Mexican farmers are setting ablaze fields of blue agave, the cactus-like plant used to make the fiery spirit tequila, and resowing the land with corn as soaring U.S. ethanol demand pushes up prices.
The switch to corn will contribute to an expected scarcity of agave in coming years, with officials predicting that farmers will plant between 25 percent and 35 percent less agave this year to turn the land over to corn.
Biofuels aren’t a bad concept — but making them out of food stocks is an extremely dumb idea. For one, we don’t have nearly enough agricultural capacity to grow enough corn to meet demand for biofuels. Secondly, it’s driving up the price of corn, which happens to be an important staple crop in the developing world. The only reason why corn-based ethanol is so popular is because Midwestern farmers are making a killing off of it. While that’s very good news for farmers, it’s not so good for the rest of us. Already Mexicans are dealing with dramatically increasing prices for corn tortillas, which is a critical part of the diet of many of Mexico’s poor. While we’re not seeing the same effect in the US quite yet, it’s a very real concern.
Fortunately, there is a solution in the form of cellulosic ethanol, which uses agricultural waste products instead of viable food crops. The problem is that it requires an extra step in processing to break down the cellulose in the plant walls of the biomatter being processed.
Biofuels are likely to be an important supplement to petroleum, but it’s important for policymakers to balance the competing factors of food and energy production — it’s just not smart to burn food for fuel, and unless the proper balance is struck, we may have cheaper gas, but higher food costs — which ends up hurting more people than it helps.
UPDATE: Even worse, German beer prices are going up due to the biofuels boom… which is an absolute tragedy — and another example of how government subsidies only screw up the market’s natural resource allocations.