Last month NPR ran a story on the role steeply rising food prices played in destabilizing Tunisia, Egypt and other Arab nations. This isn’t a new story – since the rise of biofuels organizations like the World Bank and the OECD have warned that converting food into fuel will increase the risk of famine.
As with any global-issues discussion a lot of the conversation is speculative. But here are some interesting corn-use facts, most from the National Corn Growers’ 2010 annual report:
- The world produced 31 billion bushels of corn last year.
- The US is the largest corn grower in the world, accounting for 13 billion bushels or 41.9%.
- Last year the US produced 1.059 billion bushels more than in the previous year.
- 35.6% of our corn (4.66 billion bushels) goes to ethanol and high-fructose corn syrup. 15.7% (2.05 billion bushels) goes to exported corn.
- One bushel of corn converts to 2.8 gallons of fuel ethanol. So for every 28 gallons of e10 fuel you pump into your car, you’ve used a bushel of corn.
- Every automotive gas station in Orlando exclusively uses e10 gasoline.
- The US subsidizes $.45/gallon of fuel made with ethanol.
- Egypt imported 165 million bushels of corn last year.
- Corn closed yesterday at $7.21/bushel. Last year it was $3.75/bushel. (This is the highest corn prices have ever been, since earliest available records in 1970.)
- The US has tariffs on imported sugar that increases prices from $.0625 to $.1621 per pound
- The average high fructose price last month was $.3231 in the US.
- The average refined sugar price last month was $.3398 world wide. Refined US beet sugar was $.54.
Without the tariffs sugar would be cost the same or less than high-fructose corn syrup. (Annually sugar has been cheaper every year in the last decade.) If sugar was imported into the US at global prices, without tariff, there wouldn’t be financial incentive to convert 460 million bushels of corn into a low-quality sugar substitute. It’s possible less people would grow corn without the HFCS market. But the amount of land used for corn crop has been relatively stable in the last 70 years: It’s our yields that have increased our harvest over time. The corn crop diverted to sweeteners could satisfy the corn demand in the Arab world.
The rising demand for ethanol in the US has also siphoned off more than 4 billion bushels of corn from other uses including food. The entire rest of the world only imported 3.342 billion bushels. So if we ceased using corn for biofuel the entire world demand for corn could be met with US crops. Given corn is a relatively inefficient source of biofuel, we may not even be losing much.
But instead more than a third of our corn turns into artificial sweeteners and fuel. Meanwhile across the world corn prices rise with the global shortage. Across the Arab world those rising prices contribute to unease that leads to dissent. That dissent leads to riots. Those riots lead to uprisings, and then governments start toppling.
Obviously corn policies and prices alone don’t forge a path straight to rebellion in any country. It’s a good thing, because those higher corn prices have just started raising food costs in the US as well.