There’s an air of confidence down on the farm. Grain prices are historically high and returns across the livestock sector have been catching up. Not only that, but the good times seem basically guaranteed for years to come. Grain producers believe that rising global populations combined with soaring biofuel demand will mean that markets will be demand-led as far out as we can see. Livestock producers meanwhile see huge increases in demand for their own products now that higher incomes in China, India and the rest of the developing world are enabling consumers there to add more meat to their diets.
There really can be no question about it. The main driver of high grain prices over the past few years has been utilization of food crops for biofuels.
Now, biofuel byproducts are also gaining acceptance in the livestock sector as a lower cost feed stuff in ration formulation. The upshot is, every farm has benefited from the demand for grains by the biofuel industry.
As long as there is a demand for grain for biofuel, it seems, the future for farmers may indeed be rosy.
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Yet it raises the question, what happens if we simply cannot grow enough grains and grasses to meet both the food and fuel demand?
Would there still be public support for heavily government-subsidized biofuel production if there is insufficient food to feed the world? Can we actually grow enough food to feed the world and still have surplus grain available for biofuel production?
Those are question that economist Krishna Paudel at Louisiana State University Agricultural Centre addresses in his new paper, “How Much Biofuel can be Produced from Grains without Affecting Food Supply? A Dietary Scenario Based Analysis.”
According to Paudel, multiple studies have looked at the biofuel sector but none have considered just how much grain may actually be available for biofuel production after dietary needs have been met. “Biofuel demand for grains is only relevant after food needs have been met. Food comes before fuel,” Paudel told me when I caught up with him by phone. “By 2050 it is forecasted that we will need to feed a little over nine billion people. Will that leave any grain for biofuel production?”
First, Paudel says, it’s essential that we take an honest look at the scale of the challenge.
If all the wheat, barley, corn, sorghum and sugar grown in the world today were utilized for ethanol production, they would only meet 19.4 per cent of the demand for gasoline by the global transportation sector.
If all the world’s soybean, rapeseed, palm oil, peanuts, cotton seed, and sunflower seed crops were converted to biodiesel, this would only meet 7.5 per cent of the oil demand for transportation.
Some 50 countries have now mandated or set targets for biofuels in transportation fuels. On average, these countries are seeking to replace 10 per cent of the fossil fuels used in transportation with biofuels. Yet Paudel says few people realize that if you tried to achieve this 10 per cent goal using corn, it would require more than three times the current global corn crop.
Biofuel advocates are predicting that new technology, new crops, and the utilization of crop residues will increase biofuel yields but Paudel is sceptical, at least in the short run. Such developments are a long way from achieving the scale needed to alter the flow of grain from food to fuel.
Supply-demand, 2050
How much food will the world actually need in 2050? Paudel launched a project to find out, basing his analysis on a projected population of 9.19 billion people. He is an economist, so his study is full of numbers and formulas, but the thinking behind it is quite straightforward.
Paudel calculated food demand by multiplying the projected population against various diets, including 362.6 kg of grain per person per year (the current average world consumption level), a sustainable vegetarian diet of 474.5 kg per person per year (little or no meat or dairy products), a moderate diet of 878 kg per person per year (moderate amounts of meat and dairy products), and an affluent diet of 1,533 kg per person per year (a diet rich in meat, dairy and grains).
Next, Paudel calculated the potential supply of grain in 2050. He took into consideration the amount of land which could be converted from pasture to grain production. Given the advances in intensive livestock production methods it is theoretically possible to convert over 90 per cent of the current pasture land to grain crops and still meet his estimated demand for meat and dairy products.
Paudel also projected yield gains based on rates of the past 50 years. Most people do not realize just how much our productivity has jumped over the past 50 years. For example, average global wheat yields are up 141 per cent, corn is up 131 per cent and rice is up 110 per cent.
It is questionable if yield growth can continue at this same rate for the next 40 years but that scenario cannot be discounted entirely.
Overall, the findings are eye opening, and every farmer may want to consider Paudel’s conclusions in their farm’s long-term strategic plans. The findings include:
- If crop yields only grow by 40 per cent by 2050, the world’s farmers won’t produce enough grain to meet food demand in any dietary scenario.
- The world won’t be able to spare a kernel of grain for fuel use in 2050 unless grain yields grow by 57 per cent, and unless per-capita grain consumption is capped at no more than 20 per cent above current levels — which means we accept that the world will still be a place with ongoing malnutrition and where the majority eat very little meat
- Existing cropland won’t be able to produce enough grain to meet food demand in 2050 under the moderate and affluent diet scenarios even if crop yields more than double from today’s levels.
- If food demand in 2050 is capped at three times the current level (a moderate diet scenario) and 60 per cent of pasture land is converted to cropland, and we also see major increases in crop yields, there could be enough surplus grain to meet between six and 26 per cent of transportation fuel use, depending on assumptions.
- However, even if all existing available pasture land is converted to grain production, farmers would still not be able to meet food demand under an affluent diet scenario.
It isn’t all doom and gloom. While it’s true that simply doing what we are doing today won’t feed the world in 2050, if technology enables farmers to produce 60 per cent more grain per acre, and if 60 per cent of pasture land is converted to grain production, we could not only provide the world with enough food for a moderate diet, but have enough grain left over to surpass the current 10 per cent mandate for biofuels in transportation.
These may be achievable targets.
However, they don’t consider farm behaviour. Will farmers switch to different crops in the future? Will the technology needed for yield increases flow to developing countries where yield increases must also happen.
What impact will climate change have on grain production? Will farmers have affordable access to the resources needed to achieve those higher yields, especially water and fertilizer?
Will the farmer’s cost of production for growing the huge crops exceed what the market is willing to pay for food and biofuel?
Nor do the numbers consider politics. Do we really believe that the world will lurch through 40 years of tight supplies and high prices without politicians offering a magic fix? CG
