest have made it difficult to get any new processing facilities up and running.
There were plans in recent years to build at least six plants in Hawaii to produce ethanol, an alcohol-based renewable fuel that can be made from a variety of organic materials, including sugar cane. Of the original six that were planned, only two are still on the books, and neither has a target date to begin construction.