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Bad weather is bad news for food and fuel

Wednesday, June 18, 2008

biofuels and bad weatherTwo months ago, EWG Founder Ken Cook quipped that the Bush administration's food policy amounted to "hope for good weather."

By then, EWG analysts were already hard at work on a report examining the possible affects of a particularly wet or dry growing season (or an early freeze) on the nation's supply of corn. USDA had already acknowledged that farmers would plant 8 percent fewer acres of corn this season, and with 30 percent of corn expected to go into our gas tanks this year, the balance of food and fuel grew even more precarious.

In a conversation with EWG, former USDA Chief Economist Keith Collins said point blank, "There is no cushion if we have a weather-reduced crop.” Increased demand combined with bad weather and the rising cost of fuel and fertilizer has already driven up the cost of corn -- 2007's average price was $3 per bushel, and on June 10th, following USDA's weekly progress report, the price soared to a record $6.73 per bushel.

When we began work on this report, it was an analysis of what could happen. Things are, unfortunately, a little different now; USDA is predicting a yield decrease of more than 10 percent, and on May 29th one climatologist said "it will take nearly perfect weather this point forward to recover.” The disastrous flooding in the corn belt hardly qualifies as perfect weather.

So here we've got a federal policy that orders food to be converted to fuel without any kind of cushion for bad weather, and we've got -- well, bad weather. Time for a new ethanol policy? Y'think? I'll let EWG analyst Michelle Perez sum it up for you:

U.S policy to promote the production of food crop-based biofuels is both short-sighted and dangerous. High corn prices will limit the contribution corn-based ethanol can make to our energy supplies, unless taxpayers are asked for more and more subsidies and credits to support the industry. The more corn diverted into fuel production in hopes of solving our energy problems, the greater the risk imposed on hungry people. The whole world, from average Americans to the poorest billion people on the planet, cannot rely on America’s food-to-fuel gamble. We need to step back from our current policies and chart a new course to a more sustainable biofuels policy.