The warning shots have been fired. Wheat, corn and soybeans have reached record and near-record high commodity prices. Tight global supplies threaten access to cereal grains and oilseeds for the world’s hungry and poor. Domestic food prices are rising, no thanks to higher costs for both raw materials and the energy needed for transportation and refrigeration.
Converting cropland from producing food and feed to growing corn for ethanol is being questioned, along with federal and state farm and tax policies that encourage the shift. For probably at the first time in history Minnesota farmers need to hope for bumper crops in the Southern Hemisphere, during our winter season, to replenish global food stocks.
This is the background for what is certain to become an historic Minnesota debate, pitting traditional allies against each other. Here’s why:
First, farmers and local investors are responsible for Minnesota’s huge stake in biofuels development. Currently, 15 of the 20 ethanol plants operating or under construction in the state are locally owned. This keeps profits within the state, spreading the benefits of higher grain prices throughout rural Minnesota and the entire farm economy.
Second, Minnesota is home to churches and nonprofits that are leaders in fighting hunger at home and abroad. Organizations such as CARE, programs such as Food for Peace, refinements in domestic feeding programs such food stamps and Women, Infants and Children (WIC) and international food relief efforts can all be traced back to Minnesota political leaders, scholars and farm and church groups. What’s more, issues and actions affecting hunger never went out of style in Minnesota, even when public attention was distracted by events elsewhere.
These diverse groups of Minnesotans have usually stood united when public policy issues hit the dinner plate. That may not be possible if food gets scarce while crops are fueling our gas tanks.
For these reasons, Minnesota needs to engage a lively public debate over the unintended impacts of biofuel research and development and, ultimately, how public policy should respond to food shortages if other public policies help create the shortages. These are not small matters.
Several research papers are available on the Internet to serve as primers for the food and fuel debate. Two that express merging concerns include “The New World of Biofuels” written by Robbin S. Johnson and C. Ford Runge for the Woodrow Wilson International Center for Scholars in Washington, D.C., and “How Biofuels Could Starve the Poor,” by Runge and fellow University of Minnesota economist Benjamin Senauer for Foreign Affairs magazine.
These writers bring credentials to the debate. Runge, who holds a McKnight endowed chair in applied economics and law at the University of Minnesota, has experience working for Democratic leaders in Congress and as a trade negotiator for the Reagan administration. Johnson is a teaching fellow at the university’s Humphrey Institute and is a former senior vice president at Cargill’s world headquarters in Minnetonka. Senauer is a professor of applied economics and co director of the university’s Food Industry Center.
The Foreign Affairs article at includes an exchange among Runge, Senauer and former Democratic U.S. Senate Leader Tom Daschle of South Dakota that sharpens the issues at stake. Daschle is a major proponent of ethanol.
The authors note that U.S. ethanol plants will achieve the capacity to produce 11.4 billion gallons of ethanol a year by the end of 2008, and that the Bush administration has set an annual production target of 35 billion gallons of renewable fuels by 2017.
The latter objective doesn’t specify which crops or feedstocks will boost biofuel output fivefold in the next decade. But for now the sources are corn in the United States and sugar cane in Brazil – the two leading biofuel producer nations.
“The World Bank has estimated that in 2001, 2.7 billion people in the world were living on the equivalent of less than $2 per day; to them, even marginal increases in the cost of staple grains could be devastating,” Runge and Senauer wrote. “Filling the 25-gallon tank of an SUV with pure ethanol requires [more than] 250 pounds of corn – which contains enough calories to feed one person for a year.”
Runge and Johnson’s paper offers an alternative biofuels policy that would adjust subsidies for food and fuel production depending on needs at the time.
This “food and fuel” approach should be the starting point for discussions on rationalizing both crop and energy subsidies. Minnesota has an important role to play in both.
Additional data about ethanol and the fuel vs. fuel debate can be found on the Minnesota Corn Growers Association’s website.