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The Mayonnaise Crisis

Yet again, another example of the food for fuel problem. Mayonnaise maker Kewpie announced yesterday [in Japanese] that the price of mayonnaise will increase by 10% as of June. As you know, mayonnaise is its own food group in Japan, so this is serious news. The reports on TV made a point of noting how the price of mayonnaise hasn't changed in 17 years.

So, why the price increase? The the high demand for corn and soy used in making biofuel has driven up the price of food oil. The website eureka! notes (my translation):

日本植物油協会によると、EUが2006年にバイオディーゼルに利用する菜種油は約348万トン、日本の消費量95万トン(2005年)の4倍近い量が 消費され、2010年にはさらに倍増して700万トンに達すると見込まれている。急速な需要増加を受けて菜種の国際市場は急騰しており、輸出国カナダの取引所では2006年1月中旬に1トンあたり約240カナダドルだったものが、今年4月中旬には約355ドルと5割近く上昇している。

According to the Japan Oilseeds Processors Association, in 2006, the EU consumed nearly 4 times more rapeseed oil, used in biodiesel, than Japan consuming 3.4 million tons versus Japan's 950 thousand tons (2005), and is projected to consume 7 million tons in 2010. The rapid increase in demand has caused prices in the international rapeseed market to jump in exchanges in Canada where the price of 1 ton was $240 CDN in the middle of January 2006, and rose nearly 50% to $355 CDN by the middle of April this year.

If the biofuel craze really takes off, and the EU and the USA ramp up demand for ethanol, biofuels in Japan may turn out to be a matter of food security instead of going green.

In a guide to biofuels published by to the Energy Charter Secretariat and titled “Driving without Petroleum?” the largest issue surrounding biofuels is land (emphasis in original):

Land, especially of good quality that can be used to produce bioenergy, is scarce and could limit the supply and competitiveness of “first generation” bioenergy significantly (Green, 2000). This scarcity of land is caused by the competition between the production of food, biomaterial and bioenergy on available agricultural and forestry areas and other competing land uses, e.g., urbanisation and nature development (Goldemberg, 2000).

Reaching maximum rates of biofuel supply from corn and soybeans is unlikely because these crops are major contributors to human food supplies through livestock feed and direct consumption (e.g., high-fructose corn syrup and soybean oil). Devoting all 2005 US corn and soybean production to ethanol and biodiesel would have an offset of just 12% and 6% of US gasoline and diesel demand, respectively. However, because of the fossil energy required to produce ethanol and biodiesel, this change would provide a net energy gain equivalent to just 2.4% and 2.9% of US gasoline and diesel consumption, respectively. (p.45)

Given that Japan has virtually no natural resources of its own, let alone vast tracts of arable land for growing corn or soy, what will the effect on its food supply and prices be if the demand for corn and soy for fuel goes through the roof? People will certainly stop worrying about the price of mayonnaise.

The United States is not about to suddenly bet the farm and shift everything into corn production, but it is illustrative of what can happen if we decide on a massive scale to adopt biofuels. This is succinctly captured by James Howard Kuntsler:

One of the farmers who organized the Pennsylvania Association for Sustainable Agriculture's annual meeting put it nicely: "The ethanol craze means that we're going to burn up the Midwest's last six inches of topsoil in our gas-tanks."

It remains to be seen when the media will start seriously reporting about food for fuel instead of cheering on the latest technological advancement or complaining about high food prices. It hasn't sunk in yet that the price you pay to fill your gas tank with biofuels extends to what you put in your mouth.

Update May 11, 2007

Asia times Online has an article worth reading that summarizes Japan's move to biofuels.

Starting in 2010, the Environment Ministry will require all new cars to be able to run on a blend of 10% bioethanol and 90% regular gasoline. Japan currently allows ethanol mixtures of up to 3% at the nation's pumps, but in practice only a handful of cars had actually been running on bioethanol blends in the country until bio-gasoline sales began on April 27.

[...]

The bio-gasoline-promotion project is not free of problems, including a currently negligible volume of domestic bioethanol production and almost complete reliance on imports, slightly higher production costs of bio-gasoline than those of ordinary gasoline, and the dispute between the petroleum industry and the Environment Ministry over how bioethanol should be mixed with gasoline.

Global demand for bioethanol has been snowballing, resulting in a sharp rise in the price of corn and other crops. Last year, US auto makers unveiled plans to double production of vehicles using so-called flexible-fuel technology by 2010. Also, no country other than Brazil, the world's largest producer, has any significant biofuel-export potential, and fears are rising around the globe over stable supplies. The United States and Brazil agreed in early March to promote the production and use of ethanol, when President George W Bush visited the South American country and held talks with President Luiz Inacio Lula da Silva.

Japan is looking to Brazil as its major source of the alternative fuel. Last year, the governments of Japan and Brazil set up a study group on trading in the fuel. Japan could lock up a sizable chunk of future ethanol supplies from Brazil.

Comments

>The United States is not about to suddenly bet the farm and shift everything into corn production, but it >is illustrative of what can happen if we decide on a massive scale to adopt biofuels.

One major sticking point has yet to be touched upon. If the transition to biofuel is to end dependence on fossil fuels, fine.
Presumably, however, a major reason for the changeover is the "greener" nature of biofuels.
But organic farming simply can't provide the same yields as conventional farming, so pesticides and fertilizers must be used to maintain or even increase (assuming more countries switch to biofuel) yields.
Thus, one side of the greens will have to give - either we use more chemicals to bump up yields of crops to also make biofuels OR we cut chemical use and go organic but forego all of the talk about switching to biofuel.
Then again, maybe I'm hampered by seeing things as they actually are rather than how they should be.

That's what's great about getting involved with a foreigner. You can't take it personally. What's really terrific is that when we act in ways which might objectively...seem assholish, or incredibly annoying, they don't get upset at all. They just assum

You raise good points, DiT. I don't think the goal of biofuels like ethanol was to completely replace oil. I think the limits are understood. I've updated this blog post with an Asia Times Online article that notes that Japan is importing its ethanol from Brazil while ramping up production of sugar cane in Miyako with the aim of reducing its dependency on oil by 20%

The making of a vicious circle are in the works. Brazil clears more land to grow sugar cane to convert into ethanol for Japan. Japan gets bioethanol but has to pay more for its food; Brazil suffers from environmental problems such as soil erosion due to intensive agriculture to meet the demand for ethanol.

One thing to bear in mind that although bioethanol may be "green," all of the inputs involved in making it depend on petroleum. That extends from the fertilizers used to grow the crops to the fuel involved to process the crops and transport them across the globe. In the end, we may not be making any progress on slowing greenhouse gas emissions since switching to biofuel in effect shifts the emissions from consumer to the manufacturer.


The significant problems we have cannot be solved at the same level of thinking with which we created them.
-Albert Einstein

Shawn
Let's Japan.org::Blog

Also, increasing agricultural demands on Brazil will cause them to raze more rainforests for cropland, won't it? Whatever happened to saving those?

Food is meant to power people, not machines. I hope people drop this dumb biodiesel idea before it's too late..

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