Good news. You can relax now. The food-versus-fuel debate is over. Well, at least according to the headline on an April 26 news release from the Grain Farmers of Ontario association. The release refers to results of a study, sponsored by the GFA, showing the environmental and economic benefits of grain-based biofuels outweigh minor increases in grain and food prices.

The report’s executive summary lists these “key messages and facts:”

  1. Biofuels and bioproducts are very positive for the environment in reducing greenhouse gas emissions and reducing fossil energy usage.
  2. Biofuels have had marginal effects on Canadian and international food price increases since 2007. These small increases have been offset by the depressive effect of fuel ethanol supply/supplementation on gasoline prices.
  3. Recent price spikes will stimulate future agricultural development in developing countries and depress future world grain prices.
  4. Bioproducts represent an excellent opportunity to use excessive Canadian agricultural productivity while addressing other societal goals.

According to the report, about 5.7 percent of global grain production and 10 percent of global vegetable oil production is now used to make 85 billion and 15 billion liters of ethanol and biodiesel, respectively. The United States produces about 54 billion liters of ethanol and 1.5 billion liters of biodiesel.

Substituting 10 percent ethanol into gasoline in Canada, the report claims, means a 62 percent reduction in net greenhouse gas emissions, on a per-litre basis, adjusted for differences in the relative caloric energy content of ethanol and gasoline, including corn inputs, transportation and associated soil losses.

The report acknowledges that biofuels caused an increase in U.S. corn prices by an estimated 20 to 40 percent in mid 2008, and notes that a second price peak is occurring in late 2010 and 2011. “This is very similar to the double price peak experienced in 1974 and 1980, which was followed by several decades of declining real grain and food prices,” the authors note.

Much of the report’s optimism stems from projections of continued increases in grain yields and global production, which in their own right appear optimistic. In any case, it seems unlikely this report will end the debate over grain-based biofuels, at least among livestock producers facing record-high corn prices while ethanol companies enjoy generous tax credits.

Read the executive summary or the full report from the Grain Farmers of Ontario.