Friday, June 1, 2007
America's ethanol appetite is driving tortilla prices up in Mexico, and it is hurting that country's poor.
Corn tortillas, the chief source of calories for 50 million of Mexico's poorest people, doubled in price last year mainly because our nation's farmers are converting their crops from food to energy production.
For years, Mexico depended heavily on U.S. grown corn for tortillas. With more than 100 ethanol plants in the United States and a number of new ones expected to come on line in the near future, the price hike is spawning a new call for that nation to free itself from its American corn dependency. Easier said than done because Mexican farmers look at the price they can fetch for corn to be used in fuel production and want a piece of the ethanol action.
While those in Congress rail about gas prices, they are virtually ignoring the rising food costs because of their rush to convert from fossil fuels to biofuels. Those ethanol-caused price spikes are also affecting U.S. consumers.
"Everything that uses corn is going to cost more and those cost increases are passed on to consumers," says Wally Tyner, professor of agriculture economics at Purdue University. The impact is already being felt in animal feed, particularly poultry and pig feed, which is about two-thirds corn. The cost to produce poultry - both meat and eggs - has already risen about 15 percent.
According to the United States Department of Agriculture, this year 18 to 20 percent of our total corn crop goes for the production of ethanol and by next year that will jump to 25 percent. In February, the USDA reported that corn prices had risen almost nearly 70 percent in the past six months - a spike that came much sooner than many agriculture economists had expected. As in Mexico, those hit hardest by the cost increases are poor families.
Like our Congress, Mexico's Congress embraces ethanol and recently approved a law calling for cleaner burning ethanol to be used in gasoline in that country's three largest cities: Mexico City, Monterrey and Guadalajara. So Mexicans need to brace themselves to pay more for tortillas at the grocery store.
Is there a way to provide low cost, abundant food supplies for our world's growing population and supply it with enough energy?
There are many. For example, encouraging nuclear energy, clean coal production, or drilling for more oil and natural gas. But regardless of how safe and environmentally friendly these options may be, they are not in vogue today. Currently, our Congress shuns even the thought of those proposals and seems intent on beating up on energy producers.
Setting those solutions aside as too controversial in the present political climate, there is potential to produce commercial biofuels from trees and nonfood plants grown in the woods.
In April, Weyerhaeuser and Chevron agreed to research and develop technology to transform wood fiber and other nonfood sources of cellulose into economical, clean-burning biofuels. They believe ethanol produced from biomass such as forest and agricultural waste averts a conflict with food sources such as corn and is greenhouse-gas neutral when derived from sustainable management practices.
In fact, growing trees and plants for biofuel would benefit our environment because they produce oxygen and absorb carbon dioxide, a notorious greenhouse gas.
The companies are accelerating their research at a number of universities. Hopefully, once they pioneer the production, we can use the same technology in many of our public forests which were once part of our nation's wood basket. Instead, we put those commercial tree growing lands off limits, and they are left to rot and burn. It's worth a try, and it may just help lower our food costs, especially for working families and the poor.
Don C. Brunell is president of the Association of Washington Business.