Winnipeg Free Press - PRINT EDITION

Rain on ethanol parade is 'food' for thought

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WHEN U.S. President Barack Obama made corn-based ethanol a centrepiece of his energy policy, he took a chance on the weather.

Now, like a lot of other people whose plans were rained out this spring, Obama needs to improvise.

Soggy conditions played havoc with spring planting across the grain belt. Corn prices have more than doubled in the past year. Government forecasts show stockpiles falling to their lowest levels since 1996. If nature fails to co-operate during July, the corn crop's most critical growth stage, look out below.

To an extent, the die is cast. Planting delays inevitably result in lower-than-optimal yields. No way around it: The harvest won't be as good as it could have been. And supplies were low even before the rain and mud forced Midwest farmers into their barns when they wanted to be in their fields.

So what's a president from the grain-producing state of Illinois to do?

Unfortunately, Obama has few options. Boosting the amount of arable land available for cultivation would help. Millions of acres now set aside in conservation reserves will be coming up for renewal. But much of that acreage is environmentally sensitive and only marginally productive. In Brazil, Russia and Ukraine, meantime, domestic policies limit the expansion of agricultural resources.

In theory, technology could help. Genetically modified seed and sophisticated systems for applying fertilizer and farm chemicals have contributed to higher yields, as has the widespread practice of squeezing more plants onto the same amount of land. Barring a new technical breakthrough, however, many experts predict only limited gains in the years ahead.

The upshot: New doubts about using food for fuel.

As it is, the U.S. ethanol industry produces about 13.6 billion gallons a year. The Senate is slated to vote on an amendment that would scratch a 45 cent per gallon blender tax credit and a 54-cent tariff on imported biofuel. Eliminating those unnecessary subsidies would be a step in the right direction -- and long overdue.

We could be staring at a crisis in a matter of weeks. A poor crop would send food prices sharply higher. In the United States, we would pay more for meat, milk and other grain-intensive luxuries. For the world's poorest citizens, the most basic diet would become ever-less-affordable.

It's tough to imagine the president standing by in the face of starvation. Suspending ethanol production would increase the supply of food, moderate prices and relieve suffering. But it also would send gasoline prices soaring, putting a drag on the economic recovery and inviting a backlash at the ballot box. Given how his biofuel policy has backed him into a corner, the president better hope for a couple of months with normal rainfall and seasonal temperatures.

Even if Obama gets through this dangerous summer without a crisis, he can't keep running the same risks. The Oxfam International development agency recently predicted that global food prices will more than double within 20 years, citing everything from climate change to flat-lining yields. Breathless reports designed to sound an alarm naturally invite skepticism, but the biofuel part of Oxfam's analysis rings true.

The U.S. needs a comprehensive energy policy that ends our reliance on food for fuel. We need it now, and we will need it all the more in the future.

--McClatchy-Tribune Services

Republished from the Winnipeg Free Press print edition June 15, 2011 A11

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