By Kathy Yang - Associated Renewable, Inc.
An onslaught of droughts and extreme weather has caused many discomforts and catastrophes this summer. The majority of experts agree that the erratic incidence of such volatile weather is caused by global climate changes. Areas like the Midwestern U.S. are facing droughts of historic proportions. One crisis brought about by the recent series of droughts, however, deserves more attention—the food crisis.
If you think that you’ve been dishing out more cash for your usual basket of groceries, it’s because you are. The news of the current ongoing drought in the Midwest may be well-publicized, but what most people might not know is that it’s the worst one since 1956 and it’s taking a harsh toll on our food budgets. As farmers go bust, food bills will rise. The U.S. corn industry has been hit especially hard by this brutal summer.
In the beginning of August, Bloomberg Businessweek1 reported that record drought across the Midwest has forced the U.S. Department of Agriculture to slash its forecast for 2012 corn production by 12 percent. For the current 2012 year, the Renewable Fuel Standard (RFS) requires the use of 13.2 billion gallons of corn ethanol for transportation fuel. This means that almost half of the corn in the U.S. will be used for fuel instead of food. The increasing usage of corn for ethanol contributed to huge spikes in corn prices from $2.52 per bushel in 2004 to a staggering $7.96 per bushel in 2012. Corn prices are already 90 percent higher than those reported in July 2010.
Not surprisingly, as a result of spiking corn prices - milk, eggs, beef, poultry and pork prices will all probably go up because feed will be in shorter supply. Over the next 50 years, in order to cater to 2 million additional people and their growing appetite for meat, food output will have to rise by 50 percent1. The soaring food prices have already surpassed 2007-2008 levels, and that was when riots sparked in almost 30 countries. This is not the first severe drought recorded in the U.S., but current predicaments are magnified due to misguided energy policies.
However, this agro-doomsday scenario is not without a viable solution. In fact, the answer to the problem is clear; we just all have to hop on the bandwagon and take initiative. A human remedy is available, but it requires the general cooperation of federal authorities.
A carbon tax has been heavily debated in the U.S., but it may hold a crucial part of the answer to the food scarcity issue. Along with implicating a small tax on carbon, authorities would also need to stop subsidizing pollution. It has been reported by the Environmental Law Institute that between 2002 and 2008, fossil fuel subsidies and tax breaks were almost twice as generous as those of renewable energy. And with the ever-declining supply of fossil fuels, it’s time the economy relied on other energy sources. Given how rapidly alternative energy prices have fallen in the recent years, the combination of cheaper renewable energy and abundant natural gas should manage to keep down agricultural energy costs. In both 2008 and 2011, agricultural prices rose in tandem with energy prices, just as they did in the 1970s. That is partly because it takes 160 liters of oil to produce a metric ton of corn in the U.S., and the cost of natural gas accounts for three-quarters of the cost of nitrogen fertilizer1.
With the implementation of the right policies, we can achieve a cooler planet with more crops. Policy makers could also increase agricultural productivity by decreasing the input prices of renewable power. These potential policy changes could help lower the chance of permanent volatility in future food prices. With the interwoven food supplies amongst the world’s nations, it is vital that the U.S. take action. What we as a superpower nation need, is a green revolution backed by renewable energy proliferation.
1Bloomberg Businessweek, July 30- August 5, 2012 issue
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