NEW YORK – The race to boost ethanol production could one day hurt food supply for many of the world's poor, an environmental expert said on Thursday.
"This is shaping up as competition between the 800 million people in the world that own automobiles and the 2 billion low- income people in the world, many of whom are already spending over half their income on food," Lester Brown, president of Washington D.C.-based environmental research group Earth Policy Institute, told reporters on a teleconference.
Ethanol production is booming in Brazil and the United States amid record oil prices, a shortage in refinery capacity for production of conventional motor fuels, and increasing fuel demand.
Brazil, the world's leading ethanol producer, uses sugarcane to make the fuel. Prices for sugar futures in February hit a 25-year high of nearly 20 cents per pound, on ethanol demand and as big money funds came into the market.
In the United States, the world's largest corn exporter, high subsidies for making ethanol are also encouraging a rush to corn, as everyone from Bill Gates to investment banks invest in ethanol plants.
Grain prices have not risen nearly as much as sugar has, but even a small lift could hurt the billions of people who depend on grains for food and the farmers in poor countries who use it for meat, milk and egg production, said Brown.
"There could be a real scramble, not only among sectors, but also among countries for available grain supplies," he said.
Brown said grain-importing nations such as Indonesia, Nigeria, Mexico and Egypt, are most vulnerable to price rises.
A spokesman for U.S. corn growers said the crop can meet demand in both food and fuel markets because farmers are becoming more efficient and boosting crop yields from each acre they harvest.
"What gets lost in this debate is the fact that supply is rising at a near parallel rate with demand," Geoff Cooper, spokesman for the National Corn Growers Association, said in an e-mail.
Cooper agreed that expected ethanol demand has helped boost corn prices, but said that today's prices were comparable to those seen in the 1970s, the late 1980s and early 1990s.
He also said that as grain prices rise, it spurs corn farmers to grow more.
Brown said instead of making more conventional ethanol, vehicle fuel consumption should be boosted, through higher vehicle mileage and the manufacturing of gasoline-electric hybrid cars.
An emerging high-tech fuel called cellulosic ethanol made from tough woody plants, such as switchgrass and poplar, that grow on land unfit for farming, could also be part of the solution, said Brown.
Royal Dutch Shell the world's top marketer of biofuels, has invested $40 million in Iogen Corp., which has been operating a pilot plant making cellulosic ethanol in Canada for two years.
This month a fuel manager in Asia at Shell said "morally it is inappropriate" to make fuel from food crops as long as there are people in the world who are starving.
Later, the company's head of biofuels distanced the group from the comments.