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2 October, 2008
The market of the ingredients of the food animal-grains, oleaginous, flours and other energy sources and protein-, has changed significantly in the last two years. But the fundamental underlying causes of this change are something novel for the world trade: it is not a situation of product shortage but rather of a bigger demand for the same ones. What happens is very different to that historically lived, except counted occasions, as the sudden entrance in the market of Russia in the decade of the 70 that made increase the prices in a substantial way. “In the year 73 it were the Russian who entered in the world grain market acquiring all the surpluses that they could find. In both cases, the result is that the cost of the animal foods has been duplicated or triplicated in very little time”, Dr. Thomas Elam emphasized, economist and professor of the IUPUI (Indianapolis, USA), in the Seminar on Nutrition of Ruminants organized by Elanco. The main difference between that time and the current one, according to Elam, is that the Russian phenomenon was temporary, while today no end is observed starting from the increase of the petroleum demand from China and India, among others. At the moment, a combination of great demand of food is given with a even quicker increase of the grain demand for its conversion into biofuel. For the first time in history, the prices of the energy reach record levels without offer interruption, what has also increased the demand for alternative petroleum sources. We have had cases of very high values of the energy in the past, but everything was related with political actions in the Middle East that caused interruption of the offer and increase in the prices. In this case, we are producing crude record quantities without offer interruption”, he pointed out. The government policies promoting the use of grains for the biofuels production has also collaborated with the increase in the demand and they have put pressure on the prices of grains and oleaginous at world level. AN UNAVOIDABLE TENDENCY Contrary to what happens at the present time, starting from the 2001 a fall of the stock of grains was perceived in the market -it was produced less than that consumed- with little impact initial on the prices. “For that time, the prices were very low but that of the oleaginous was sufficiently high as to attract the production, what predicted an unavoidable increase of prices. We were already worrying about that at the end of the 90s´, and still before knowing that it would also be impacted by the biofuels”, the economist assured. Smaller exportable balances of the European Union in the last two years have also taken -according to Dr. Elman- to an increase of the pressure on the agricultural prices. “The European Union made the political decision of reducing the arable lands because it was producing too much, with excessive expenses to subsidize it. As a result, they became net importers reducing the world offer of these products”. Between 2007 and 2008, the scale reached a debit of twelve million tons of grain. Analyzing the world grain consumption for animal food and industrial uses, it is possible to assure that practically the whole increase in the consumption starting from 2000 -of 820 million metric tons to 1.000 millions-, has been destined to the ethanol production. “From 2006 a true explosion has existed; and this is due partly to the fact that the fuel has much more value and we are looking for new energy sources”, Elam emphasized.Â
- USA with a participation of 43% starting from the ethanol and, in smaller measure, the biodiesel production. - Brazil, with 32% of the world market of ethanol in the year 2007, based on the sugarcane. - The European Union, a market predominantly of biodiesel, with 15% of the international market. Apart from Brazil -where the ethanol represents 20% of the fuel for automobiles- only a 1% of the biofuel offer comes from South America. “There is an enormous difference among Brazil, United States and the European Union. Brazil is using a very efficient process of conversion that competes not necessarily with the food offer, while the other ones are converting cultivations for foods -either soya or corn- into ethanol and biodiesel respectively. This growing ethanol production in the United States is becoming very polemic”, he related. The price of the crude is at the moment the number one decisive of the corn price in the United States, and this was put in evidence clearly starting from the first of July, when the fall in the prices of the crude was accompanied by a decrease of the prices of the ethanol and, therefore, of the rate of the corn in the market. In spite of this recent fall, the prices of this cultivation in the country of the north have been duplicated -from 2,50 to 5 dollars/bushel- in the last ten years. For Dr. Elman, another variable that also changed is the risk: “The coefficient of price variation of the corn is now three times what was at the beginning of the decade. The prices are not only higher but rather more difficult to predict.” A MORE THAN POLEMIC LAW The government policies of the USA have had a considerable effect in the global price of the grains. The law of energy of the year 2007 -denominated “Law of Security and Independence”- established a bigger use of corn to be transformed into ethanol, what made an ascend of the value of the grain in the international market. The same thing happened with the soya. Established by law the use of soya oil for biodiesel, the price of the oleaginous ascended until reaching the range of 13 to 15 dollars per bushel (520 to 600 US$/ton), level in which it still remains. “The cost of the animal food has been duplicated practically regarding what it was two or three years ago. The good news is that, if I had given this presentation at the beginning of July, we had been speaking of a triplication of the cost… the prices have lowered enough”, he indicated. Dr. Elam dedicated special attention to the analysis of the program that USA adopted in the biofuels topic: “Partly of the fundamental reason for which United States is making this is because we want to be independent from energy, it doesn’t please us to have to import eatable oil from the rest of the world. If we transform all our corn production into ethanol we could hardly replace 15% of our petroleum imports, and this cannot achieve the energy independence. These politicians are based on erroneous suppositions. This way, we not only depend on Middle East for the supply of petroleum but rather this has an impact in the security of our own food supply.” Another important point is -for the professor- the impact of the subsidies to the biofuels production in the cost of the foods at world level. “According to the World Bank a million more people have gone from, in the last 18 months, portions ‘hardly appropriate ‘ to completely inadequate ” and we are beginning to see that these policies are economically regressive: they take from the poor and give to the rich. Without a doubt, it is not the best public policy and it is necessary to reconsider it.” Besides a market protected by tariffs and direct subsidies -that represent 25% of the value of the ethanol production-, in USA an obligatory use has been established, for the year 2008, of approximately 2.400 million liters of ethanol. “According to my calculations, if we didn’t have this obligatory standard, the fiscal credits and the tariffs -in a free market-, we would be producing 1.200 million liters approximately. The total effect of all this is to deviate important quantities from foods to the production of fuel, with the rising increase of costs and prices for all.” Looking in perspective, the demand of 2.400 million ethanol liters would be using a fourth of the total supply of all the grains -a great sum, if it is considered that it overcomes the production of Argentina and Indonesia together- and the net gain would be of hardly 0,2% of the supply of world petroleum. “If we had to convert the world grain production -2.100 million tons- into ethanol, it would give us the gross energy content of the naphtha supply of the United States that represents 10% of the global petroleum consumption”, Elam noticed. OTHER LEGISLATIONS  In the European Union a biofuels program has also been established, that is limited mostly to programs of obligatory use. What is there imposed is the use of these alternative energy sources in a 2% of the whole fuel supply, ending up in the year 2020 to constitute the 10%. “This number is changing; it went down enough this year when establishing -an internal report- that the net cost of this program would represent from 33.000 to 65.000 million Eurus per year”, Elam explained. With a quite similar program, the Argentina establishes an obligatory use of 5% for the year 2010. Of being fulfilled that goal, 700 million liters of biodiesel and 250 million liters of ethanol will be needed, coming from the cultivations of soya and corn respectively. “I still don’t understand how this program will achieve its objective, because it has certain contradictions that are probably difficult to solve. For the way in that is configured, still with the retentions, the exports will be more attractive than the internal market”, Elman inquired with concern. As a result of the increase in the grain prices in the last two years, some of the main organizations in the world responsible for the poverty and feeding programs have begun to question the government policies that promote the food conversion into biofuels. “What will happen in the global economy with the increase of the costs? The markets will adjust at these highest levels in prices reducing the production; we are already beginning to see that in the meat production of Canada, United States and some European countries”, he assured. It is also interesting to observe that not only the food producers suffer with the highest costs of the grains; but the ethanol producers also suffer it. “As their prices have gone up -from June of the last year- their utilities have been reduced, because they have not done it as much as the corn price, so there is certain justice in all this. In the period 2005/06, a company could build an ethanol plant, request all the money borrowed and to pay its debt in one year thanks to the obtained utilities, with a margin of two dollars/gallon. At the moment, with 15 to 20 necessary years to pay the loan, the rate of beginning of new plants has been reduced”, the economist concluded. “The biofuels policies are based on erroneous suppositions. This way, USA doesn’t only depend on Middle East for the supply of petroleum but rather this has an impact in the security of its own food supply.”Â
With great affluence of professionals from the cattle sector of milk and meat, the company in nutrition and animal sanity, Elanco, organized in Rodizio Costanera the Seminar on Nutrition of Ruminants. After the economist’s Dr. Thomas Elam words, professor Todd Duffield- of the University of Guelph, Canada- presented the most recent technical information on the use of Rumensin in milky rodeos. Along his dissertation, the academic exposed diverse works that coincided in demonstrating the wide relationship cost/benefit -bigger to 15:1- of the product, when benefitting the productivity, health and energy status of the milk cow.  At his turn, Dr. Fernando Bargo, product manager for Cono Sur, Central America, Caribbean and Andean Area, exposed to the public the value of Rumensin 200 with Microtracers for the food plants, new product of the company with wide strengths as for homogeneity of blendeding; precision, practicity, relationship cost/benefit; and traceability. Finally, Dr. Eduardo Bernal, regional manager of sales, insisted in the commitment of Elanco with the production of animal protein, with the highest quality standards. “We share with our clients their same concerns”, he assured convinced. Courtesy of the Infortambo Magazine for Nextfuel Argentina/Biodiesel.com.ar Deje un comentario |
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