Business seems harmonious at The Bagelry where people come to have a bagel and a cup of coffee, and prepare for the day ahead. Construction workers in paint-stained Carhartts lean against the window counter and teenagers snack and gossip before school. Even the delivery man gets in line after dropping his shipment off, enticed by the smell of toasted bread and uncooked dough. Franz Kafka wrote that all life’s questions disappear when the mouth is full, which explains why a notice taped to the cash register warning patrons of higher food costs is attracting questions.
Making bagels is what owner Ken Brian does best, but he’s been forced to raise prices because of soaring flour costs. A 50-pound bag of flour has ballooned from $9 to $26 in the last 14 months. He’s never seen anything like it during the 24 years he’s been in business. And these prices may last for ten years as food shortages continue across the world.
"I can hardly keep up," Brian said. "If this keeps up I’ll be running up and down that ladder [to change menu prices] like a gas station attendant."
Brian said his customers have been sympathetic to the 15 cent increase per bagel, but it remains unclear if and when these price increases will stop or when people will stop buying. One thing is clear: the days of cheap food are numbered, if not over, and many are blaming biofuels.
Biofuels are fuels such as ethanol and biodiesel obtained from corn and soybean crops. But when resources are limited, the choice between food and fuel can be charged. A 2008 World Bank report states that the grain needed to fill an SUV tank with ethanol could feed one person for a year. On April 29, scientists at the International Food Policy Research Institute suggested a temporary halt of biofuel use could cut food prices by 20 percent.
The rising cost of staple food crops is one of the biggest challenges to growing both food and fuel. The amount of crops diverted toward ethanol and biodiesel is nowhere near the projected levels needed to meet the goals of legislation passed over the last few years, yet this nascent industry is already impacting food costs worldwide.
Higher gas prices are raising the cost of crop production, a cheaper dollar is increasing demand on American crops, and demand for corn ethanol is contributing to high costs for wheat, corn and soybeans.
Farmers in eastern Washington may have found a way to fuel cars without driving up food prices by planting alternative crops that don’t compete with staple crops for land. They are taking advantage of obscure and rarely used plants that can be grown without replacing existing food crops or using the prime land on which food crops grow.
Washington State adopted biofuel legislation in 2006 to lower greenhouse gases, reduce America’s reliance on foreign oil and help farmers. The federal government passed the Energy Independence and Security Act (EISA) in 2007 geared, among other things, toward creating a 36 billion gallon biofuels market in the U.S. Biofuels can be obtained from a variety of existing crops, and fit easily into our infrastructure while emitting up to 70 percent fewer pollutants. However, some opponents say increasing fuel efficiency standards by one mile per gallon could accomplish the same reductions.
Charles Antholt, economics professor at Western Washington University with more than 20 years experience in international agriculture, said the high prices for crops reflect traditional supply and demand models. Biofuels interact with the market like any other product, and now that crops are being diverted away from wheat and soybeans to grow corn, price increases should be expected.
Antholt said the market is intended as a way to limit the unknowns for farmers and secure prices for next year’s crops. But when reserves become low, traders who are buying those "futures" will bid up the actual price as they try to predict how much of a crop will be needed to satisfy demand.
The effects on crop prices are startling. Corn and soybeans have more than doubled over the last two years, and wheat has almost tripled.
"You’ve got to be careful with biofuels," Antholt said. "The big problem is corn ethanol. It’s not a disaster waiting to happen, it’s happening."
And it’s happening with the best crop production on record. The International Grains Council reported a grain harvest of 1.6 billion tons last year, the highest ever recorded. Nonetheless, demand is still outstripping supply and the total stock of grains declined by 53 million tons. Considering the U.S. used 30 million tons of corn for ethanol production, it’s clear biofuel production is raising feedstock prices, according to the World Bank.
Using the most optimistic conversion rates for last year’s harvest, corn was converted into 2.9 billion gallons of ethanol, well below the 15 billion gallon goal of the energy act. There is not enough land to grow the corn-based ethanol needed to replace petroleum, so researchers are asking where the rest of the ethanol is going to come from and if there are alternatives for farmers who want to cash in on the biofuels market.
Hal Collins from the USDA and Steve Fransen from WSU work with 20 other scientists at a research center in Prosser, Wash., trying to answer that question. The center tests 14 different crops on 130 acres throughout Washington State devoted to research and demonstration projects for biofuels.
"We want to find out what kind of alternatives we have for biodiesel," Collins said. "The whole issue of fuel for food is muddled. There is a lot of criticism that the biofuel industry is causing food shortages and it’s not totally true."
Collins said there are more than six million acres of cropland that could be used for ethanol and biodiesel crops in Washington, but said it is unlikely most of that land would be devoted to biofuels because farmers would lose too much money.
"The reality is that farmers will need a subsidy or incentive to grow crops for biofuels right now because they can get $12 for a bushel of wheat rather than 20 cents a pound for canola," Collins said. "They’re gonna grow wheat."
A mixed blessing. While farmers in Washington won’t switch from staple food crops to grow biofuels, there is little incentive to grow biofuel crops at all without subsidies like those in place for corn-based ethanol.
In order to reach the 2 percent mandate, Washington needs 300,000 acres of canola. Sounds reasonable. However, to meet the 20 percent goal, three million acres would be required. That’s half of all available farm land, but Collins is sure current farming practices will keep that from happening.
The plan is to create techniques for growing a variety of crops for multiple markets. Collins and Fransen said crop diversity can give farmers flexibility to choose crops so that everyone isn’t farming the same crops, which wreaks havoc on the market.
"If we can get biodiesel from a bunch of different crops then the markets won’t get saturated and the prices won’t drop out from beneath them and render their crops worthless," Collins said.
Rene Featherstone from Lentz Spelt Farms, fifty miles south of the Grand Coulee Dam, is growing camelina, a short, hardy herb with tiny yellowish seeds that smells like broccoli when crushed for oil. This crop is generating a lot of excitement at the research center, and the Lentz Spelt Farm has gone from 10 acres three years ago to 170 acres this season. The crop performs well in marginal conditions and doesn’t need fertilizer or pesticides to grow in Washington.
The 240 acres at the Marlin farm has been in the Lentz-Hardt family since 1898, but when the land couldn’t grow wheat competitively anymore, Featherstone suggested camelina. It grows well without irrigation in Central Washington’s dry climate, and although it contains less oil than canola, it has more uses. Featherstone said they sell camelina as a food supplement to Barlean’s in Ferndale and for biodiesel to Natural Selection Farm in Sunnyside.
"Everyone ignored this old oil seed from the Bronze Age," Featherstone said. "It can be used to make soap, perfume, skin care products, and livestock feed, all of which make more money than biodiesel."
Featherstone said that politicians pay lip service to biofuels in Washington State. There are low interest loans for people who crush the seed, and people who blend biodiesel get a penny tax cut for every percent of biodiesel added to petroleum fuel but nothing goes directly to the farmer.
Ted Durfey, who currently owns the only in-state seed crusher Featherstone can send his seeds to, has a more cavalier outlook on biofuel’s impact on food prices.
He said biofuels create additional crops for farmers in the area, but it’s important to know camelina will not interfere with staple crops like wheat.
"If you have marginal ground, you’re not going to grow wheat or any other crop," Durfey said. "Camelina produces on very marginal land and it’s a very cheap crop to grow."
His $1.2 million crusher can produce up to 2,000 gallons of biodiesel per day and he said there’s 2,000 acres of camelina in Yakima and another 4000 acres in Morrow Ore. coming to him, which should bring in around 480,000 gallons of biodiesel.
With three more crushers expected to go on line in the near future, demand for camelina and other oil seed crops is likely to increase. There is an estimated one million acres of marginal land in Washington that could prospectively bring in around 80 million gallons of biodiesel, roughly 30 million gallons more than needed to meet the 2 percent mandate. But much of that land is in the Conservation Resource Program, which has become critical habitat for many species in the state.
Americans have more choices than growing crops for food or fuel. We are substituting one tradeoff with another in order to meet reductions only though biofuels, when efficiency and conservation may accomplish the same goals.