Monday, June 2, 2008

Food Fight Over Biodiesel

United Nations Food and Agriculture Organization is organizing a Summit in Rome to debate about food fight over biodiesel. I extracted part of the article appeared in the WSJ.
"The fuel of the rich is competing with the food of the poor," says Willem Jan Laan, director of external affairs for Unilever, the consumer-goods company. Unilever buys shiploads of vegetable oil every week to make soap, shaving cream, ice cream and candy. That puts Unilever in competition with fuel companies for the corn, rapeseed, oil palm and other crops used to make biofuels. Mr. Laan says that at a panel discussion in the coming week, he will argue for increased use of other alternative-energy sources, such as wind and solar power, and fewer biofuels.

I would argue that for very short term, everyone should drive lesser. If you look at the main demand driver, it's transportation. Based on Exxon Mobil forecast, this sector will take up huge portion in years to come but non-OECD demand is still relatively small compared to total global fleet. By looking at the data, alternative energy will solve some of the industrial and power generation but not transportation.

As people getting richer, they will own more vehicles. Exponential demand growth can be observed once certain income per capital breakthrough is achieved.

For now, I agree with the statement that we should not let them convert food into gasoline to fill up their gasoline hungry automobiles. It's a dumb idea. Additionally, the US protectionist policy also contributed to the problem - maintaining silly tariff of US $ 0.54/gallon on imported ethanol. This is extremely irrational because sugar-based ethanol produces by Brazil is a lot cheaper than US corn-based ethanol.

It is not fair for them to point fingers at Asian saying we are the cause of the food inflation.

"The problem is rising food and feed demand in Asia," EU Agriculture Commissioner Mariann Fischer Boel said in a speech this past week. She argues that only 1% of EU arable land is used to plant biofuels, making the impact on land prices negligible.

I think many people are desperate and hitting every where but missing every where also without examine the root cause. If you ask 5 times WHY, you should get the real root cause. Why food inflation? Because we divert them to biodiesel. Why biodiesel? Because of high energy price. Why high energy price? Because flight of the dollars? Why flight of dollar? Because the Fed printing money like nobody business. Why the Fed printing money like nobody business? Just to save a few politicians and Wall Street firms.


Sreenivas said...
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Sreenivas said...

One of the solutions to resolve the food-fuel crisis and high cost of transport fuels is production of sustainable and low cost biodiesel feedstocks.

The existing sources such as palm, canola, soybean and coconut oils, used cooking oil and tallow are expensive and are not available in large quantities.

Pongamia and Jatropha could be cultivated in marginal areas, including desert, other than forests with lower rainfall and poor soils. The biggest advantage of these trees is that there is no competition with agriculture and food production.

There is a concern that biodiesel from edible oils increases the cost of food around the world and forests are being cleared to grow them. Even otherwise, it is felt that the biodiesel crops compete with agriculture for land and water.

The use of non-edible oils produced by hard trees that are grown in non-agricultural and non-forest lands offers a solution to these issues.


Sreenivas Ghatty
Tree Oils India Limited