Sunday, September 23, 2007


Letter on biofuels, climate change, peak oil and food inflation

Recently I had a letter to the editor published. The reason why we came to the property which grows food was peak oil. I never thought 20 months later that it is all starting to show up in food prices.

Here it is:

16 Sept 2007

The Observer
Kapiti Observer

Dear editor,

Local body candidate Robert Atack rightly draws attention to Kapiti's future with climate change but without cheap oil.

On August 23 the Dominion Post reported that phosphate fertiliser di-ammonioum phosphate had rocketed 80% in two months largely as countries such as China were using it to fertilise their vast tracts of land in biofuels. No doubt this will feed through to food prices.

On TV3 on September 15th the President of Federated Farmers attributed the 100% rise in the price of wheat this year partly to the competition from biofuels for land use.

The scramble for biofuels is an illusory solution to the end of cheap oil. It is already stealing food from the poor in Mexico and Italy. This year close to 25% of the US corn crop will go to biofuel. Next year, with over 70 more bio-fuel plants under construction, the figure will be even higher. When US farmers grow more corn, they also grow less wheat and soybean. So the ripple effect is extending across all grains, and right around the world.

Butter is up 23% this week. International prices have doubled during the past two years on the back of drought pressures on milk production and competition for cattle feed from biofuel producers causing a world shortfall of milk. Cheese is next.

Climate change is also a contributor to soaring wheat prices. Many exporting countries suffered a mix of droughts, hot winds and flooding. Australian crops were down 50% last year. Time Magazine, Aug 27, warns, "And, if the world warms as expected over the coming decades, the terrible farming year of 2007 may be just the beginning."

If the production of oil peaked in April 2005 as many experts believe, this is feeding through to food price inflation remarkably quickly. With rises in interest rates and the price of electricity, petrol and food, households will have less disposable income. That is all the more reason to constrain rates by putting expensive roading projects on hold, to encourage local food growth (without expensive fertilisers), and to limit housing encroachment on first class horticultural land. Heritage fruit trees could be planted on public land. And now, oh for a local dairy factory!

Deirdre Kent

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