Food Supply Will Meet Demand

The UN Food and Agriculture Organization (FAO) and OECD released their annual Agricultural Outlook yesterday. It makes a strong case for increasing global agricultural production by increasing yield on existing acres – one of many solutions biotech can help provide.

  • Adverse weather conditions in major grain-producing regions, coupled with low stocks, were enough to trigger the current sharp rises in food prices even if all other factors were equal.
  • Productivity gains from increased yields will eventually meet and exceed the growing demand for food, feed, fiber and biofuels.
  • Continued growth in yields will be a more important factor in meeting demand than increased use of land for agriculture.
  • Food and feed remain the largest sources of demand growth in agriculture, not biofuels.

The report also credits new technological developments – such as cellulosic biofuels – with the possibility that we could reduce world food prices in the future, but also points out that these technological developments are not considered in the current projections.

How the world can boost agricultural output without increasing land use is a challenge that U.S. Agriculture Secretary Ed Schafer will address when he travels to the UN High-Level Conference on World Food Security: the Challenges of Climate Change and Bioenergy in Rome next week. His agenda for the meeting will include support for increased adoption of and reduced trade barriers for agricultural biotechnology. At a briefing for reporters, he noted:

The United States will propose that all countries consider strategies that expand research, promote science-based regulations, and encourage innovative technology — including biotechnology…. 

“I will be hosting a side event focused on new technologies to showcase developing countries that have moved forward with public investment in adoption of bioengineered products….

“According to our [White House Council of Economic Advisors] analysis, the increased biofuels production accounts for only 2 to 3 percent of overall increase in global food prices. At the same time, the International Energy Agency reports that biofuels production over the past three years has cut the consumption of crude oil by 1 million barrels a day. Biofuels are helping address both environmental concerns and the economic impacts of high oil prices.”

The IEA perspective on biofuels mentioned by Schafer is well worth reading. It says in part:

Biofuels are playing an increasingly important role in meeting growing transport fuel demand. They represented 49% of the growth in Non-OPEC oil supply in 2007 and this share is expected to rise to 55% in 2008.”

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Will the Press Set the Record Straight?

Last week, Roll Call revealed that the Grocery Manufacturers Association paid for a PR campaign aimed at blaming high food prices on biofuels (call it the ‘vast chicken wing conspiracy’). But since the revelation, there’s been very little effort in the press to set the record straight.
The USDA this week held a press conference to tell reporters the true causes of food price increases. And on Tuesday this week, Michael W. Masters, Managing Member and Portfolio Manager of Masters Capital Management, LLC, testified before the U.S. Senate Permanent Subcommittee on Investigations Committee on Homeland Security and Governmental Affairs on whether institutional investors are contributing to food and energy price inflation:

Institutional investors are one of, if not the primary, factors affecting commodities prices today.
“When asked to explain this dramatic increase, economists’ replies typically focus on the diversion of a significant portion of the U.S. corn crop to ethanol production. What they overlook is the fact that Institutional Investors have purchased over 2 billion bushels of corn futures in the last five years. Right now, Index Speculators have stockpiled enough corn futures to potentially fuel the entire United States ethanol industry at full capacity for a year. That’s equivalent to producing 5.3 billion gallons of ethanol, which would make America the world’s largest ethanol producer.
“Turning to Wheat, in 2007 Americans consumed 2.22 bushels of Wheat per capita. At 1.3 billion bushels, the current Wheat futures stockpile of Index Speculators is enough to supply every American citizen with all the bread, pasta and baked goods they can eat for the next two years!”

So, what’s the solution? Purdue Agricultural Economist Dr. Chris Hurt told the Purdue Biofuels Symposium on Sunday May 18:

We must not throw out all the work that’s going on, the tremendous amount of research into cellulose, into increasing the yield ability of corn and the amount of ethanol we can get from that. Our fuel problems aren’t just going to go away. Agriculture needs support over the next several decades. That’s the message we all in agriculture want to get across. We’re into this now. We have huge potential. Let us continue to develop that potential.”

According to Alan Tracy, U.S. Wheat Alliance President, and Ron Suppes, USW Chairman,

Biotechnology is the best and most practical tool available to give the world the boost in agricultural productivity we must have to reduce starvation and environmental degradation. Continued mindless opposition to this applied science will only bring greater misery, poverty and environmental destruction to the world.
“The genetically modified crops now planted broadly across the U.S. require less herbicide and insecticide and consume less of the oil and energy it takes to make such pesticides. (Doesn’t it just make sense to build an insecticide into a plant rather than broadcast one onto the whole field?) Engineered herbicide tolerance brings better weed control, which leads to less tillage, which uses less fuel and preserves both the soil and its capacity to store away carbon. Higher yields mean that less new cropland has to be found to meet the needs of a growing world population. That means less forest and jungle and savannah get destroyed along with their air purifying and carbon storing capacity. Biotechnologically derived saline tolerance is now on the near horizon, meaning that we will be able to reclaim croplands that have been abandoned. Modern biotechnology is roving to be one of the most important environmental advances that agricultural science has ever discovered.”