DANIEL VAUGHAN: We’re using food for fuel in a food shortage crisis

“We’re on the precipice of a global food crisis,” according to GOYA Foods CEO Bob Unanue. It’s hard to put any more fine point on the issue than that. Most of the world will likely experience food shortages, with outright famine occurring in some countries. I’ve written several times that the data is clear on food shortages. The story there is terrible and hasn’t changed.

We’re moving beyond shortages, though. The policies of the Biden administration are making worsening the food shortage by dipping into the food supply to make gasoline and diesel. We’re planting our fuel instead of building up supplies for a food shortage — it’s poor short-term thinking at the worst time imaginable.

The ethanol nonsense.

The first policy decision involved is the expanded use of ethanol, a corn-based fuel. Earlier in April, the Biden administration announced expanded access to E15, “gasoline that uses a 15% ethanol blend—to be sold in the United States this summer in an effort to expand Americans’ access to affordable fuel supply amid the surge in gas prices.”

Asked about the decision, the White House said:

A senior administration official said utilizing E15 “provides additional options for Americans at a time in which we obviously have a real challenge when it comes to oil and petroleum market.”

“This provides greater choice, savings, and also a source of fuel that is not dependent on an oil market, which, right now, is volatile as a result of Putin’s actions in Ukraine,” the official said.

Instead of focusing more on drilling more oil out of the ground, we’re growing it. In the 1970s, this might have been a good idea when food was plentiful, and the oil shock from OPEC hurt everyone.

We’re in a radically different position right now.

Food prices are skyrocketing.

Food prices are up across the board — and that includes corn. The Wall Street Journal reports, “Until recently, that drought a decade ago was the only time that corn cost more than $8 a bushel. Corn futures, up 37% this year, traded as high as $8.24 on Thursday, about 15 cents shy of the all-time high.”

The WSJ added, “Corn is more than twice as expensive as before the pandemic and in most years without drought. Soybeans have nearly doubled their typical price, too.”

Furthermore, “U.S. food prices in March were up 8.8% from a year earlier, according to the Bureau of Labor Statistics. A United Nations group said global food prices hit a new high last month, and the World Bank said it expects war in Europe to boost food prices about 23% this year, after a 31% climb in 2021 when snarled supply chains and bad weather jolted agricultural commodity markets.”

Drought, poor planting, and the war in Ukraine are forming a perfect storm to drive up all food prices. We need the corn used in ethanol to flow into food markets — not the skyrocketing energy sector. The Biden administration plugs one small hole and opens a larger one.

The economic analysts at Doomberg are shocked by the White House. In a long piece, the end by observing, “In the face of a global energy crisis, the war in Ukraine, food shortages, and rampant inflation, does it make sense to be redirecting so many acres of valuable cropland to make renewable diesel, a fuel we can easily and directly drill for domestically?”

A checked out White House.

Biden is using an outdated playbook out of political concern for a single metric — the price at the pump — and ignoring a much larger food crisis issue. That kind of thinking can have dire consequences. I’ve written multiple times about the links between inflation, food scarcity, and political instability.

Food executives in the United States, Macron in France, and others have warned that we’re heading towards this food crisis cliff. The White House denies that reality: “We are not expecting a food shortage here at home,” [Jen] Psaki told reporters in Tuesday’s briefing, ‘but we are acting to bolster food security around the globe, both unilaterally and in conjunction with allies and partners,’ she said.”

The United States is taking no such actions. We’re planting fuel, ignoring food prices, and settling into a prolonged conflict in Ukraine, which only pushes the food prices higher. Biden may give one of his gaffe-like statements, where he says that the food crisis is a real threat, but there’s no action.

Political leadership is not elected to predict events when it has access to the best intelligence in world history. Political leaders are elected to solve problems before they become issues. That’s not happening here. If the White House wants to predict and commentate on events, they can sign up to write columns or get a podcast.

Solving food security means hitting the ground running during planting season. It means increasing the production of food when you can. Once planting season is over, things get much more difficult. The White House doesn’t seem able to predict that fact.