New Blogs Address Current Food Issues

There are two new blogs that have recently started that deal with the current food issues.

As we all know commodity prices have been increasing and that many food manufacturers have made the claim that ethanol is to blame. And while the extent to which ethanol is responsible for higher food prices is up for debate, this could also be the perfect situation for food manufactures to increase prices in excess of what input costs dictate in order to increase their profits. Food Before Profit attempts to hold food manufacturers accountable for such practices.

Food Price Truth was developed to counter the public relations campaign being waged against biofuels by the Grocery Manufacturers Association. Their goal is to provide a clearinghouse of information designed to set the record straight on the domestic and worldwide food crisis.

Ethanol Not Responsible For High Wheat Prices

Two months ago there were numerous articles in the news about how ethanol production was causing wheat prices to rise by taking away wheat acres. Well it turns out that that just wasn't true, at least not according to two wheat industry leaders.

David Cleavinger, President of the National Association of Wheat Growers and Ron Suppes, Chairman of U.S. Wheat Associates provided testimony before the House Small Business Committee Hearing to Examine “Food Prices and Small Businesses” last week. In their testimony they note the following reasons for high wheat prices.

• Strong competition for acres among crops in an environment where wheat is losing competitiveness.
  
• Production problems including poor weather conditions in many wheat growing regions worldwide including the U.S., Australia and parts of Europe.
  
• Global consumption exceeding production seven of the last eight years.
  
• Increased world demand for food, especially high quality food including wheat products, from both larger world populations and a rising middle class in developing countries.
  
• Domestic stocks at 60-year lows and world stocks at 30-year lows.
  
• A weak dollar promoting increased exports from the U.S., which is the world’s largest wheat exporter and sells about half of its wheat crop overseas in a typical year.
  
• Export restrictions by some countries, which have curtailed the world’s access to wheat.
  

We have seen some of these same reasons listed before for general food price increases, but the one thing they say isn't causing wheat prices to rise is ethanol production.

Wheat competitiveness, highlighted in the first bullet point above, has been a particular concern for the wheat industry for a number of years. The decline in wheat acres in the United States is not a recent phenomenon spurred on by biofuels, as many would suggest. On the contrary, wheat acres have been declining steadily for decades; plantings are about 30 percent lower than in the 1980s.

Source : News Release

ASTM Approves New Biodiesel Blend Specifications

The ASTM approved three specifications for biodiesel and biodiesel blends last week.

The biodiesel industry is celebrating today following last night’s final vote by the ASTM International D02 Main Committee to approve a trio of long-awaited ASTM specifications for biodiesel blends. After more than five years of extensive research and subsequent balloting by the ASTM fuel experts in the blended fuel balloting process, ASTM has finally voted to approve three key sets of biodiesel specifications that should significantly bolster automaker support and consumer demand for biodiesel:

* Changes to the existing B100 biodiesel blend stock specification (ASTM D6751)
* Finished specifications to include up to 5% biodiesel (B5) in the conventional petrodiesel specification (ASTM D975)
* A new specification for blends of between 6 percent biodiesel (B6) to 20 percent biodiesel (B20) for on and off road diesel.

Automakers and engine manufacturers have been requesting a finished blend specification for B20 biodiesel blends for several years, with some citing the need for that spec as the single greatest hurdle preventing their full-scale acceptance of B20 use in their diesel vehicles.

Source : NBB Press Release

Hopefully this will lead to greater acceptance by the automobile manufacturers and more refueling locations.

Is Ethanol Causing A Link Between Crude Oil And Food Prices?

I have seen it mentioned in several places over time that ethanol production is causing food prices to become linked to crude prices. An article in the news today put it this way.

The indices for food and non-food agriculturals too have risen by 40% and 25%, respectively, illustrating the close link between crude oil and food prices, the result of land being diverted to the production of ethanol.

A quick look back at the average annual price per bushel of corn, soybeans and wheat does suggest that food prices and crude prices are indeed linked together. Following the oil embargo of 1973 the prices of all three shot up quite a bit. Corn went from $1.57 in 1972 to $3.02 in 1974. Soybeans went from $4.37 in 1972 to $6.64 in 1974. Wheat went from $1.76 in 1972 to $4.09 in 1974. So over the span of two years corn and wheat almost doubled and soybeans went up by about 50%.

But there was little if any ethanol production to speak of in 1974. So with history as our guide, crude oil prices have a large impact on food prices, with or without ethanol production.

Tyson Foods Biofuels Hypocrisy

The opponents of ethanol argue that even though most of the corn from which ethanol is made isn't eaten directly by humans, that diverting corn to ethanol creates higher meat, egg, and diary prices by making livestock feed more costly.

Tyson Foods has been one of the most outspoken opponents of ethanol over the last couple of years. Tyson CEO Richard Bond recently had this to say about ethanol.

It is inefficient because it raises the price on feed stocks to artificially high levels, which increases costs for other uses, such as food.

But Tyson isn't against all biofuels. In fact they have their own renewable fuels division and about a year ago partnered with ConocoPhillips and Syntroleum to produce biodiesel from the animal fat the company produces.

The Springdale, Ark., company plans to convert its fatty byproducts, known as tallow, into fuel. Tyson has struck deals with oil giant ConocoPhillips and Syntroleum, a tiny company that develops synthetic-fuel technology, to process millions of gallons of animal grease each year.

The article also states that about a third of all the animal fat produced in this country flows from Tyson slaughterhouses. So the partnerships that Tyson has formed could potentially lead to the production of millions of gallons of biodiesel while at the same adding value to tallow.

This is a huge advantage over other renewable fuels, like ethanol, that require large capital outlays," says Ramey, who expects tallow prices "to rise significantly, just as the price of corn rose in response to demand for ethanol.

But there is a drawback.

Ramey says that biodiesel adds a higher value use for tallow, which has been used to make other products, such as soap and livestock feed.

So in their quest to produce biodiesel from tallow, they are removing a component of livestock feed from the food supply and increasing the cost of tallow and the cost of livestock feed. In other words they are doing the same thing that they have been criticizing ethanol for.