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Biofuels - Jan 28

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A culinary and cultural staple in crisis
Mexico grapples with soaring prices for corn - and tortillas

Manuel Roig-Franzia, Washington Post via MSNBC
NEZAHUALCOYOTL, Mexico - Thick, doughy tortillas roll hot off the conveyor belt all day at Aurora Rosales's little shop in this congested city built on a dry lake bed east of Mexico City.

Using cooking techniques that date to the Mayan empire, Rosales has never altered her recipe. Nor did her father, grandfather or great-grandfather.

On good days, the neighbors line up for her tortillas.

But these are not good days, and sometimes hours pass without any customers.

Mexico is in the grip of the worst tortilla crisis in its modern history. Dramatically rising international corn prices, spurred by demand for the grain-based fuel ethanol, have led to expensive tortillas. That, in turn, has led to lower sales for vendors such as Rosales and angry protests by consumers.

The uproar is exposing this country's outsize dependence on tortillas in its diet -- especially among the poor -- and testing the acumen of the new president, Felipe Calderón. It is also raising questions about the powerful businesses that dominate the Mexican corn market and are suspected by some lawmakers and regulators of unfair speculation and monopoly practices.

Tortilla prices have tripled or quadrupled in some parts of Mexico since last summer. On Jan. 18, Calderón announced an agreement with business leaders capping tortilla prices at 78 cents per kilogram, or 2.2 pounds, less than half the highest reported prices. The president's move was a throwback to a previous era when Mexico controlled prices -- the government subsidized tortillas until 1999, at which point cheap corn imports were rising under the NAFTA trade agreement. It was also a surprise given his carefully crafted image as an avowed supporter of free trade.
(27 Jan 2007)


US corn exports may fall as ethanol use rises

Reuters
The United States could shift from the world’s largest exporter of corn to a net importer as its burgeoning ethanol industry continues to expand, but in the meantime sales abroad are poised to rise as farmers boost acreage to cash in on decade-high prices.

...“If the US becomes a net importer of corn, it could drastically affect the global corn industry,” he said. “Our ability to export corn will probably be diminished by the increased demand domestically from the energy side.”

Most analysts do not foresee such a drastic shift. But calls by President George W. Bush to use 35 billion gallons of renewable fuels by 2017 have many pondering how the country will achieve such a goal. Even Bush acknowledged this week that his plan for a five-fold increase in ethanol use will be constrained by the amount of corn that American farmers can grow.
(28 Jan 2007)


As corn price rises, so could food bills

Kevin G. Hall, McClatchy Newspapers
President Bush's State of the Union call for a sevenfold increase in ethanol production within a decade could have the unintended consequence of sparking corn shortages and driving up prices for a wide array of food products.

Bush said Tuesday that he wanted 35 billion gallons of ethanol in the nation's fuel supply by 2017, and he proposed an ethanol subsidy of as much as $17.8 billion over a decade, as well as grants and loan guarantees.

To meet Bush's goal, a substantial amount of corn that's now used to feed animals or make food products may be diverted to producing alternative fuels, and that worries cattle ranchers, hog farmers and poultry producers, who depend on feed corn to raise their animals. They've already seen per-bushel prices for corn double over the past six months, and they expect further price increases as dozens of ethanol plants open over the next two years.

"Bottom line is, it has already gone up substantially," said Gene Gourley, a pork producer in Webster City, Iowa, who fears forecasts that the feed corn available to his industry could shrink by 30 percent or more. "We're not opposed to ethanol production...but it's just trying to balance the growth of that industry along with the livestock needs."

In 2000, about 6 percent of the nation's corn harvest went to produce about 1.6 billion gallons of ethanol. Last year, 20 percent of the corn harvest was used to make 5 billion gallons of ethanol.
(26 Jan 2007)
Related:
Expanded Biofuel Production Expected to Drive Up Food Prices (Farmscape)


Biofuel trade disadvantages poor nations-report

Reuters
A combination of rich nation import controls and excessive pricing power among too few western importers is disadvantaging biofuels producers in developing countries, a London-based research institute said.

...Developing countries are the biggest producers of biofuels that are currently competitive with oil, because they have lower costs and their biofuels have a higher energy content than those produced in temperate zones.

But under present trade rules rich nations -- the biggest biofuels consumers -- are disadvantaging developing country producers, the report by the International Institute for Environment and Development (IIED) said.
(26 Jan 2007)

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