In this edition of the Ethanol Report, Renewable Fuels Association (RFA) president and CEO Bob Dinneen discusses ethanol production for the year so far, new Renewable Fuel Standard (RFS) ad campaigns and gives his thoughts on the Environmental Protection Agency’s 2014 Renewable Volume Obligations that are under Office of Management and Budget (OMB) review.Ethanol Report on Ethanol Production, RFS Food EPA
In this edition of the Ethanol Report, Renewable Fuels Association (RFA) Senior Vice President Geoff Cooper talks about how corn prices have fallen but food prices continue to rise, and how that shows the “food versus fuel” argument is false.
A new report from RFA compares corn prices to the price of dairy products, pork products, beef products, and poultry and egg products from January 2007 – July 2014.Ethanol Report on Corn and Food Prices
The Renewable Fuels Association (RFA) has released a new report today in an effort to “debunk” what they call the “fictional” food versus fuel debate. The report finds that while corn prices have dropped dramatically over the past two years, retail food prices of key foods including eggs, beef, poultry and pork have remained steady or continue to increase. The report concludes, “… fluctuations in corn prices do not significantly affect consumer food prices.”
The report examined a number of factors that contribute to food prices including the cost of food production, pointing to Citibank’s Sterling Smith who stated, “Corn prices may have come down 50% (from their highs), but that doesn’t mean a box of corn flakes will fall 50% in price. Much of the price of food comes from the processing and movement of food…” Additionally, the report also highlighted the role of crude oil in retail food prices, finding that “…every step in the food supply chain is significantly affected by energy costs—especially crude oil.”
The report also compared corn prices to the price of dairy products, pork products, beef products poultry products and egg products from January 2007 – July 2014. Report findings include:
Retail prices for key dairy items like milk and cheese have been largely unresponsive to changes in corn prices. In fact, since January 2011, milk and cheese prices have been negatively correlated to corn prices, meaning retail milk and cheese prices have tended to move in the opposite direction of movements in corn prices.
- Retail prices for items (like chicken legs, frozen whole turkey, fresh whole chicken) have risen steadily and smoothly since 2007. Wide swings in corn prices did not interrupt or affect the gradual trend toward higher prices for these items.
- Retail prices for pork products have not shown any meaningful relationship to corn prices over the past seven years. It is well documented that the recent acceleration in pork and bacon prices has been driven by piglet casualties resulting from Porcine Epidemic Diarrhea virus (PEDv). These retail price increases have occurred at a time when corn prices have been plunging.
- Retail ground beef prices have steadily and smoothly trended higher over the past seven years, showing no obvious response to wide swings in corn prices.
“The food vs. fuel folks screamed to high heaven when the price of corn rose during the drought and immediately blamed high corn prices and ethanol for food price increases,” said Bob Dinneen, RFA president and CEO. “However, these same critics remain suspiciously quiet now that corn prices have dropped, but retail food prices aren’t dropping along with them. The food vs. fuel argument is just another misguided attack on biofuels and the Renewable Fuel Standard, which is reducing foreign oil dependence, lowering gas prices for consumers, and revitalizing rural America.”
The food versus fuel debate arose once again in front of Congress. At last week’s U.S. House Ag Subcommittee hearing in Washington, D.C., opponents and proponents of the Renewable Fuels Standard presented their arguments on the RFS and its impact on the livestock industry.
One of the biggest opponents of the RFS is the poultry industry. Their members argued that ethanol has forced up feed prices that keeps them from expanding operations and fulfilling consumers’ needs to have a cheaper alternative to beef and pork, calling the RFS “broken beyond repair.” But the chief economist at the U.S. Department of Agriculture, Dr. Joseph Glauber, said while ethanol initially did have an impact much bigger factors forced up the price of feed.
“Certainly, the ramp up [in ethanol production] we saw from 2005 to 2010 had a big impact on corn prices, but we also saw a big increase in energy prices, so it’s not the only thing going on,” he told the committee.
In fact, during that same ramp-up period, petroleum prices shot up to record levels, and RFS proponent, Roger Johnson, President of the National Farmers Union, said the agriculture industry should be united for renewable fuels.
“The World Bank found that crude oil is the number one determinant of global food prices. We should reduce our dependance on oil consumption in order to be more food secure, and biofuel production is an excellent way to do that,” adding that pitting the biofuels industry against the livestock growers is counter-productive.
The bottom line, according to Glauber, is that biofuels are important, and they’re here to stay.
“Corn-based ethanol is a vibrant industry and is competitively priced against gasoline, and producers will continue to produce ethanol from corn as long as profit margins are there. And profit margins have been there.”
Ethanol backers got their voices heard during the recent American Coalition for Ethanol (ACE) Biofuels Beltway March in Washington, D.C. And at least some lawmakers were listening.
In this edition of the Domestic Fuel Cast, we talk to Rep. Rodney Davis (R-IL), Sen. Mike Johanns (R-NE), and Sen. John Thune (R-SD), who met with ACE and its supporters and all expressed their backing of efforts to keep renewable fuels, especially ethanol, in the forefront of federal policies.
Listen to what they had to say after they listened to ACE: Domestic Fuel Cast - Lawmakers Meet with Ethanol Advocates
The Global Renewable Fuels Alliance (GRFA) is demanding the High Level Panel of Experts on Food Security and Nutrition (HLPE) withdraw their Biofuels and Food Security report given its flaws and their refusal to release the report’s funding sources. The organization’s call to action comes as the Committee on World Food Security’s (CFS) annual Plenary gets underway in Rome, Italy.
Biofuel industry associations representing Canada, the United States and European Ethanol producers sent a joint letter to members of the HLPE Steering Committee highlighting the numerous flaws in the reports drafting process and demanded to know the sources of funding behind it.
“It is not surprising that the final HLPE report was flawed given the secretive nature by which it was funded and the inherent biases among the appointed members of the so-called Project Team,” said Bliss Baker, spokesperson for GRFA.
The open letter released by the GRFA slammed the panel for the manner in which the project scope was finalized, the apparent disregard for stakeholder feedback provided during consultations, the opaque and secretive “external review” of the final draft report, the non-disclosure of the reports financial donors and the veiled process by which the Project Team was selected.
“It became apparent early in the process that industry concerns were being dismissed without any explanation from the HLPE,” said Baker. “It is essential in any public policy process to explain decisions for accepting or rejecting recommendations from stakeholders, but regrettably, the HLPE did not believe that an open transparent process was required.”
Equally concerning to the GRFA was the secretive way the Project Team was selected. Key stakeholders should have been allowed to participate in selecting a Project Team, said Baker, but instead the HLPE “hand-picked” its members. This “hand-picked” team did not include a single expert from the biofuels industry but instead included a known biofuels critic who was the primary author of a highly controversial theory of predicting future land use patterns that has been widely criticized.
“Effective policy is best informed with sound science and an open, transparent, deliberative process that involves the public,” added Baker. The HLPE did not adhere to any of these principles and because of these short comings the HLPE should withdraw the report at the CFS Plenary until these deficiencies are addressed. Moreover, it is imperative that the HLPE disclose the financial donors who contributed to this report.”
Congress is preparing to return to work and renewable fuels will be top of mind at their return with debate still ongoing around the Renewable Fuel Standard (RFS) as well as the need to pass a bi-partisan FAARM bill before the end of September.
Fuels America recently brought together several renewable fuel experts held a call to discuss the progress the renewable fuel industry has made over the summer. In addition, the experts took a look ahead to issues that will both help and hurt the industry.
Panelists included Delayne Johnson, Quad County Corn Processors, Bob Dinneen, CEO and President of the Renewable Fuels Association (RFA), Tom Buis, CEO of Growth Energy, and Paul Bertels, Vice President of Production and Utilization, National Corn Growers Association.
Dinneen noted that as he traveled this summer around the Midwest how he saw fields of corn. This, he said, is undermining Big Oil’s “food versus fuel” argument that he called a “canard”. He pointed out that both the United States Department of Agriculture (USDA) and United Nations (UN) have both come out in the past few weeks with reports that food inflation is really low.
Tom Buis noted that part of what the RFS debate is about is the movement to second generation biofuels (ethanol plants are beginning to co-locate second gen technologies with first gen technologies). Everyone knew, said Buis, that when the RFS was passed, the country would have to move to higher blends to achieve the 36 billion gallon goal. He said that if Big Oil can keep the so-called blend wall from being cracked they can go to Congress and say the RFS isn’t working. However, Buis noted that as consumption of biofuels increases, investments and technology developments in second generation biofuels will increase – a move that will continue to erode Big Oil’s market share.
To learn more about the continued biofuels debate in DC, listen to the full press conference here: Renewable Fuels Fall Preview
According to a paper published by the nova-Institute on agricultural feedstock use in industrial applications, efficiency and sustainability assessed on a case-by-case basis should be the sole criteria in judging the choice of feedstock used. The paper reviewed the “food versus fuel” arguments surrounding feedstocks to help shed light on the debate on how feedstocks should be used. The institute further stressed that the real issue is land availability for growing biomass for different purposes.
The paper refers to studies asserting that, even after satisfying food demand of a rapidly growing world population, enough arable land would remain available for purposes other than food production. The authors argue that the best usage of these areas is achieved by considering the land-efficiency of different crops. Studies show that many food crops are more land-efficient than non-food crops. According to the paper, they require less land to produce the same amount of e.g. fermentable sugar (commonly used in biotechnology processes) than non-food crops or so-called second generation feedstock, e.g. lignocelluloses.
“Efficiency and sustainability should be the leading criteria when selecting renewable feedstock for industrial purposes, such as the production of bioplastics,” said Hasso von Pogrell, Managing Director of European Bioplastics, embracing the paper as a welcome contribution to the discussion. “If the industry were to neglect the use of first generation feedstock at this point in time, it would do a disservice to society and the environment,” he added. “In addition to being currently more efficient, the use of food-crops for industrial purposes has the major advantage that, in times of food crisis, these crops could be reallocated to food use.”
European Bioplastics is in favor of promoting the use of second or even third generation feedstock for industrial purposes. However, as long as food crops continue in many cases to represent the most efficient feedstock by far, discrediting their use would be misguided and a step in the wrong direction in achieving the European Commission sustainability targets.
“This often very emotional discussion needs to be steered into a more fact based direction,” continued von Pogrell. “Only two percent of the global agricultural area is actually used to grow feedstock for material production and only 0.006 percent is used in the production of bioplastics, compared to 98 percent used for food, feed and as pastures,” he concluded.
These findings echo the conclusion of a study recently published by the World Bank, according to which an increase in food prices is largely influenced by the oil price. Biofuels and, by extension, bioplastics play a negligible factor here. The study looked at food commodities such as corn, wheat, rice, soybeans and palm oil and compared commodity prices to energy prices, exchange rates, interest rates, inflation, income and a stocks-to-use ratio to determine which of these drivers had the most impact on food prices.
This week the European Parliament Environment Committee voted for the European Union (EU) to cap the amount of food used as biofuels at 5.5 percent. Groups opposed to the measure want to see an end to biofuels created from “food” crops. The EU’s Renewable Energy Directive requires EU member states to use 10 percent of the road transport fuel from renewable sources by 2020. Historically, the mandate has been met with feedstocks also used to produce food (corn, wheat, soy).
The first generation cap on “agri-fuels” is an attempt to help the country transition to advanced biofuels and reduce greenhouse gas emissions resulting from indirect land use change (ILUC).
“I nonetheless think that the industry must be given time to adapt, and I shall propose a compromise to this end in plenary session,” said rapporteur Corinne Lepage (ALDE, FR) after the vote. Her first-reading report was approved by 43 votes to 26, with one abstention.
“While today’s vote for a 5.5 percent cap is better than no cap, it still means that people in the United Kingdom and Europe will put food in their cars that could have fed tens of millions of people. This is not acceptable at a time when 1 in 8 people go hungry globally,” said Anders Dahlbeck, Head of Policy at ActionAid UK.
The EU is revising its biofuels policies and this week MEPs on the Environment committee voted on proposed amendments that will not have to be accepted or rejected by the European Parliament’s plenary session in Strasbourg in September. After that, the European Parliament will have to negotiate with the European Council (made up of EU governments) before a final revision to biofuels policies can be implemented. Continue reading
Emotions are mixed regarding the findings in a recent report published by the Food and Agriculture Organization (FAO) that was released in Rome during a meeting with ambassadors. The report found that biofuel from crops has a significant and direct impact on food prices and food availability. In response, ActionAid said the report shows how Europe’s biofuel targets are driving up food prices and increasing hunger among the world’s poorest people.
The report comes several weeks before a final decision is made by the Environment Committee, part of the European Commission, on how much fuel will be allowed to be made from feedstocks used to produce food.
“It is a wake-up call to the EU to get its house in order on food and fuel. This means some hard work ahead for MEPs and Member States who are working on redefining EU biofuels policy,” said Anders Dahlbeck, ActionAid’s biofuels policy advisor. “However as we speak, the biofuels industry is lobbying hard against new proposals before the Parliament and Council to limit the use of food crops for biofuels. MEPs and member states must not bow to industry pressure – they must end the use of food for fuel.”
The global biofuels industry has in fact taken issue with the report and the Global Renewable Fuels Association (GRFA) says that there are several methodological and factual errors in the report including the omission of key co-products in calculating the net benefits of biofuels; the overly prescriptive policy recommendations; and the inclusion of unproven land use methodologies. It should be noted that the EU biofuels policy that is under review specifically does not take in to account indirect land use in its calculations. Continue reading
Several new studies have been released on biofuels and investment needs of small-scale farmers released by the High Level Panel of Experts (HLPE) of the Committee on World Food Security (CFS). Report no. 5: Biofuels and Food Security finds that world biofuel production increased five-fold in the decade between 2001-2011. As a result, the report attempts to identify the impacts that biofuel policies and the development of biofuel markets are having on food security.
The report studies several specific issues including:
- To what degree does the sector divert crops from food to fuel?
- How does biofuel production factor into high food prices?
- Is the biofuel development model pro-poor?
- What are the implications for land availability and use and what do they mean for rural communities and the environment?
Report no. 6: Investing in Smallholder Agriculture for Food Security looks at how to promote greater investment in small-scale agriculture. This study finds that “a vast majority of the hungry people in the world are, paradoxically, small farmers” and calls for a “new deal” for smallholder farmers. This type of farmer constitutes the majority of farm families in the world and make crucial contributions to household, national and global food security.
The report examines:
- The diversity of smallholder agriculture in the world
- The constraints to investments
- What types of investments are needed at farm and broader levels
It also proposes the development of national strategies for investment in smallholder agriculture.
A proposal from the European Commission that would limit the amount of food produced from biofuels made from food crops was amended today by the European Parliament industry, research and energy committee. The Committee voted to raise the proposed cap on biofuels from 5 percent to 6.5 percent and also voted not to implement indirect land use change (ILUC) factors. According to ActionAid, this means that European countries might end up using biofuels that are worse for the climate than fossil fuels.
Anders Dahlbeck, ActionAid biofuels policy advisor, said, “MEPs voting in the Industry committee in the European Parliament today sent a clear signal that they are prepared to put fuel goals before hunger goals and industry interest before poor people.”
“The evidence is clear that putting food into tanks does not make sense. EU’s biofuels policy is driving food price volatility and land grabs in some of the world poorest countries. The FAO says we need 50 percent more food by 2050 so why do we keep putting it into cars?” questioned Dahlbeck.
The UN special representative on the issue of food rights and hunger, Olivier de Schutter, met MEPs this week and raised the alarm bell on the damaging impacts of the EU’s biofuels policy. In spite of this the Industry committee in the European Parliament has weakened the European Commission’s proposal to limit the amount of food that can be used for fuel.
“There is still time for MEPs to turn it around with upcoming votes in the environment committee and the plenary vote in September. Do we accept hunger in exchange of EU energy targets – targets not even tackling climate change?” asked de Schutter.
One of the big issues that continues to dog the biofuels business, especially ethanol production, is the use of food crops as fuel sources. While many have made the case that the crops can provide both food AND fuel (consider the dried distillers grains from ethanol production, for example), a New Jersey-based company thinks it has a way to remove the food part from the debate altogether.
In this edition of the Domestic Fuel Cast, we talk to Kef Kasdin, CEO of Proterro, as she tells us about her company’s method of actually creating, not extracting, sugars. You’ll be able to hear how this process makes sugar for as low as 5 cents/pound… a pretty good bargain compared to 10-20 cents/pound of more conventional methods.
You can listen to the Domestic Fuel Cast here: Domestic Fuel Cast - Proterro Creating Sugars for Biofuels
And you can check out the video below to get a better explanation of how the process Kasdin describes works.
Apparently tired of false claims that biodiesel takes from the food supply, biodiesel maker Renewable Energy Group has put out a whitepaper that actually shows how the green fuel is helping the food supply. Biodiesel Magazine has this good summary of “Food THEN Fuel: How the American Biodiesel Industry Is Strengthening Food Security.”
“[C]ritics of biofuels have [tried] to convince the public that biodiesel is merely part of an amorphous group of energy sources that share the same alleged disadvantages,” the paper states. “Indeed, they would have the public believe that biodiesel not only depletes the food supply by creating a competing use in fuel, but that it also contributes to higher prices at the grocery store. In reality, biodiesel is playing a vital role in strengthening America’s food security and reducing rising pressures on food prices. Rather than competing with food, biodiesel production applies a “food THEN fuel” approach by adding economic value for food industry byproducts and sending economic signals to the market to produce more. Biodiesel production helps make the food and agricultural sectors more profitable, incentivizes the production of protein and generally helps keeps grocery items, like meat, from increasing in price more than they already would due to inflation and petroleum energy costs.”
Some of the facts REG cites are that soybean oil is the historic primary feedstock for U.S. biodiesel and still makes up the largest single feedstock used. With the soy oil used for biodiesel, that still leaves more than 80 percent of the bean to be made into meal for livestock, keeping feed costs down for livestock producers.
In addition, other feedstocks for biodiesel, such as animal fats and used cooking oils, have created value-added markets in those food industries to help farmers and restaurant owners make more money and allow them to them to produce even more food at cheaper prices.
As always, the Global Perspectives and Washington Insiders panels at the National Ethanol Conference were as entertaining as ever. The panels routinely feature representatives from other organizations that may not share the same viewpoint of the Renewable Fuels Association (RFA), allowing the opportunity for some interesting dialogue.
Global Renewable Fuels Alliance spokesperson Bliss Baker served as the moderator/referee for the global panel which featured RFA CEO Bob Dinneen; Canadian Renewable Fuels Association president Scott Thurlow; Rob Vierhout, Secretary General of ePURE; UNICA CEO Elizabeth Farina; and Poul Ruben Andersen with Novozymes A/S.
Noting the panel placement of Canadian Thurlow between Dinneen and Vierhout, Baker commented, “Some of you may be familiar with Canada’s tradition of peacekeeping,” he said. “Scott may have to assume that role of peacekeeper when we talk about our first issue” which was Europe’s trade challenge to U.S. ethanol imports. “I find it a little bizarre that we are in this spat that we are in today, attacking one another,” Baker said, throwing the floor open to Veirhout to explain “what were you thinking?”
Listen to the panel here: NEC 13 Global Panel
This year’s Washington Insiders panel included (L to R) – Marty Durbin, Executive Vice President, American Petroleum Institute; Shane Karr, Vice President, Federal Government Affairs, Alliance of Automobile Manufacturers; Louis Finkel, Executive Vice President, Government Affairs, Grocery Manufacturers Association; and James Massie, Principal, The Alpine Group (the “insider’s insider”).
Interesting exchange on the panel came between Dinneen and GMA’s Finkel regarding the impact of the Renewable Fuel Standard. Challenging Finkel’s claim that the production of corn ethanol under the RFS has had a “significant” impact on food costs, Dinneen asked if he would say that oil prices also have a significant impact on the price of food. “I don’t think it has a significant impact,” Finkel replied. “I think it has an impact on the cost of transporting our food.”
“You’re a good advocate for your industry,” Dinneen responded.