Crops for BioFuel and BioDiesel, Agribusiness Urges

July 25 – Some of the leading agribusinesses, including Archer Daniels Midland Company (NYSE: ADM), Monsanto Company (NYSE: MON), DuPont (NYSE: DD) and Deere & Co (NYSE: DE), have joined forces to back the lobby for the use of crops in the generation of biofuels.

July 25 – Some of the leading agribusinesses, including Archer Daniels Midland Company (NYSE: ADM), Monsanto Company (NYSE: MON), DuPont (NYSE: DD) and Deere & Co (NYSE: DE), have joined forces to back the lobby for the use of crops in the generation of biofuels. The new group, lead by ADM and christened Alliance for Abundant Food and Energy, announced its plans on July 24 to use national advertisements and various lobbyists on Capitol Hill to promote the use of this new technology to help ease rising fuel shortage across the world.

The alliance and its goals are likely to draw strong criticism from those opposing the federal mandate that requires the US to use 9 billion gallons of alternative fuel per year by 2009. The members of Alliance for Abundant Food and Energy said that their goal is to make people aware of the fact that crop yields can be improved through technology and that food supply need not be affected by the rising production of fuel from crops. The alliance believes that the solution lies in increasing agricultural productivity, rather than reducing biofuel production. The alliance also aims to counter the pressure on the government to roll back federal tax subsidy and import tariffs on sugar-based ethanol.

Monsanto’s Chief Executive Officer Hugh Grant had said last month, “While others are asking should it be food ‘or’ feed ‘or’ fuel, we believe the answer is ‘and’.” These thoughts were backed by Monsanto’s Chief Technology Officer Robert Fraley, who added, “I think we can add a component of science and technological perspective to the discussion.” Archer Daniels Midland’s Vice President Todd Werpy stated that rolling back US ethanol mandates would hurt the country’s biofuels industry, which has just started to blossom and produce fuel to domestic consumers.

 

The use of crops for producing fuel is being staunchly opposed by food companies, such as Tyson Foods Inc (NYSE: TSN), Kellogg Co (NYSE: K) and Kroger Co (NYSE: KR), all of which have recently announced a “Food Before Fuel” campaign. Tyson Foods, the profits of which have been significantly affected by rising feed costs for poultry, beef and pork processing, has attributed the rising food inflation in the US to global demand for protein and competition for corn from ethanol producers. Moreover, the International Food Policy Research Institute has stated that biofuel production has caused a rise of roughly 30% in food prices. However, White House economic advisers claim that the ethanol industry is responsible for merely 2%-3% of the total hike in global grain prices.

 

Alternatio Cirqui, EconomyWatch.com

Energy Correspondent