Cargill: Food and Feed are Higher Priorities for Corn than Ethanol for Fuel.

The Strib has an short article about an interview with Cargill CFO William Veazey today. As one of the nation’s largest food processors as well as being a player in the energy markets, Cargill is well positioned to both understand the nature of the ethanol production as well as understand how it affects food production. Cargill appears to be coming out strongly on the side of using corn for food:

The company continues to push for a national debate about the role of corn in energy markets, saying food and feed are higher priorities for corn than ethanol for fuel.


“We’re not sure whether it’s economic development policy, or energy policy or farm policy, or exactly what’s driving it, and we don’t think there’s necessarily clarity of objectives,” Veazey said.

He’s absolutely correct. The blending of food and fuel policies has muddied things up such that it’s hard to say which of the two is in the driver’s seat at any given moment. Currently, rising gas prices mean that the fuel side probably has more importance in the mind of many politicians, economists and businesspeople. That may not stay that way for long, though.

 

One story that’s slowly gaining some legs throughout the global media is the spectre of a global grain shortage. The Earth Policy Institute has released a statement indicating that the Earth currently has global grain stocks equal to only 57 days worth of consumption. This is bound to mean prices rising for grains, and all of hte food stuffs that directly or indirectly use them. George Ure at Urban Survival has been predicting a protein shortage some time in the next year due to rising feed prices. Also, anything that uses high-fructose corn syrup as a major ingredient (like pretty much any soda, for example) will also be hard-pressed to put off a price rise to make up for rising ingredient costs.

 

Consider these facts:

  • one tankful of ethanol could feed a person for a year

  • The EROEI for ethanol is quite low, even possibly less than 1 (i.e. it takes more than 1 unit of energy to make the same unit of ethanol). Oil wells in their early days had EROEI ratios better than 100. Nowdays it’s lower, but on average it’s still better than 8 or so unless the wells are played out, or the oil is the heavy, nasty stuff that needs a lot of refinement.

Both of these things combined with dwindling grain supplies mean that production of ethanol will be limited by market factors or political factors long before it could even come close to replacing oil as our motor fuel of choice. Another potential “Silver Bullet” bites the dust.

Again, the long-term answer is to cut back on our use of all motor fuels. Cargill’s position is interesting, since they would stand to profit either way the decision goes. They must be deciding that starving masses around the globe is worse for business than pedestrian masses.

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