Food or Fuel?
Despite living in the heartland of the American grain belt, I don't usually watch Iowa Public Television's Market to Market weekly ag-news program, but by chance I caught Doug Jackson's sobering comments the evening of August 4,2006. A few days earlier, Earth Policy Institute's Lester Brown had just issued a similar warning that at some point in the not too distant future, the world is going to have to face the choice between food and fuel, as increasing amounts of American grain are diverted towards ethanol and biodiesel production.
In a suprisingly negative tone, Jackson, who is an analayst for FC Stone, sounded an alarm over the future of grain supplies in the next year and beyond.
"The will be the year of transitioning from large supplies to a billion bushels less of inventory next year. And then, as we plunge headlong down this road toward biofuels, we start to really feel the impact in the '07, '08 and beyond balance table where demand for these biofuels is outrunning our natural ability to increase production with increasing yields, and that means we need to pull in acreage... substantial amounts of additional acreage.
"We need three to five million corn acres next year to have a prayer of keeping the U.S. corn supply-demand situation in balance and even that will require nearly ideal weather."
He warns that this situation is not like 1996 where corn briefly climbed to $5 a bushel and slumped the following years as more land was set aside the following year for production. He cautioned that every year 3-5 million more acres will have to be brought into production, which will throw it into competition with the wheat and oil seed markets, which are also trying to expand acreage.
"We simply don't have enough acres at this price to satisfy this headlong plunge of demand that we see for these biofuels.
"You are going to see the most catastrophic confluence of fundamental changes in agriculture since the invention of the plow."
Jackson's remarks are 4:05 minutes in length and you can listen to them, courtesy of Iowa Public Television's Market to Market by using either of the two built-in MP3 players to the right or by downloading them to your computer for transfer to your favorite MP3 device. EV World expresses its appreciation to the producers of Market to Market for their assistance in making Mr. Jackson's comments available to EV World listeners. We are told that they have created quite a stir. We can see why.