ADM SAYS CROP-YIELD GAINS ENOUGH TO MEET FOOD, ETHANOL DEMAND
UkrAgroConsult news on-line, Kyiv, Ukraine, Thu, Sep 24, 2009
WASHINGTON, D.C. - Archer Daniels Midland Co., the world’s largest grain processor, expects improved yields will deliver enough crops during the next 40 years to supply rising demand for ethanol without hurting the food supply.
Archer Daniels, based in Decatur, Illinois, plans to boost output and storage capacity as global food needs rise, Chief Executive Officer Patricia Woertz said yesterday in an interview with Bloomberg Television in Washington. Rising use of biofuels in the U.S. hasn’t cut available food supplies because of greater crop yields, she said.
“The ability to match the ethanol needs for corn is way outstripped by the additional yields,” said Woertz, who runs the second-biggest U.S. ethanol producer. Increased yields have provided for greater exports in recent years even as ethanol production consumes almost a third of the U.S. corn crop, U.S. Department of Agriculture data show.
Corn surged to a record price last year in Chicago, partly as oil and gasoline rallied, before plunging as the global recession eroded demand. The grain has tumbled 20 percent this year, touching the lowest level in almost three years. The U.S. is the world’s largest corn grower and exporter.
Woertz spoke after appearing on a panel with the CEOs of Monsanto Co., DuPont Co. and Deere & Co. at a conference in Washington held by the four companies to promote biotech crops and agricultural innovation.
The United Nations has said that by mid-century, food supplies must double to feed the global population. Crop and livestock output may instead fall as much as 25 percent by 2050, the UN warned in February, unless food-production and handling practices are altered as water shortages increase and climate change affects land-use patterns.
CAUSES OF HUNGER
More than 1 billion people are projected to go hungry each day this year, a record, the UN said in June. Farmland degradation, dwindling fish stocks, the use of cereal grains for animal feed and crops for fuel may also weigh on the food supply, the organization said in the February report. The UN said that the most immediate cause of rising poverty and hunger is the global economic crisis.
Demand is recovering for food goods as the recession eases, Woertz said. The worst world slump since the Great Depression of the 1930s has led to more than $1.6 trillion in writedowns and credit losses at the world’s biggest banks, brokers and insurers since June 2007, according to data compiled by Bloomberg.
“We saw demand decline during this global recession, which is kind of unusual because people do need to eat,” Woertz said. “That demand is starting to come back.”
FOOD SPENDING
The world’s poorest people currently spend half their income on food, according to the World Bank. To boost food output by poor farmers in developing countries, the governments of the Group of Eight industrialized nations in July pledged to invest more than $12 billion in agriculture within three years.
The U.S. is the world’s biggest agricultural exporter, with total shipments for the year ending Sept. 30 valued at $97.5 billion, the USDA said last month.
Increased corn yields in the U.S., commercialization of cellulosic-ethanol technology and the development of alternative biofuel crops on marginal land worldwide should ease conflicts between food and fuel, Woertz said.
Cellulosic ethanol is made from grass and agricultural wastes. Poet LLC of Sioux Falls, South Dakota is the biggest U.S. ethanol producer. ADM and Poet both use mainly corn as a feedstock.
Today’s conference was held as part of the Global Harvest Initiative, an effort sponsored by Monsanto, DuPont, Deere and Archer Daniels to boost global agricultural production through innovation in food production, storage and distribution.
Companies have stepped up anti-hunger efforts both as global food needs grow and as some countries resist the use of bioengineered crop seed.
Earlier this month, closely held Cargill Inc., the world’s largest agribusiness, and Yum! Brands Inc., owner of the Pizza Hut and Taco Bell restaurant chains, formed the Business Council to End Global Hunger. The group is calling for greater U.S. support of global farm development.