As it happened, this was the second time I’d seen this drought-as-storm metaphor. A full year ago, Mark Miller of the National Cattlemen’s Beef Association ascribed the record high prices of beef to “a perfect storm of elements.” These included feed grains increasingly being diverted to produce biofuels, reduced cattle herds, and drought conditions in Texas and Oklahoma – described by a Texas state extension agent as “the worst drought that anyone alive has ever seen, because it was the worst in recorded history, back to 1895.”
That regional drought went national in 2012, causing major declines in grain production and driving record corn, soy, and wheat prices even higher. And now we’re seeing that it’s hurting pasture for beef cattle as well as the grains they’re fed. Here’s how Caren Cowan, executive director of the New Mexico Cattle Growers’ Association, describes it:
“It’s trite, but it is the perfect storm. We have no rain, there’s no feed readily available, what is available costs too much and the cost of transportation has increased. We’re just in a bad place.”
There’s no doubt that the situation is dire for the beef industry. The U.S. cattle herd has declined to a level smaller than it has been since 1952. The 2011 calf crop is the smallest since 1949. And the effects are rippling up the supply chain; Cargill Beef announced last month that it would stop production at its Plainview, Texas slaughterhouse and lay off all 2,000 of its workers.
But is “a perfect storm” the right metaphor? I’m not quibbling about using a wet event to describe a dry one; my question is more fundamental. Is this just an incredibly unusual coincidence of bad things all happening at once? Or is it something that is going to be repeated again and again in years to come, because of the way that the agricultural system responds to global warming?
For an answer, compare what has happened to beef to the very different situation of the U.S. chicken industry. There, production of broilers (chickens for meat) was up 3 percent in November, stocks are up by 4.8 percent over the previous year, and the forecast for 2013 production was just increased to 36.8 billion pounds. Despite the drought, the poultry industry is weathering the “perfect storm.” Why the difference?
For a start, the American diet is changing. U.S. per-capita beef consumption, despite the “real food for real people” and “it’s what’s for dinner” advertising, has declined more than 30 percent since its high point in 1975. During the same time period, our chicken consumption has doubled.
There’s a difference on the production side too. Both beef and chicken production now depend heavily on feed grains, but beef depends on pasture too. And while feed grains can be stored for many months and shipped all over the world, the pasture grasses stay put – and even if you can cut them to make hay, that’s much bulkier than grain, harder to ship, and loses its already-lower nutritional value as it dries out.
Drought hurts both crops and pasture. “For the sun comes up with its scorching heat and dries up the grass. The flower in it drops off, and its beauty is gone.” (James 1:11). But grains can be shipped in from elsewhere, while drying-up pastures are hard to replace. Furthermore, beef cattle are less efficient at turning feed grains into meat than chickens. And finally, beef calves take a lot longer to grow to slaughter weight than chickens or pigs, meaning that the “beef cycle” is longer and takes more time to adjust to changing conditions.
All these things make beef more vulnerable to droughts than the alternatives. But they’re not going to be the one-time-only, incredible-coincidence events that the metaphor of a perfect storm suggests. On the contrary: beef is not only a bigger cause of climate change than other foods; it’s also more likely to be hurt by it.]]>
It has been widely reported over the last several weeks (here, here, here, and here) that the water level on some drought-stricken stretches of the Mississippi is so low that barge traffic may grind to a halt. Last week saw members of Congress out on the river in Illinois, praising the Army Corps of Engineers’ efforts to deepen the channel through rock removal, and pledging to press the White House to do more, if needed, to keep the waterway open to commerce. The Corps’ efforts, along with recent and forecast rains, make a closure seem less imminent—at least for the moment.
Still, waterways groups are anticipating billions in commodity losses in December and January due to the slowdown in river traffic. Among the commodities at risk of not making it to their destinations if the river shuts down are chemical fertilizers heading to Midwestern farm fields, and corn and other grains that are the products of those fields.
Big Ag Bites the Hand that Feeds It
There is a deep irony in the notion that big agribusiness is under threat from the Mississippi River. In fact, the Mississippi, its farm belt tributaries, and the Gulf of Mexico where the river empties have long suffered at the hands of industrial agriculture.
The annual U.S. corn crop is massive—97 million acres in 2012, the most since 1937, and most of that in the Midwest. Grown in the typical industrialized way, corn requires enormous quantities of added nitrogen fertilizer, but the plant only takes up about 50 percent of what is applied, with much of the rest washing out of the soil and into waterways. The effects on water quality have been well documented.
Opinion is divided as to how much corn farmers will plant in 2013, as corn is a notoriously thirsty crop as well, and suffered big losses from the past year’s drought. But there was evidence last fall that big seed companies like Pioneer were urging farmers not to change crops—get your corn seed orders in now!—and the USDA’s World Agricultural Outlook Board projects 97.2 million acres planted, up a little from last year. If growers do gamble on corn again this spring in response to continued high prices, they are likely to load on the fertilizer in the hopes of maximizing their yield. And if and when the rains come, much of that will find its way into the Mississippi.
More Corn, More Droughts, More Corn?
In a roundabout way, the emphasis on high-input industrial corn production also serves to exacerbate the climate/drought problem. Nitrous oxide is a potent greenhouse gas linked to climate change, and last spring chemists at UC Berkeley reported powerful evidence that increased fertilizer use is responsible for a corresponding increase in N20 levels in the atmosphere.
So, more drought may lead to more corn planting and more fertilizer use, which may lead to more global warming emissions and ultimately, more drought. A pretty vicious cycle.
The past year’s epic drought woke up a lot of folks to the reality of more frequent droughts and other severe weather due to continued climate change. Similarly, it may be dawning on the agribiz industry just how much they—and the rest of us—rely on the Mississippi and other waterways that run through America’s heartland.
The question is, what will we do to protect them?]]>
Approximately 66 percent of the contiguous U.S. is currently in severe, extreme, or exceptional drought. Many of these same areas were in drought six months ago – and even as far back as 2009 in the case of Texas. Below normal precipitation and/or above normal temperatures are expected to persist in some parts of the country that are already drought-stricken, such as the south central and southwestern U.S and the Gulf coast states.
Last week, the U.S. Department of Agriculture released its crop production summary for 2012 which shows the severe impact of last year’s historic drought. Corn production for 2012 was 10.8 billion bushels, 13 percent below the 2011 crop, and yield per acres was 16 percent below 2011 levels – a cruel blow to farmers who had started the growing season expecting a bumper crop. Hay production was at the lowest level since 1964, which had serious consequences for the livestock industry.
The forecast for this year’s spring growing season is not much improved, especially with the already low soil moisture conditions caused by last year’s drought. As the National Weather Service says: Soil moisture is currently very low across the southern plains, and with elevated chances of below median precipitation amounts predicted for the remainder of winter, it appears that dry soil conditions will persist into spring.
Texas has been hit particularly hard by what is now a multi-year severe drought, affecting crops, livestock, and water supplies, and causing significant wildfires. In December 2012, Governor Rick Perry made a disaster proclamation, renewing a similar proclamation he had made in July 2011, and stating that “exceptional drought conditions pose a threat of imminent disaster.”
The Texas Water Development Board’s latest water plan is an urgent call for attention to the fact that Texas does not and will not in the future have enough water to meet its needs in the event of serious droughts like the current one. The long-term implications are substantial. Without significant action, in 2060 water shortages caused by drought could lead to roughly $116 billion in lost income for Texas businesses and workers, lost state and local taxes totaling $9.8 billion, and lost jobs of 1.1 million. It is no wonder then that the issue of water shortages and conservation measures is attracting the full attention of state political leaders.
The drought has also meant record low water levels on the Mississippi river, which is making it difficult for water transportation of critical goods like grain, oil, chemicals, and coal. Delays or closures affecting commercial barge traffic along portions of the river will result in expected losses of about $7 billion through the end of January, according to barging industry officials.
The U.S. Army Corps of Engineers (USACE) is engaged in a massive project to keep navigation channels open, part of which involves excavating the rock bed of the river near Thebes, Ill. The project is expected to cost $10 million.
Recent extreme weather events like this extended drought have exacted a heavy economic and human toll on Americans. The risks of some kinds of extreme weather like drought, heat waves, extreme precipitation, and flooding are likely to increase with climate change. This is a reality we all have to grapple with and respond to in a responsible way. Furthermore, as my colleague Alden Meyer blogged today, the Obama administration must show leadership in setting out a comprehensive strategy to lower emissions of carbon dioxide and other heat-trapping gases and increase the resilience of communities and ecosystems to the mounting impacts of climate change.]]>
In our posts we’ve covered many of these impacts: on food prices, land prices, biofuels, electric power, and on the economy in general. We’ve looked at how the drought and the heat wave are interacting with each other, and how this combination is likely to be aggravated in coming decades. And we’ve considered ways to adapt to future droughts, through limited solutions like increased water use efficiency and crop breeding, and through the systemic change in our agricultural system that is necessary to make it sustainable over the long term.
Meanwhile, there have been new developments. There has been rain over parts of the Midwest, which has improved the situation somewhat along the eastern and southern edges of the drought region. But the drought remains severe over a large area of North America’s breadbasket, and as it continues, crops are dying. Because of low water, shipping conditions along the Mississippi River are described as “near critical.” The month of July has turned out to be the hottest ever recorded in the continental United States. Even in places that are used to extreme heat it has been brutal – e.g. temperatures of 110 degrees Fahrenheit or more for nine days in a row in Phoenix, Arizona.
Some of the things we talked about have shown up only days later in the news. The Wall Street Journal reported that Midwest farmland prices, which had already doubled over the past five prices, increased 26 percent in the three months ending June 30, compared to just a year earlier.
Reviewing the agricultural situation, the Federal Reserve Bank of Kansas City concluded that “Severe drought has had a profound impact on U.S. agriculture this summer. Crops have been devastated and prices have skyrocketed.”
Public opinion seems to have been affected too. In a July poll, 70 percent of Americans said that they thought the climate was changing — up 5 percent since March — while only 15 percent said that it’s not (down 7 percent). The change is especially notable among independent voters and those in drought-stricken southern states such as Texas.
Meanwhile, scientists are continuing to consider the broader implications of heat and drought. Jon Foley of the University of Minnesota, writing in the New York Times, pointed out that “it is hard to imagine a system more susceptible to bad weather than the American corn and soybean belt.” The Centers for Disease Control, the American Public Health Association and other organizations have responded to the drought by organizing a four-part webinar series beginning on Friday August 24 entitled “Drought: When Every Drop Counts.”
Coincidentally, an important new scientific paper was published on August 5 in the journal Nature Climate Change. The study, by Aiguo Dai of the National Center for Atmospheric Research, showed that in terms of recent observations of drought, the many global models are broadly consistent both with each other as well as with data. Furthermore, they give similar predictions to each other for the next few decades.
And those predictions are not encouraging. The map (see below) of the places where the models predict reduced precipitation (top) and more intense drought (bottom), includes North America, Europe, southern Africa, northern Latin America and Australia – key places in the world agricultural system.
Dai concludes that “the observed global aridity changes up to 2010 are consistent with model predictions, which suggest severe and widespread droughts in the next 30–90 years over many land areas.”
So, drought will likely be an increasing feature of our lives in the months, years, and decades to come. Although this is the last of our intensive, several-a-week postings on the 2012 Drought in America, we will definitely have occasion to return to the topic and its ramifications in the weeks to come.
The drought blog series is over, but the drought most certainly is not. And as the Kansas City Fed concluded, “the drought of 2012 will be forever engraved into the annals of agricultural history.”
In an era of globalized commodity markets, the devastation of the U.S. corn crop translates into a global grain shortage. But, equally important, the U.S. drought is just one of many extreme weather events around the world this year and their combined “domino” effect could put many at risk of higher food prices, if not a full-on food crisis.
We are just at the front end of feeling the impacts of the drought. The harvest season has yet to unfold across much of the U.S., the final tally of lost crops is not yet in, and drought conditions persist in much of the country. The most recent USDA weekly crop progress report is not promising: 50 percent of the corn crop and 39 percent of soybean is in poor or very poor shape. The sorghum crop has also been hit hard with 45 percent in poor or very poor shape.
The U.S. is one of the largest producers and exporters of corn (also called maize), contributing 38 percent to world output and responsible for nearly half of global corn exports. Simultaneous with corn losses, global wheat output has been affected by drought and dry, hot conditions in Australia and Russia, both major wheat producers and exporters. The price of wheat (and some other grains) has also gone up because people are looking for ways to substitute away from corn.
The effects on corn, soybean, and wheat prices has been clear. According to the latest data from the Chicago Board of Trade, corn has risen 61 percent since June to $8.2675 per bushel, soybeans rose 20 percent to $16.2675 a bushel, and wheat prices rose to $9.2725 a bushel which is a more than 40 percent increase this year.
Higher corn prices are also negatively affecting the livestock industry since corn is major source of feed. The price of hay has also doubled in some areas. Additionally, the drought has left 59 percent of pasture and rangeland land in poor or very poor condition. Many cattle farmers are culling their herds. This short-term response may lead to a temporary glut in the meat market but that will taper off within months. Over the longer term, into next year, we can expect rising meat and poultry prices, reflecting the increased cost of feed and smaller herds.
The extreme heat that has baked much of the country this summer has also led to lower milk production and lower weight gain among animals. According to a recent news article quoting Jim Fraley of the Illinois Milk Producers Association, in Illinois cows normally give 90 pounds of milk per cow per day but now production is down to around 60 pounds.
According to the USDA:
We will likely see impacts within two months for beef, pork, poultry and dairy (especially fluid milk). The full effects of the increase in corn prices for packaged and processed foods (cereal, corn flour, etc.) will likely take 10-12 months to move through to retail food prices.
The Federal Reserve Bank of Kansas City says the drought could contribute to a 4 percent rise in annual retail food prices over the next year, similar to increases seen during the 1988 drought.
And this comes on top of the enormous costs of the drought to farmers and taxpayers.
Record-breaking drought in a major agricultural producer like the United States would undoubtedly be expected to have global impacts. But this year has been especially hard on the global agricultural output because of the number of extreme weather events that have occurred within a short period of time across the world affecting a wide range of crops. This limits the prospects for diminished yields in one country to be somewhat tempered by increased exports from other countries, or substitution to other crops.
South American corn and soybean crop production in 2011-12 was reduced because of drought. Current hot, dry conditions in southern Europe are affecting corn yields. Drought-like conditions in southern Russia and Ukraine are affecting wheat output there. The delayed Monsoon in parts of India and Pakistan has that region bracing for drought and could have a severe impact on cereal crop yields there.
Many of the extreme weather events happening this year – such as heat waves, drought, and erratic monsoons – are more likely to happen in a warming world. Although there might be a low probability that all these events would happen in a single year across the world, 2012 shows us that it is by no means impossible. And when it happens the impacts are likely to be very significant.
It’s too early to tell if 2012-2013 will bring another global food crisis, such as we had in 2008. But the warning signs are certainly there, especially since global food reserves are already low. Moreover, for some parts of the world like the Sahel in Africa the crisis is already here and more than 18 million people are facing the prospect of food shortages and malnutrition.
People in developing countries spend a much higher proportion of their income on food than we do here in the United States and that means that any increases in global food prices will be far more devastating for the poorest. Data from the Gates Foundation show that while U.S. households spend about 6 percent of their total expenditures on food, that figure is as much as 35 percent in India and 45 percent in Kenya.
As we confront the reality of a seriously altered climate, it’s worth thinking about the economic and human costs of these types of extreme events playing out simultaneously across the world. There are limits to our ability to adapt and extreme weather imposes a very unequal burden on the poorest people in the world.
There’s no doubt that we can use water more efficiently and that this would be socially and ecologically desirable. But this week, as I’ve being participating in the Annual Meeting of the Ecological Society of America (ESA) in Portland, I’ve started to doubt whether efficiency will really solve our drought and water problems. The reason is that for another vital resource — the land — efficiency doesn’t seem to be enough.
The hypothesis that using land to produce food more efficiently — that is, increasing agricultural yields — will “save” more land for nature, is called “land sparing” and is often associated with the famous crop breeder Norman Borlaug. It was the subject of a session of scientific presentations here at the ESA yesterday, including one by me. Although I’m by no means unbiased on this subject, I’d say that the messages of the presenters about the validity of the land sparing hypothesis mostly ranged from “It’s wrong” to “it depends.” (I gave both answers, but with more emphasis on the first one.)
An example of the first was the talk by Jahi Chappell of the University of Washington-Vancouver, who showed that increasing agricultural yield seems to do much less to reduce hunger in developing countries than social changes such as improving the status of women. The second kind of answer came in the presentation of Frank Egan of Penn State, who argued that land sparing works to preserve plant biodiversity in simple environments, but that in more complex landscapes a different strategy, “land sharing,” is preferable.
Laurie Drinkwater of Cornell University made the connection between agriculture and water quality, showing how U.S. agricultural and biofuels policies that promote massive corn production in the Midwest lead to excessive applications of nitrogen fertilizer, much of which runs off and contaminates streams, rivers, and ground water.
If there’s any place that land sparing ought to work, it’s in the Corn Belt, where high-input farms produce record crop yields (except in drought years like this one, likely to be increasingly common in the future). Yet the result, contrary to the land sparing hypothesis, has been a landscape with practically none of its original nature (the tallgrass prairie) remaining, and water pollution that creates an enormous “dead zone” in the Gulf of Mexico, a thousand miles away.
If high productivity doesn’t spare land, how about water? As I said in my presentation, the error of the land sparing hypothesis was first pointed out 150 years ago by the British economist William Jevons. That error is to ignore the economics, which often leads to more use of a resource whose yield increases, not less. Jevons was talking about coal, but the same point applies to land. And if it’s true for water as well, then more efficiency won’t save us from this drought – or the next.]]>
Of course, commercial farmers in in Kansas and nearby Missouri face far more dire consequences from the drought. As they look out over parched fields and cloudless skies, they see their mainstay crops, corn and soybean, drying up—along with this year’s income.
Parched fields are always a sickening sight to farmers, although government-subsidized crop insurance will cushion the financial blow for most commodity growers. Taxpayers will be on the hook for billions, but the farmers’ distress cries out for relief.
A widespread drought like this one is a jolt to farmers and non-farmers alike because it is so rare. Although severe drought hit parts of Texas last year, the last drought of this magnitude to afflict the American heartland was in 1988. The 25-year run of good weather since then has been a godsend but it would be unreasonable to think it is the norm.
Going forward, we should expect droughts and other weather extremes. Of course, Mother Nature has served up disastrous droughts in the past on her own. The infamous Dust Bowl of the 1930’s lasted seven long years. But we are now in the grip of a changing climate that will exacerbate weather extremes such as droughts, excessive heat, floods, and intense downpours.
From here on out, we should anticipate weather shocks. We can’t avoid them, but we can design agricultural systems to better withstand them.
The best way to hedge against uncertainty in agriculture—just as in finance—is to diversify the portfolio. Whether the weather brings excessive heat or pounding downpours, some part of the system will be able to make the best of it.
During my road trip through the Midwest next week, I’ll get to see firsthand how far the United States is from a diversified agricultural portfolio. Instead of fields of diverse grains, legumes, fruits, and vegetables, I’ll be driving through field after field, county after county, and state after state of corn and soybeans—this year 96 million acres of corn and 74 million acres of soybeans. Our agriculture is like a stock portfolio with shares in only two companies, making it extremely vulnerable to adverse circumstances.
Why have we ended up in this position? The Midwest contains some of the richest farmland on earth. It would support any number of crops. Why don’t we grow them? One reason is that long-term considerations rarely come into play in farm policy discussions. Perhaps 25 years of relatively benign weather has lulled us into complacency.
Whatever the reason, most farm policy has been focused on keeping prices high and the current population of farmers prosperous. Short-term thinking in agriculture creates a peculiar dynamic that blocks the path to diversity. Substantial acreage in corn creates pressure for new uses of the crop—as fuel, feed, sweeteners, and oils, in addition to sweet corn and corn chips. Multiple uses keep prices up and entice farmers to plant more and more.
As larger numbers of farmers commit to corn, they become an ever more powerful political lobby for policies to protect their profits. Unlike shoemakers—or even farmers with fruit and vegetable operations—large commodity crop producers can use the Farm Bill to obtain subsidies that kick in when market prices drop (or even when they don’t). They also can command the resources for heavily subsidized crop insurance and generous emergency payments. The result is a reinforcing spiral: More corn means more power means more corn.
While this dynamic meets the needs of today’s farmers, it stands as a barrier to the emergence of a resilient agricultural system. The well-being of future farmers and consumers commands little attention on the Hill. The farmers of the future don’t show up in the halls of Congress.
More than any other feature of our agriculture, excessive dependence on corn and soy makes us vulnerable to the weather-related stresses that lie ahead.
Unless we confront it head on, this policy blind spot will cost taxpayers billions to bail out corn and soy farmers hit by extreme weather. We need to take the future seriously and design an agricultural system to cope with it and that means fundamental changes in what we grow. We need to start identifying and promoting more crops and to do that we will need to give the future a place at the farm bill policy table.]]>
The simplest climate model is only one equation and gives the temperature a body (like Earth) must be at to give off as much energy as it’s receiving from a source (like the sun). It is a simple balancing of energy flow in and energy flow out. Things get complicated in a hurry when you add greenhouse gases, ice sheets, and oceans, but the story never stops being one of balancing energy flows. Indeed, climate change arises when this balance of energy flow is disrupted and much work goes into trying to measure these flows from the deep seas all the way up to low-Earth orbit.
The energy flows of an entire planet are important to know, but it’s also just as important for on-the-ground conditions to know how incoming energy is divvied up. One only has to step outside on a hot summer day after a rain shower to see or feel this. The energy in would be from the sun. When it’s dry out that energy is primarily absorbed by the ground and heats up — sensible heat is the technical word. In this case the sun’s energy ends up heating the air just above the surface making it feel hot for us. Once the ground heats up it also can dissipate that heat by re-emitting it back to the air as infrared heat. This heat can be absorbed by heat-trapping gases in the air, which in turn re-radiates that energy in all directions. Infrared energy is a longer wavelength than sunlight and may be more familiar as those “night goggle” images of people and pets outside in the dark.
Now comes a nice rainstorm that soaks the ground and puddles abound. You’ll now notice that even after the clouds have parted and the sun is back out it stays cool for a while. That’s because now the sun’s energy can take a path that doesn’t involve heating the air just above the ground. That’s through latent heat.
Basically, the sun’s energy is going into heating and evaporating the various puddles and soggy surfaces. Energy is being carried away by this evaporation that may have otherwise gone into heating the ground and air near the surface. This energy is released somewhere else as the moisture eventually condenses out as clouds up in the atmosphere. It’s only after the surface moisture has evaporated (e.g. no more puddles and dry parched soil) that the temperatures begin to climb again.
This energy partitioning has important implications for drought exacerbating heat. It’s also important in, for instance, ecosystems in determining how they can affect their surrounding climate.
There is a growing body of scientific literature looking at the connections between drought and high temperatures. The latest IPCC Assessment report included a section looking at these relationships and reported that often higher temperatures occur with lower precipitation and vice versa. There has been other work that discusses how low soil moisture (dry conditions) “primes the pump” for subsequent heat.
One study found that the distribution of daily maximum temperatures shifts with soil moisture content and that the hotter end of the distribution feels greater effects than the cooler end. They also found that in some regions elevated temperatures can hang around for weeks after the low soil moisture conditions. Also, reduced soil moisture was found to have played a role in elevating temperatures during the killer European heat wave of 2003.
Finally there was a recent study that found for many parts of the world, including North America, that the occurrence or risk of experiencing above average numbers of hot days increases 60-70 percent after periods of reduced precipitation. This study even zoomed in on Texas, which has been faced with a crippling drought over the past year. Dry years for Texas led to increases in the number of hot days experienced during those years. This probably won’t come as a surprise for people living there.
So, there are some pretty simple explanations linking precipitation (or lack of), surface moisture, evaporation, and temperature. It is a more detailed and intricate dance than presented here, but the short message is if there’s a drought there’s likely a heat wave lurking around the corner. And as we’ve seen in this series, so far, the impacts can be massive.]]>
Federal biofuels policy, called the Renewable Fuels Standard (RFS), mandates the consumption of 13.2 billion gallons of conventional biofuel this year and 13.8 billion gallons next year. Since corn ethanol fills the vast majority of this demand, the RFS could keep ethanol production high despite record high corn prices. If it does, it will place an even bigger burden on other users of corn. It won’t have much impact on your corn flakes, but you can expect an increase in prices for eggs, milk, and meat.
But for consumers of corn in the developing world, for whom food prices are a big part of their budget, the price impacts can be a lot more severe, potentially causing another global food crisis.
We don’t yet know the final reckoning of the losses from the drought, and it is possible that extra credits from 2011 will cushion the blow, but it is not too soon for the government to commit to being flexible in the implementation of biofuels mandates. The government has the authority to reduce the mandate in the event of economic harm or inadequate supply, but so far has not indicated a willingness to use this authority, instead pursuing a strategy of prayers and rain dances.
Ultimately, to build a biofuels industry that reduces oil use and global warming pollution, conflicts between food and fuel must be minimized. Short-term adjustment of the mandates can help, but in the longer term we need to transition from depending on corn to more diverse sources of biofuel that look beyond food-based fuels. A more diverse agricultural system would also be better at producing healthy food.
But back to fuels, the RFS already points us in the right direction, requiring that most of the growth in biofuels beyond 2012 come from advanced biofuels, which have lower lifecycle emissions. Only a quarter of these advanced biofuels can be made from food, and the rest, 16 billion of 21 billion gallons, must be cellulosic biofuels made from agricultural waste, fast-growing grasses, and other sources of waste biomass. This transition away from food-based fuels is essential to managing the conflict between food and fuel, and it is why the success of the RFS is so critically tied to the commercialization of cellulosic non-food biofuels.
Fortunately, the first commercial cellulosic biofuel facilities are coming on line this year, with larger ones following in 2013 and 2014. But this is a slower scale-up than Congress called for — even if everything goes well it is likely the industry will produce less than 4 billion gallons in 2022, rather than the 16 billion gallons Congress envisioned when enacting the RFS in 2007. While this is disappointing, we are still looking at the beginning of something big. Don’t listen to the self-interested whining from the oil industry, the cellulosic ethanol industry is moving fast. It took the corn ethanol industry decades to move from zero to four billion gallons, and the delayed growth of the cellulosic industry is still consistent with the UCS plan to cut our projected oil use in half in 20 years.
But the delayed scale-up of cellulosic biofuel does raise an important question about how the EPA will administer the RFS. The EPA has broad discretion to either reduce mandates for advanced biofuels in line with the delayed commercialization of cellulosic biofuels, or make up for the missing cellulosic biofuel by increasing mandates for biodiesel and other food-based advanced biofuels.
Corn ethanol is not the only food based fuel that impacts global markets, vegetable oil-based biodiesel is also a major concern. If the EPA replaces cellulosic biofuel with mandates for food-based fuels, the demand would grow faster in the next ten years than it has in the last ten. We have learned the hard way over the last four years that U.S. biofuels policy impacts U.S. and global food markets and leads to deforestation from Brazil to Indonesia.
Small buildings can be built to resist storms by just over engineering them, with shutters over the windows and extra thick walls. But if you want to make a really big building in a region known for typhoons and earthquakes, like this skyscraper in Taiwan, you need to anticipate the risks and be flexible in the face of a storm (a tuned mass damper also helps).
Similarly, given the scale of the RFS corn mandate relative to the size of the corn market, and world agriculture in general, it is no longer realistic to think that everyone else can adjust while the RFS mandate levels are held firm.
To protect the policy and realize the long-term goals of reducing oil use, reducing global warming pollution, and protecting the food supply, the EPA, the USDA, and the President need to be flexible as we weather this storm, and build flexibility into the future of our biofuels markets.]]>
The USDA’s Economic Research Service reports that “about 2/3 of all crops and 2/3 of all livestock are produced in areas that are experiencing at least moderate drought,” and that “44 percent of cattle production, and almost 40 percent of corn and soybean production, are in areas experiencing at least severe drought.”
But those increases in food prices, particularly for the corn and soybeans of the American Midwest, are not just due to the need for people to have something to eat. As the graph below shows, most U.S. corn goes either to produce ethanol (about 40%) or to feed livestock (about the same). The soy is almost all used as livestock feed too.
Legislation passed by Congress effectively subsidizes these uses by a variety of mechanisms. Among them are the mandate for 13.2 billion gallons of corn ethanol in the 2007 energy bill, and crop insurance in the Farm Bill, which compensates corn and soy producers for losses due to drought. A forthcoming post from my UCS colleague Karen Perry Stillerman will explore the various ways the next five-year Farm Bill—now caught up in election-year politics in Washington—could help farmers (and taxpayers) better cope with future droughts.
For many years, we have seen farmland prices rising, and the increase in the Midwest in the past year has been dramatic, with several states seeing more than 20 percent or even 30 percent increases in a single year.
It’s conventional economic wisdom that government policies that have subsidized the production of certain crops and boosted their demand have been a significant factor in soaring land values. If a large number of farmers get their crops wiped out by the drought and default on their loans – and the prospect of future droughts in a warming world finally comes to be seen as a threat to future productivity – does that mean that the bubble will burst?
To find out about these questions, I talked to my colleague in the UCS Food and Environment Program, agricultural economist Jeff O’Hara. Jeff told me that last year the prominent Yale economist Robert Shiller had pointed to the farmland market as the next potential bubble. We already know that corn and soybean monocultures pose environmental risks. However, having only a handful of crops dominating regions like the Midwest implies that our agricultural system is highly vulnerable to economic risks as well! Just like a retirement fund should have a number of assets to protect against risk, so should individual farms and the landscape broadly speaking.
The high prices mean that the lucky farmers that were not impacted by the drought will do extremely well. What happens to the farmers who suffered damage?
As Jeff discusses in his new report, Ensuring the Harvest, the federal crop insurance program supports corn and soy – and thus, biofuel and meat production – and these farmers tend to be generally wealthier and have more acreage.
Farms that are actually attempting to mitigate risk on their own – for example, a Community Supported Agriculture farmer growing a variety of fruits and vegetables throughout the growing season – have no effective insurance policies. Now that such weather events will be happening with greater frequency, we need an agricultural system that is far more resilient.
So, just like investment banks, our government has deemed certain farms “too big to fail.” If the Midwest drought and heat wave continues as NOAA is forecasting, you and I and all the other American taxpayers will pay for it twice – in increased meat and milk prices over the next few months, and next April 15 when we file our 1040s.
Sound like a system that is in danger of collapsing, leaving taxpayers to foot the bill? Now, when have we seen that before?