[NYTr] Biofuels Meet Increasing Skepticism
 
Date: Mon, 2 Jul 2007 16:40:12 -0400


Via NY Transfer News Collective  *  All the News that Doesn't Fit
 
Excerpted from THE AGRIBUSINESS EXAMINER #509 - Jul 2, 2007

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Pittsburgh Post-Gazette - June 14, 2007

FOOD FIRMS RAISE CONCERNS ABOUT USING CORN FOR FUEL 

By Teresa F. Lindeman

A coalition of food companies, including the H.J. Heinz Co., wants
lawmakers to think twice before using congressional mandates to
accelerate conversion of the nation's corn crop into ethanol and
other biofuels.

In a letter sent to Senate leaders last week, the group said overly
aggressive proposals could hurt companies that use corn in producing
food for human consumption. Already, the food companies argue rising
demand for biofuels has forced livestock producers to seek other
ways to feed animals and has begun to pressure food prices.

The energy package being pushed by Senate Majority Leader Harry
Reid, Dem.-Nevada, will likely face numerous challenges before it
gets too far, as have past energy bills.

The ambitious plan addresses a number of issues, but the food
companies specifically focused on provisions that would mandate an
increase in corn-based ethanol as an alternative to traditional
fossil fuels.

"We understand and share the eagerness to develop a road map for
energy security," the letter said, which news reports indicated was
also signed by Kellogg's, Coca-Cola and the National Chicken Council
among others. "We simply ask that as Congress moves to consider
energy policy mandates, time be provided to review, understand and
take into account the implications of this policy on the livestock
and food industries."

Another industry group, the Grocery Manufacturers Association,
raised a similar concern last month over another piece of legislation
aimed at increasing use of ethanol and biofuels, arguing an
"overambitious" increase could raise food prices, increase world
hunger and cost taxpayers billions of dollars.

Fuel ethanol use is already increasing rapidly. About 20% of the
2006 corn crop was used to make ethanol, nearly twice the amount
four years earlier, according to the National Corn Growers Association.
Corn prices increased from about $2 a bushel in January 2006 to
just under $4 this spring, the group said.

While food companies including Heinz, Del Monte Foods Co. and
TreeHouse Foods have cited the pressure of rising costs of commodities
such as corn and fuel on recent quarterly earnings results, the
corn growers organization disputes arguments that rising crop prices
have had a significant impact on retail food prices.

                      ***

Des Moines Register - July 1, 2007

REPORT SAYS ETHANOL MAY FUEL DEAD ZONE

By Philip Brasher 

Shrinking that dead zone in the Gulf of Mexico will be much more
costly than first thought. A group of scientists that looked at the
problem during the Clinton administration targeted agricultural
runoff in the Midwest as the main source of the problem and called
for a 30% reduction in the amount of nitrogen flowing into the Gulf.

A new panel of scientists believes it's going to take a far bigger
reduction in nitrogen than that, on the order of 45%, according to
a draft report.

And even that is not going to be enough. The scientists say that a
second chemical, phosphorus, which comes from city sewage systems
as well as farms, also needs to be reduced. By 40%. Moreover, the
report says that biofuels will likely make the problem worse, because
of the increase in corn acreage and use of nitrogen fertilizer
needed to keep with the demand for ethanol.

Encouraging more production of corn-based ethanol, in fact, "could
nullify other efforts" to reduce the dead zone, the scientists say.

"They're calling for a larger reduction (in pollutants) at the same
time that the rush to corn-based ethanol is moving in the other
direction," said Don Scavia, a University of Michigan scientist who
served on the original advisory board that completed its work in
2000.

The report calls for a wholesale overhaul of agricultural programs,
away from crop subsidies and into conservation measures that will
reduce runoff.

The Gulf's dead zone is an oxygen-deprived area, nearly devoid of
shrimp, fish and other sea life, that appears every summer. It
varies in size from 3,000 to more than 7,700 square miles, an area
approaching the size of New Jersey. The oxygen loss occurs when
high levels of nitrogen and phosphorus cause excessive algae. The
government's goal is to reduce the average size of the dead zone
to 2,000 square miles by 2015.

Farm groups had hoped that the latest scientific review would down
play down the role of nitrogen in causing the dead zone and instead
pin the issue on phosphorus. Instead, the study showed that both
chemicals would have to be addressed, and raised the new concerns
about biofuels. By one estimate in the report, the expanded corn
acreage needed to support the ethanol industry could increase
nitrogen runoff by 33%.

An energy bill passed by the Senate in June would require refiners
to more than double their use of ethanol by 2015.

The scientists' report is due to the Environmental Protection Agency
this fall. After that, a task force comprising federal and state
officials, including Iowa Agriculture Secretary Bill Northey, will
issue an action plan. Iowa and other states will then be expected
to come up with ways to meet the reduction goals.

And now it's not just farms that could be affected. Cities and towns
along streams that drain into the Mississippi River could be forced
to remove more phosphorus. "It simply raises the bar of where we
need to try to go. There will be new resources needed to do that,"
said Dean Lemke, water resource bureau chief for the Iowa Department
of Agriculture and Land Stewardship.

The final recommendations may be finished too late to bear on either
the farm or energy bills that Congress is writing this year. But
if lawmakers were to heed the draft report, they might rethink their
direction on both scores.

The cost of significantly reducing farm runoff in Iowa alone would
be high --- more than $600 million a year, according to Iowa State
University economists who are studying the issue for state farm
organizations. That's roughly as much as the entire state of Kansas
received in federal farm payments last year and half of Iowa's
total. "Policymakers need to have these kinds of numbers in front
of them and right now they don't have them," said Rick Robinson,
who follows environmental issues for the Iowa Farm Bureau.

"We're going to have to make choices. Where does the money come
from? Does it come from education? Does it come from public safety?
Does it come from health care?"

What's clear from the report is that the price tag for repairing
the damage to the Gulf isn't going down.
       
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