On this episode of the Fueling the Future podcast, I spoke with Dr. Dev Shrestha of the University of Idaho about the recent paper he co-authored, “Biofuel Impact on Food Prices Index and Land Use Change.” The paper found, among other things that short term food price increases have been blamed on biofuel based on simplistic analyses, which may not reveal the main drivers of food insecurity and ignore opportunities for bioenergy to contribute to solutions. Looking at real-world data from the UN Food and Agriculture Organization (FAO) and the U.S. Department of Agriculture, the study team was able to show that there is no impact on food prices or land use change happening because of biofuels production and consumption. Following are a few excerpts from our discussion, which you can download or listen to at the link below or listen to in ITunes.
“This is one of the questions we generally get about biofuel, that if we grow or use agriculture product to make biofuel, then the same amount of agriculture product that uses in making biofuels fuel has to be grown somewhere else, that means somewhere else has to convert agricultural land or forest land into agriculture. That’s called indirect land use change. That means because of the fact that we use more biofuel in United States, some other country has to clear up forests to grow agriculture product that they’re missing from the United States. Again, this is all the model predictions. It makes sense from outside. The idea is that the biofuel creates more demand for agriculture product and the forest has to be converted to agricultural land. That’s a valid concern.
However, what we have found looking at the real world data is the opposite of this expectation. The world and U.S. agricultural land is steadily decreasing, not increasing. I would emphasize that fact that the world and the U.S. agricultural land is steadily decreasing. The reason that the world needs less land to grow food may be explained by improving land productivity. So despite declining agricultural land, the World Bank data shows we are growing agriculture production by 2.8%. And that’s been consistent since 2000. Declining agricultural land in case of the U.S. and the world average is true. However, we have not looked into individual countries. There may be some countries that deviate from the world average. So that’d be an interesting study in itself to look at, as you said, there may be a country or two which deviates from the average of the world’s land productivity or land use change impact we have seen in this study.”
“Despite economic models having many known flaws, we rely on economic models because this is the best tool that’s available out there. And economic models have worked for many other problems, but since this is relatively new without much data, it hasn’t worked in addressing indirect land use issues for biofuels. So initial studies to predict land use change, again, have used these existing economic models. They were not designed to predict the impact of biofuels, that’s the reason that predictions were either off or even in some cases completely the opposite of what actually happened.
So I’ll give you these four predictions that was given in 2008 paper [the Searchinger study] using this economic model, and then we’ll compare how that economic models compare versus the real world. So the first prediction was that corn prices will increase by 40% because of biofuel production. That was the first prediction which clearly did not happen. As we discussed earlier, the real world data from 1991 to 2016 shows the inflation rate of corn prices was steady before and after the biofuel era. There’s no hiccup. There may be a year or two where the food price has gone up specifically, like in 2007, 2008 and 2011. That was due to the weather issues and the declining dollar value at that time and a couple of other things like fuel prices were high. But other than that, if you just look at the trend, there is no change whatsoever before and after biofuel era. So that prediction did not hold.
The second prediction was that U.S. corn exports will decline by 62% and soybean exports will decline by 28%, which also did not happen. The corn export stayed the same while the soybean export is continuously rising. Look at the third prediction of this study, which held that world agricultural land will increase to grow food to replace the amount used by biofuel. Also, as we discussed earlier, world agricultural land is actually declining 14 million acres a year. So that’s quite a significant amount of reduced land for agriculture in the year, yet we are increasing per capita food production. And the fourth prediction they had made was that the U.S. will bring about 10.8 million acres of additional land into agriculture, which also did not happen. And actually in U.S., agricultural land is declining.
Again, I would say that the problem with this complex model is that they require largely input parameters and understanding of interrelationships. Unfortunately, that has to be based on literature and studies and verified data, which currently is not available. There are flaws in the economics, but we still rely on these models. It has a long way to go for economic models to catch up with reality, though these models are improving over time. Since 2008, we have come a long way to improve these economic models, but we are not there yet to use this as the only tool in making good agriculture or biofuel policies.”