Saturday, July 5, 2008

Parallels - Biofuels and Mao's "Great Leap Forward"

Christopher Calder

An essential economic point that political leaders and the media have missed about the world food crisis is that rising oil prices have not shrunk the human food supply, but biofuel production has. Higher oil prices naturally raise the cost of everything that takes energy to produce, but additionally United States and European Union policies have actually reduced the amount of food available for humans to eat by artificially mandating a shift of agricultural resources to biofuel

production. President Bush's 2007 "Energy Independence and Security Act" turns food into fuel, and is reminiscent of Chairman Mao Tse Tung's 1958 Five Year Plan, known as "The Great Leap Forward." Mao forcefully shifted China's agricultural based economy to greater industrial output, a policy which caused the greatest famine in world history.

The big problem with the Bush energy plan is that the higher food prices of 2008 cannot easily lead to increased food production, as would normally be the case, because of the government mandated shift of land, water, fertilizer, farm equipment, and manpower resources to biofuel production. With biofuels out of the equation, farmers could have easily passed higher energy costs on to consumers without shrinking food production, and they could have increased food output to meet the greater demands of an expanding world population. Higher prices normally give producers a strong incentive signal to make more of a product so they can make more money. Now those incentive signals are confused and ineffective because farmers must produce for the automotive biofuel market as well as for the human food market.

Chairman Mao Tse Tung banned private farms in 1958 in his shift to communes and greater industrial output at the expense of agriculture. This led to a 15% drop in grain production in 1959 and another 10% reduction in 1960. Ethanol production is currently consuming 33% to 38% of America's corn crop, depending of whose statistics you believe, and has caused many farmers to grow corn to make ethanol instead of wheat to make bread. America is also using an ever increasing percentage of its soybeans and rapeseed crop for the production of biodiesel. These basic food products are the foundation of America's food supply, because we use them to feed our farm animals which give us dairy products, eggs, and meat. The new 2007 energy law has demanded even more of our food to be turned into fuel in the name of "energy independence," but at the tragic cost of global food supply security.

Mao's top-down meddling in agriculture was compounded by droughts and storms, just as Bush's top-down meddling in agriculture has been compounded by a drought in Australia, and a winter storm in China which caused major crop failures. A convergence of forces turned Mao's well meaning 1958 plan into the greatest famine in world history, with mortality estimates ranging widely from 14 million up to 40 million. Bush's well meaning 2007 "Energy Independence and Security Act" may take even more lives worldwide over the next few years, unless public protest puts a halt to the madness of turning food into fuel.

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