The United Nations has called on the US government to suspend its production of bio-fuel ethanol. The UN’s Food and Agriculture Organization says the continuing drought and heat wave across the United States – the worst in 50 years – is destroying much of the country’s corn crop. Under US law, 40 percent of the harvest must be used to make bio-fuel. But the UN says meeting the quota could contribute to a global food crisis. Jose Graziano da Silva, director general of the FAO, says suspension of the quota would allow more of the crop to be diverted for food production.
MULLINS: The latest prediction for this year’s US corn harvest is out today and it’s looking even worse than had been thought. The government has cut its estimate of the corn crop by almost 20 percent.
That’s more bad news for global food stocks, since the US is the world’s largest exporter of corn, and it comes amid growing calls for the US to suspend a requirement that diverts nearly half of the country’s corn harvest away from the food supply to be turned into fuel, instead.
The world’s environment editor Peter Thomson is here now. What are you hearing from Washington, Peter?
THOMSON: Well, Lisa, today’s figures from the Department of Agriculture were just the latest in a series of cuts this summer in its forecast for the country’s corn production. The agency cut another 17 percent from its last projection and now estimates the harvest will be well below last year’s and likely the smallest harvest since 1995.
MULLINS: Safe to assume, Peter, this is because of the incredibly hot weather and drought?
THOMSON: That’s right, Lisa. In fact, federal scientists have just told us that July was the hottest month ever recorded in the lower 48 states. It was also extremely dry in much of the country, in the grain belt in particular, and that has hit many corn growers extremely hard. Corn doesn’t like hot weather, especially when it hits as it did in much of the country this year at pollination time. It’s been especially bad news for those areas that don’t have access to irrigation.
MULLINS: Okay, so how does this all translate in terms of food prices?
THOMSON: Well, corn prices in the trading center of Chicago have already jumped 60 percent over the last couple of months. And the UN’s food price index is up about 3 percent from a month ago. More generally, the droughts here and in Russia and elsewhere in the world are raising a lot of concerns that we could be looking at the kind of shortages and price shocks we saw in 2007-2008. And that’s where this issue that you mentioned at the top comes in–the US requirement that roughly 40 percent of the country’s corn harvest be processed not into food for people or animals but into ethanol, to be mixed with gasoline for cars. Yesterday the UN’s top food official called for an immediate suspension of what’s called the US’s “Renewable Fuel Standard.” And he’s been joined by the head of a World Bank-funded organization called the International Food Policy research institute and a growing chorus of voices from within the US, including 25 senators.
MULLINS: Perhaps it would serve us to be reminded of the rationale for this requirement in the first place.
THOMSON: Well, it was put in place under President George W. Bush as part of a curious and perhaps typically American mix of policy initiatives. It was partly in response to greater energy independence for the US, to help get us off foreign of oil. It was partly to help out farmers in the Midwest by giving them a guaranteed market for much of their harvest. And partly a response to environmental concerns over greenhouse gas pollution from fossil fuels. But it’s now widely seen to have been a mistake that diverts vital grain stocks away from the food supply and into a much lower priority use. And it’s especially questionable policy in times like this, as we see drought and heat and in all likelihood the impact of global warming start to put increasing pressure on the food supply.
MULLINS: And so is there any chance that biofuel requirement will be suspended?
THOMSON: Well, it’s not likely. It seems to have been set up in a way that creates a very high bar to suspending the ethanol mandate. But if things continue to get worse, we’re certainly only going to see pressure grow.
MULLINS: The world’s environment editor Peter Thomson. Thank you.
THOMSON: Thanks, Lisa.