Fields being used more for fuel, less for food

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This article was published 24/02/2024 (822 days ago), so information in it may no longer be current.

Farmers have long embraced the altruistic creed that they feed the world, but the reality is, their production is increasingly being used to feed gas tanks.

The booming renewable fuels sector in the U.S. and Canada is creating unprecedented demand for commodities such as corn, soybeans and canola, which is reducing the volumes available for export sales.

Seven new facilities designed to process canola into biodiesel have been announced for Canada within the past three years, which could grow this country’s domestic crush capacity by an estimated 60 per cent by 2030.

Statistics Canada data show that in 2023, 54.7 per cent of the crop went to domestic processors for food and fuel, while 33.6 per cent went to exports.

One of the key drivers for new growth is Canada’s Clean Fuel Regulation, introduced in 2023, which mandates a reduction in the carbon intensity of fuels using a system of credits and debits.

Meanwhile, growth in the U.S. biofuels sector, largely driven by that country’s renewable fuels standard requiring petroleum-based fuels to be blended with corn ethanol and biodiesel, has significantly cut into that country’s reliance on export markets.

“The U.S. crop sector is in the process of reinsulating itself from the world market,” wrote Scott Irwin, an agricultural economist at the University of Illinois, in a blog post last week. “But this time we are reinsulating through the demand side rather than the supply side.”

Between the 1930s and 1990s, U.S. farm support programs placed limits on production, which cushioned farmers from export market volatility. Those controls ended in the mid-1990s as the policy shifted to “freedom to farm.”

However, the U.S. introduced its renewable fuel standard in 2005, a time when U.S. corn markets were swimming with surplus corn. Industry reports indicate that the U.S. now streams twice as much corn into ethanol as it does into exports. U.S. reliance on soybean exports is also trending lower as more goes into biodiesel.

Surging demand for commodities — whatever the source — is good news for farmers at a time when market prices are sliding off their record highs of a couple of years ago.

However, how much of this market demand is based on real economics and how much of it is politically driven?

Creating markets for renewable fuels is politically popular, arguably one of the few issues politicians can agree on in the deeply polarized debates south of the border. And while it’s true that renewable add-ins make petroleum gasolines less environmentally damaging, they don’t reduce our reliance on them.

Some scientists are questioning whether they make any sense at all: they are essentially solar energy that’s been put through a corn plant fed with nitrogen-based fertilizers that is processed into ethanol, which then only serves to reduce the emissions from petroleum-based fuels.

The 2023 Iowa Climate Statement signed by dozens of academics and researchers, noted technological improvements to the efficiency of solar-based energy has cut the cost of production to one-tenth of what it was 20 years ago.

The cost of new solar energy is often below the cost of energy from existing fossil-fuel plants, it says.

“A one-acre solar farm produces as much energy as 100 acres of corn-based ethanol,” it says.

Meanwhile, global food security continues to be challenged by food price inflation, declining stocks-to-use ratios and political instability — largely driven by climate change.

Farm Credit Canada has just released an economic analysis that highlights Canada’s multifaceted role in supporting global food security as a major exporter as well as by providing technical assistance to food-insecure countries.

The global stocks-to-use ratio for food grains is expected to decline to about 13 weeks of supply this year, which is the lowest in a decade, FCC says.

Restoring that ratio to more stable levels would require a six per cent increase in production globally.

Fuelling cars may not have the same moral cachet as feeding hungry mouths, but that’s a question for the policy-makers to address, not farmers, and there’s no indication they’ll be changing course any time soon.

Laura Rance is executive editor, production content lead for Glacier FarmMedia. She can be reached at lrance@farmmedia.com