The use of “biofuels” like ethanol has changed the economy of grain worldwide significantly. Corn farming in Iowa for ethanol is affecting the hungry bellies of children in Africa and Asia, whether we know it or not, and whether we like it or not.
The third source of demand growth emerged when the United States attempted to reduce its oil insecurity by converting grain into ethanol. The jump in U.S. gasoline prices to $3 per gallon that followed Hurricane Katrina in 2005 made it highly profitable to invest in ethanol distilleries in the United States. As a result, the growth in world grain demand, traditionally around 20 million tons per year, suddenly jumped to over 50 million tons in 2007 and again in 2008 as a huge fleet of new ethanol distilleries came online. This massive ethanol distillery investment in the United States launched an epic competition between cars and people for grain.
The conversion of grain to automotive fuel has continued to climb. Roughly 119 million tons of the 2009 U.S. grain harvest of 416 million tons went to ethanol distilleries, an amount that exceeds the grain harvests of Canada and Australia combined.
Even as these three sources of demand combined to drive up world consumption, speculators entered the fray. By buying grain futures and holding grain off the market, they further fueled the price rise.
On the supply side of the food equation, several trends discussed in preceding chapters are making it more difficult to expand production rapidly enough to keep up with demand. These include soil erosion, aquifer depletion, more-frequent crop-shrinking heat waves, melting ice sheets, melting mountain glaciers, and the diversion of irrigation water to cities.
Farmers are also losing cropland to nonfarm uses. Cars compete with people not only for the grain supply but also for the cropland itself. The United States, for example, has paved an area for cars larger than the state of Georgia. Every five cars added to the U.S. fleet means another acre of land will be paved over—the equivalent of a football field.
Brown, Lester R. (2011-01-06). World on the Edge: How to Prevent Environmental and Economic Collapse (Kindle Locations 902-916). Norton. Kindle Edition.