Don't blame Mexican tortilla crisis on biofuels, blame subsidized corn instead

Quicknote bioenergy economics
We have received some sharp questions from readers on why we do not report on Mexico's widely covered 'tortilla crisis'. Don't these protests prove that there is a growing conflict between food and fuel? We don't think so. The questions stem from the unnuanced way in which mainstream media report on biofuels. The price increases of tortillas in Mexico are not due to biofuels as such, they are entirely due to the fact that corn and corn ethanol are extremely heavily subsidised in the U.S. and protected against foreign competition by high tariffs (earlier post). Biofuels and U.S. corn ethanol are two entirely different things.

Thousands of Mexican farmers used to grow corn, but in 1994 the North American Free Trade Agreement (NAFTA) signed their death warrant. From then on, Mexico started importing cheap, subsidized corn from the U.S., where farmers receive billions each year under hundreds of support schemes. Mexico became entirely dependent on these imports, and disinvested its domestic corn production. When today, heavily subsidized U.S. farmers sell their crop as a feedstock for ethanol - which in turn is once again subsidized - then the consequences are obvious: shortages lead to price increases, and consumers in countries forced into dependence suffer. Many Mexican farmers have meanwhile quickly taken up growing corn to profit from the increased prices, but this will not solve the problem.

So let us stress this again: don't blame biofuels for the tortilla crisis, be more nuanced and explicitly blame subsidized corn, subsidized corn ethanol (which does not deserve the 'biofuel' label), the US$0.54 tariff on ethanol imported from the South, and a free trade agreement detrimental to Mexico.

Tortilla crisis proves why U.S. should import fuels from the South
We would even go so far as to say that the tortilla protests entirely prove the case we are trying to promote at the Biopact: if the U.S. were to give up producing its inefficient, uncompetitive and climate unfriendly corn ethanol which distorts markets, and instead started importing sustainable, competitive, low-cost and highly efficient fuels from the South where they do not compete with food, then it could sell its corn at normal prices and as food, to the markets it signed its NAFTA agreement with. Turning American corn into fuel is a bad idea, under all circumstances. As the chief of the International Energy Agency recently said: if the U.S. wants to take biofuels seriously, it should import them from the South, instead of turning a crop into a fuel that makes no sense from neither an economic nor an environmental, let alone an energetic point of view (earlier post).

It is up to American taxpayers to decide whether they wish to continue wasting their money on the American corn lobby, which the Washington Post has now started calling "Very, Very Big Corn" because of the tortilla crisis. The food protests in Mexico are the consequence of this choice. Sadly, as a small organisation, we do not have the power to influence the way mainstream media report on biofuels. We regret the fact that some of them do not distinguish between corn ethanol on the one hand, and biofuels on the other. The difference is however crucial [entry ends here].
ethanol :: biomass :: bioenergy :: biofuels :: energy :: sustainability :: tortilla :: corn :: subsidies :: U.S. :: Mexico ::