Biofuel Mandate Bashed In Iowa Speech

Iowa Farm Scene

Chairman of Nestle, one of the world's largest food companies, sharply criticized biofuels in a speech at World Food Prize symposium.

Published on: October 30, 2012

The chairman of the board of Nestle Group, the giant Switzerland-based food manufacturing and marketing company that owns many brand names and supplies numerous products on grocery store shelves around the world, warns that overuse of water will lead to shortfalls of grain. "This year's drought in the U.S. has aggravated the trend," said Peter Brabeck-Letmathe, one of the speakers at the recent 2012 World Food Prize symposium held October 17-19 in Des Moines, Iowa. Over 1,400 people from 65 nations attended.

Also in his speech, Brabeck-Letmathe criticized biofuel mandates, such as the Renewable Fuel Standard which requires a certain amount of ethanol and biodiesel to be used each year in the United States.

NO FOOD FOR FUEL: Peter Brabeck-Letmathe, chairman of the board of Nestle, a giant food manufacturing and marketing company based in Switzerland, spoke at the World Food Prize symposium in Des Moines in mid-October. He made it clear he opposes production of biofuels such as ethanol from corn and biodiesel from soybeans. "No food for fuel. Food is for people. We can use waste products for fuel," he said.
NO FOOD FOR FUEL: Peter Brabeck-Letmathe, chairman of the board of Nestle, a giant food manufacturing and marketing company based in Switzerland, spoke at the World Food Prize symposium in Des Moines in mid-October. He made it clear he opposes production of biofuels such as ethanol from corn and biodiesel from soybeans. "No food for fuel. Food is for people. We can use waste products for fuel," he said.

"In normal years we have been using the buffer grain stocks and buffer water supplies that are needed in difficult years," he said. "The result is falling water tables and rivers and streams going dry. Massive grain shortfalls due to water deficiencies are highly probable if we continue to do what we are doing today."

Nestle chairman predicts global shortfalls in grain production of 30% by 2025
The Nestle chief is predicting global shortfalls in grain production of 30% by 2025. This would be a loss equal to the entire grain crop of the U.S. and India combined. Increasing meat production in developing nations is also using more water, he said. These increasing appetites threaten to outstrip agricultural production. Growth in global crop yields outpaced population growth from 1970 to 2007. But from 2009 to 2017, there is expected to be only a 0.8% growth in yield, and a 1.1% growth in population.

Brabeck-Letmathe discussed a number of world hunger issues in his speech. However, it was his comment about biofuels, saying they distort the market and that he believes it is absurd to be making fuel from grain, that didn't sit well with representatives of Iowa farm organizations and leaders of the state's corn and soybean grower groups. They were in the audience listening to Brabeck-Letmathe deliver his opinion.

Nations that require the use of biofuels are complicating efforts to feed the 870 million people who are hungry in the world today, said Brabeck-Letmathe. Acknowledging that "it is somewhat delicate to speak critically of biofuels here in Iowa," he called such national policies as the RFS "absolute absurdity." There were some people in the audience at the World Food Prize symposium who applauded when he said, "My view is clear: No food for fuel. Food is meant for people. Waste products can be used for fuel."

Derisive comments on biofuel refuted by Iowa Corn Growers Association
Craig Floss, CEO of the Iowa Corn Growers Association, rebutted Brabeck-Letmathe's derisive comments about biofuels. It is true that a significant share of the U.S. corn crop is now being used for ethanol production. However, that's not the whole story. One-third of each bushel of corn processed for ethanol comes back as a high-quality livestock feed in the form of distillers grains or DDGS.

Floss cites USDA statistics as well as analysis provided by Pro Exporter, an economic research firm that conducts studies for major agricultural companies. The figures show 39% of the U.S. corn crop is going to ethanol plants. But the equivalent of 11% of that corn that goes to ethanol plants comes back on the market as DDGS. So the net amount of the U.S. corn crop being used for ethanol is 28%.

What's the situation in Iowa? In Iowa, 52% of the corn crop is going to ethanol plants and 14% is coming back as DDGS. So the net amount of the Iowa corn crop being used for ethanol is 38%. "The 14% that comes back as DDGS all goes for feed," notes Floss. "When you add that 14% to all the other corn usage for livestock, you see that the livestock sector is a significant user of corn in Iowa."

Looking at total use of the U.S. corn crop, 38% of the corn is fed to livestock, 11% is DDGS from ethanol production, 28% is used for ethanol, 12% of the corn is exported and 11% goes into other processing such as sweeteners, food products, chemicals, etc. When you add the 38% of the corn that is fed directly to livestock and the 11% that comes back as DDGS, a total of 49% of U.S. corn production is used as animal feed.

Floss adds, "People hear those big numbers, such as 52% of Iowa's corn crop goes to ethanol or 39% or 40% of the U.S. crop. Opponents of ethanol like to cite those big numbers. But they don't want to account for all the coproducts that come out of ethanol processing. This is the message we are trying to get across to people."

For more information and illustrations that explain this topic, Floss suggests people visit the ICGA website and click on the "corn education" tab and then the "production and use" button.

Processing corn into ethanol produces livestock feed which replaces corn that would typically be fed directly to livestock
The point is, when a bushel of corn is hauled to an ethanol plant, about two-thirds of it is used in processing to make ethanol. The remaining one-third of each bushel is used for high-protein livestock feed. "The amount of livestock feed produced by ethanol processing actually replaces corn that would typically go into livestock feed, freeing up corn for other uses such as food and export markets," notes Floss. Likewise, biodiesel production encourages a larger soybean crush, resulting in a larger supply of soybean meal for animal feed.

Floss also points out that farmers have increased U.S. corn production to meet ethanol needs. Even with the historic drought in 2012, the U.S. has produced the eighth largest corn crop on record. One of the reasons the U.S. is able to do this is because farmers have increased corn acreage and have worked to produce more corn per acre to meet increased demand. "There is enough food to feed the world," says Floss. "While too many people, especially in poor and developing nations are still hungry, the number of hungry people is lower today than it was before biofuels began to be produced 25 years ago in the Midwest."

Floss makes another important point: Some groups that work to combat global hunger complained several years ago that U.S. agricultural subsidies kept world crop and livestock prices too low and hurt farmers in poor nations. Today, some of those same groups are complaining that biofuels push farm prices too high and hurt farmers in poor nations. "So, which is it?" asks Floss.

Progress is being made in food aid, and food aid programs produce side benefits
Another speaker at the 2012 WFP symposium, Rajiv Shah, administrator of the U.S. Agency for International Development, released a progress report and scorecard for Feed the Future. This is a U.S. government program that supports poor countries in developing their own agriculture sectors in order to generate opportunities for economic growth and trade, which can support increased incomes and help reduce hunger and malnutrition. Shah said his agency's aid programs have benefits that go beyond tackling hunger issues. They help protect U.S. security, generate jobs and have helped result in trade agreements being signed decades later.

The looming cutbacks in U.S. government spending and the increases in taxes that are set to potentially go into effect at the end of 2012 have cast a pall of uncertainty over federal agencies, corporations, nonprofit groups and other organizations that participate in helping to provide food aid to poor nations. What will happen if U.S. spending on international food aid programs is reduced?

"We plan for various different scenarios," said Shah. "I think the bipartisan support for this work we do and our ability to document these kinds of very powerful and very concrete results will over a period of time protect us from the political ups and downs. People will look at our work and see its value to America's national security and to our nation's economic prosperity."

Ag company CEO says urgency is needed to fight hunger around the world
Volatile crop prices, unpredictable weather, global conflicts and a shortage of water are hampering efforts to reduce the number of people who are hungry in the world, said Sandra Peterson, CEO of Bayer CropScience. She told the World Food Prize audience "The one thing that has eluded everyone in the fight against hunger is time. Time is racing. 2050 might be decades away, but if we want to feed the hungry, we need to accelerate our sense of urgency today."

With the world population expected to rise to 9 billion people by 2050, green groups, food aid organizations and others contend efforts to boost the food supply must be done in a way that preserves resources such as water and has a minimal impact on the environment. The need to step up the pace to alleviate global hunger has gained momentum following widespread drought and other disasters such as earthquakes and hurricanes. This year the drought in the U.S. Corn Belt sent grain prices soaring. In order to make a significant difference in closing the hunger gap, Peterson said improvements must come from three areas:

* Providing small farmers, who produce most of the food in their nations, with needed training and better technology;

* Investing in innovations that protect the planet but produce greater amounts of food with a higher nutritional value;

* Doing a better job of working together to get the food to the people and to get the job done.

"Closing the world's hunger gap is not an either-or situation," she said. "There are ways to do this that can solve all three of these problems collectively."

WFP laureate David Beckmann is concerned about the U.S. farm bill debate
World Food Prize laureate David Beckmann, also speaking at the 2012 WFP symposium in Des Moines, said he was disappointed the U.S. presidential candidates didn't discuss world hunger or national hunger problems during their recent series of debates. "One in five children in this country can be classified as food insecure, yet the presidential candidates didn't talk about hunger issues," Beckmann noted.

Beckmann, president of Bread for The World, is putting together a coalition of hunger advocacy groups to lobby against proposed cuts in food aid, which he described as "scary." He is a minister and an economist and Bread for The World is a faith-based organization that works with churches, religious organizations and others to advocate on hunger issues.

Referring to the looming federal debt crisis, Beckmann said "The United States needs to get its fiscal house in order but it shouldn't do it on the backs of the poor and hungry." House and Senate ag committee members have passed two different versions of the proposed 2012 Farm Bill. The Senate proposal includes a $4.5 billion cut to the Supplemental Nutrition Assistance Program or SNAP, formerly known as food stamps, which is part of the USDA budget. The House farm bill proposal would cut about $16.5 billion over five years.

Beckmann says the Senate farm bill includes language that would reform the SNAP program and make improvements and he believes its $4.5 billion in proposed cuts are achievable. But he says the House version, with the larger cuts is unacceptable to many groups that work to help feed hungry people. He says farmers need to understand that programs such as SNAP, which help feed the hungry, also help farmers in the long run by creating demand for food.