Biofuels and food: a grain of truth

As evidenced by the screaming headlines of recent days, global commodity prices — including food grains such as corn, wheat and rice — are at or near all-time highs. Not surprisingly, this has created a lot of political unrest, reminding both of us of the political turmoil that surrounded Russian grain purchases in the 1970s. Politicians everywhere are looking for someone or something to blame, and many have now chosen to castigate biofuels as the chief culprit.

The rhetoric of these biofuels critics is remarkable. A U.N. official called biofuels "a crime against humanity" (a statement quickly rejected by the United Nations' World Food Program). And a representative of one of the nation's largest meat processors deemed America's ethanol policy "borderline criminal."

Harsh indictments indeed!

These emotionally charged but factually deficient accusations obscure the incredible achievements of a golden agricultural era, here in America and around the globe. The enormous productivity gains of the past three decades have not only made food the "best buy" in American family budgets but in budgets throughout most of the world. As a consequence, people everywhere have taken "cheap food" for granted, and are now shocked and chagrined that this situation has changed.

But why is this such a big surprise? Why are journalists and policymakers suddenly focusing on the issue? The demand for food grains has been soaring in recent years, a predictable response to growing populations coupled with rising incomes — particularly in developing countries. As middle-income classes emerge in countries like China and India, they want a little meat with their rice, a little cheese with their crackers. That boosts the demand for feed grains as well as food grains, and that's why price levels for many farm products have exploded.

This huge growth in demand is likely to continue. The era of cheap food is over, and would change little even if every biofuels plant in the world were to close tomorrow morning!

On the supply side, we had better all begin to recognize that crude oil at more than $100 per barrel gets incorporated in the cost of food, just as it is incorporated in the cost of gasoline. It also contributes mightily to our huge trade deficit.

Were crude oil still at $30 a barrel, neither oil prices, gasoline prices nor food prices would be on the American radar screen. But it isn't at $30 a barrel. Demand for crude has soared in recent years, in response to economic growth in the United States and much of the rest of the world.

Regrettably, supply is heavily controlled by a cartel, some members of which assuredly do not have the interests of America at heart! That is an intolerable vulnerability that we must correct. In that context, biofuels are not the problem. They are part of the solution, though by no means the only part, or even the major part. We should view biofuels in a positive light, not negatively, as a myriad of critics have been doing lately.

Being a critic — of biofuels or anything else — is the easy part; delineating viable alternatives is another matter. Additional drilling offshore, or in northern Alaska, provokes far more opposition than does the production of biofuels. So does nuclear power. Solar and wind power can boost our energy supplies a bit, but far less than can biofuels.

There are few bright spots in the alternative-energy picture, so we should not be surprised if criticism of biofuels produces smiles and smirks at OPEC. If we're not careful, we'll be even more dependent on imported oil a decade from now than we are today, food prices will be as high or higher, and gasoline at $4 a gallon will seem a distant memory.

President Kennedy astutely observed that "a rising tide lifts all boats." At the moment, far too many nations are sinking those boats with foolish "beggar thy neighbor" policies — hoarding, export controls, export taxes and a host of others.

What all nations should do is concentrate on increasing agricultural productivity. Farmers everywhere respond to incentives, and they respond quickly. If we do this right, a strong global agricultural community will deliver the food, feed and fiber the world needs, and make a major energy contribution as well.

John Block served as secretary of agriculture in the Reagan administration and Clayton Yeutter served as secretary of agriculture in the administration of George H.W. Bush. Readers may write to them in care of the Podesta Group, 1001 G Street NW, Suite 900 East, Washington, D.C. 20001.