China recently bought an additional 21 million bushel of corn, per the WSJ more than what their traditional annual purchase is. That prompted a story in the WSJ of corn shortage fear mongering for the US, suggesting increasing meat demand in China as well as a need to supply such corn. Here is what is missing:

China has a current capacity of producing ethanol in 5 large-scale (120 mgy) plants for a total of 600+ Million Gallons per year. Feedstock is cassava or corn. CORN! To feed those on corn only, takes 222 million bushel corn per year. The one time order of 21 million bushel cited is merely 60% of one plants annual intake, or a mere ten percent of what those plants digest annually. In addition, the COFCO in China announced plans to ramp up production of ethanol in to the equivalent of 25% US production or 50 large-scale plants by 2020, meaning ten times capacity in less than ten years or an annual increase by 222 bushel of corn (if all would be feed corn).

Conversely (or perversely) China exports ethanol via the Caribbean (for dehydration) to the US as fuel ethanol (do a Google on that).

If you take this together, China is buying US corn, produces Ethanol, and sells it back to the US while keeping the DDGS, the feed byproduct which replaces corn in hog and cattle rations locally. This business makes even more sense for China as they can build cheaper plants, run them better energetically integrated and profit from increasing ethanol prices in the US. What you have in sum is an outsourcing of the corn to ethanol production to China, which also makes sense, because all the empty containers that delivered the iPhones, computers, iPads and TVs to the ports in Long Beach and Oakland can be filled with comparatively cheaper corn to go back and get more goods to further increase the US trade deficit (which  BTW will also be worsened by importing higher value ethanol from China).

Here is now, where you actually do have an iLUC issue: China uses US soil to grow corn for ethanol, which now does not end up anymore in food/feed in China. This is different from the US situation, because in China you do need more calories per person, whereas in the US we have too much (to be precise we consume 4,000 cal/day/capita in the US, or twice as much as we should per USDA).

What should happen is, that China should shut down their own ethanol facilities if they do not have enough domestically grown feedstock to run them. Further, China should not be allowed to purchase corn as long as they produce ethanol from corn they do not grow or have. Obviously one now runs into WTO and free trade issues, but on the upside the perversion in the rhetoric around corn-to-ethanol and iLUC is now blatantly obvious with the new twist, that the exploiting (highly industrialized) country is China and the exploited farmers are American, while the American ethanol industry, beat up and bashed looses out, and we again become dependent on foreign imports.

What irony, and how fast did we get here?

A common argument thrown against the expansion of conventional biofuel production from agricultural resources is the indirect land use charge, which is a more eloquent argument along the line of the food vs. fuel accusation, which in itself should rather be a fat vs. fuel debate. The interesting aspect of both hypothesis is that they typically come out of environmentally concerned corners of the political spectrum, the side where one would expect a demand for softer chemistry and industrial processes using an integrated approach to meet the demands of the society. Put into the bigger context, both challenges to the use of conventional biofuels are misleading if not hypocritical.

Currently a mere 4% of corn ends up as actual food on US tables, another 16% is exported, and 39% may end up, after extraction of carbs and their conversion to ethanol, in US gas tanks. The vast majority of 70% of corn, as well as the remainder of the corn-ethanol conversion ends up in the stomachs of animals, which are raised for meat production at a conversion rate of 7:1. Essentially they provide another 10% of calories as protein to the American diet and 25% of greenhouse gases from the digestion of said corn and its conversion to methane. Hence, given our current diet, we use the vast majority of our land to produce the same energy as the other 4% which go straight to food.

On the other side, net of exports, we consume per capita shy of 4000 cal. per day, which is nicely twice as much as the USDA, also in charge of promoting US agricultural products, recommends for a healthy diet. Consequently, the US is enjoying an obesity epidemic at a rate of more than 60% of the population that is overweight, and more than a third clinically obese, and a quarter that is pre-diabetic. Overweight leads to obesity, which in return provides us with diabetes, cardiovascular diseases, and an ever-increasing healthcare bill, which at 17.9% of GDP is going to bankrupt the US medical system in this decade.

In sum, we are using 80+% of land to overfed the average consumer by twice its necessary consumption and bankrupting the government on the way by asking it to care for the effects of fattening our bodies.

Along that line the indirect land use change (iLUC) argument (i.e. using land to produce feedstock for biofuels takes it away from food production and hence “somewhere” “new” land needs to be cultivated and that increase GHG output) becomes paradoxical when applied to a growing, eating population. How indeed should we be charging the overeating, obese members of our society for the increase in GHG output by way of their nutritional intake. Even more so, how should we account for emerging economies finally growing enough food for their people by ploughing and cultivating uncultivated lands, so that they too can enjoy a better and healthy life style, and there we are talking about billions of people not just the mere 300 million in the US. And yes, the birth rates in emerging economies lead to forecasts of 9 billion people in the next decade. Shall those countries – applying the iLUC thinking here -  be taxed for the increasing need of agricultural land or should they continue to go underfed and malnourished?

The opportunity here is to recraft the agricultural policy to provide healthy food by modern standards at healthy levels of 2000 cal. per capita and day, and using the surplus production lands to produce a domestic renewable fuel in distributed integrated biorefineries, which at the same time revitalize rural economies and diversify the feedstocks grown. The agro-food conglomerates such as the meat packers and food multi-nationals may seem as losers in this change, but they have something to offer that is critical in making the change and investments: balance sheets to support the investments in bioindustrial production, expertise in processes, logistics expertise and market penetration reaching each and everyone. Even a Walmart and Whole Foods can and should play in the change from a mere food driven agro industry to an agriculturally driven bioeconomy. The biggest loosers though should be the healthier population and the empty treatment rooms of sickness care providers.