Tap Our Own Resources? Food, Fuel and Foreign Policy
Antiquated Domestic Farm, Energy Policies Contributing to Growing World Food Prices
May 25, 2008
READ THE HEADLINES -- in the past six months there have been riots over food prices or food shortages in Mexico, Haiti, Ivory Coast, Cameroon, Indonesia, Bangladesh, Uzbekistan and the Philippines.
In Egypt, riots erupted over the price of cooking oil. Josette Sheeran, head of the United Nation's World Food Program warns that global food reserves are at the lowest level in 30 years - 53 days of emergency supplies versus 169 days worth in 2007. If market prices are a reliable indicator of supply-demand imbalances there could be severe challenges for the food supplies in 2008 and beyond.
Consider that over the past two years the price of corn is up 148 percent, soybeans up 136 percent, soy oil (marketed as vegetable oil) up 140 percent and wheat up 66 percent, as a group easily surpassing the 86 percent rise in crude oil during the same period.
Rice, the primary food staple for half the world, is also in tight supply as major exporters like India and Vietnam restricted exports to ensure sufficient supplies locally. This reached U.S. shores when Sam's and Costco stores in California began rationing rice sales this spring.
Before stockpiling our pantries, breaking ground on Victory gardens or adding another expensive government "solution," we should re-examine existing agriculture policies for their relevance in today's riot hungry world.
Three old policies that stand out like scarecrows in a cornfield are the Conservation Reserve Program, ethanol and the Arctic Natural Wildlife Refuge.
The Conservation Reserve Program, first authorized in the 1985 farm bill allows previously cultivated farmland to be "retired" by way of contracts with the Farm Service Agency that run from 10 to 15 years. There are almost 35 million acres now under CRP contracts with annual rental payments from the government estimated at $2 billion at an average of $60 an acre. The penalty for resuming cultivation before the contract expires is payback of all past rental income plus interest.
With corn and soybeans doubling in price the past two years, you don't have to attend a food riot to find frustration with the CRP program. In January, 45 associations from across the U.S. including the American Bakers Association, the National Grain and Feed Association and the Mississippi Poultry Association, petitioned Secretary of Agriculture Ed Schafer requesting that farmers who wished to put "retired acres" back into cultivation could do so without contract penalties.
With this year's plantings coming to an end, all penalties remain in place and the acres remain retired. Of the 34.7 million acres of U.S. farmland under CRP contract, 900,575 acres are in Mississippi.
It is worth noting that since the CRP was signed into law 23 years ago the world's population has grown by 36 percent to 6.6 billion, while the world's arable land remains static at about 3.7 billion acres. Add to that fact the billion or so folks striving mightily to join the middle class and enjoy the improving lifestyles and diets that come with such status.
The first subsidy for ethanol-blended gasoline appeared in the Energy Tax Act of 1978. In the subsequent 30 years, government has expanded the program to include mandated use, bigger subsidies and tariffs against imported ethanol.
This past December, the bi-partisan "Energy Independence and Security Act of 2007" was signed into law which extended and expanded mandates for production of renewable fuels to 36 billion gallons by 2022, of which 15 billion gallons must be corn-based. The American Coalition for Ethanol estimates it will require 35.7 million acres of corn to produce those 15 billion gallons.
That would equal 41 percent of the 86 million acres corn growers plan to plant in 2008. Such huge mandates require huge capital investment and the private sector has stepped up, investing over $5 billion in ethanol processing plants in recent years.
There are now 139 plants in production with capacity to produce 7.2 billion gallons with another 62 plants under construction.
Alas, the skyrocketing price of corn has made many of the ethanol business plans uneconomic. As a result, some of the plants have been closed waiting and hoping for lower corn prices.
When the government mandated corn ethanol for fuel, the Arctic Natural Wildlife Refuge became a farm policy issue. The political battle over ANWR has been long and tortuous. In 1960, President Dwight D. Eisenhower declared 8.9 million acres in northeast Alaska as a protected wildlife refuge. The size was increased to 19.6 million acres in the 1980s. In 1995, Congress authorized oil drilling on the coastal plain portion of ANWR, but the bill was vetoed by President Bill Clinton.
Numerous attempts since then to open ANWR for drilling have been defeated by vote or filibuster. ANWR's 19.6 million acres sits on 16 billion barrels of crude oil and 10 trillion cubic feet of natural gas, making it one of the largest untapped reservoirs of oil and gas on the planet.
The few hearty inhabitants (260 Inupiat Eskimos) of ANWR reside in the village of Kaktovik. The Inupiat strongly favor drilling in ANWR. George Tagarook, the vice-mayor of Kaktovik, has harsh words for those opposed to drilling: "Step by insidious step, outsiders pushed us aside, set up rules that made it harder and harder for us to use our lands and waters. The worst thing they have done is to declare part of our homelands 'wilderness.' The management rules for such places make it impossible for us to continue to use them.
"Now they want the entire coastal plain made 'wilderness.' That is code for finally removing us from our homelands. That is code for genocide," said Tagarook. Russia's version of ANWR is called Siberia and is famous as a locale for gulags and dissidents.
In an irony worthy of Tolstoy, George Tagarook and his fellow Inupiats now find themselves in a "green" gulag, modern day dissidents stymied by forces far away and beyond their control.
In summary: CRP, ANWR and corn-based ethanol are policies ill suited for today's resource hungry world. In fact they manifest a level of dysfunction that would make Rube Goldberg grin.
For readers born after 1970, Rube Goldberg was a Pulitzer Prize-winning cartoonist famous for his depictions of complicated machinery that performed very simple tasks in an indirect and convoluted way. They put America on the wrong side of history, mandating meager existences for Eskimos while our president travels to Arabia asking kings to pump more oil. What the people of Cameroon, Haiti and Bangladesh grasp that we have yet to, is that in the world of 2008, arable land is the precious scarce resource in the food and energy debate.
Rather than something to be retired and sent out to pasture, arable land is a vital and strategic resource, valuable for both economic and humanitarian reasons. Rather than flying across the globe, our president should ride across town and notify the bean counters at the U.S. Department of Agriculture to set aside the "set asides" and let America's farmers make hay while the sun is shining.
There is a whole lot to be said for fruited plains and amber waves of grain.
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