Huge shift between grain and energy
July 30, 2013
Of the many examples that may be cited underscoring the way the world has been changed by technology, by politics and by many different human endeavors, hardly any is more front and center today than the shifting relationship of grain and energy. When global demand for both grain and oil exploded in the early 1970s, largely due to the failures of communist regimes in the Former Soviet Union and the Peoples’ Republic of China, it became tempting for commentators favoring the food industry to express gratification that global production of grain enjoyed a rising trend from agronomic advances, while energy, largely made up of oil produced from wells dug deep into the ground, had a static, if not declining, output future. Conversations centered on frightful concepts like “peak oil,” which refer to a belief that production had reached its zenith and would only decrease from that point forward.
It is no exaggeration to say that this differing prospect for energy and grains has been reversed, primarily because of events in the past decade. Now, there is reason for worry that crops of grain, especially of the major food grain, wheat, will not rise in line with expected population growth to the middle of the 21st century. Those limits, already reflected in lagging global wheat production thus far in the new century, stem not so much from technological shortfalls as they do from humankind’s doubts about applying modern science to improving crop performance. Further, recent growing seasons have emphasized as much as any of their memorable predecessors how dependent grain crops are on favorable weather. Massive crop shortfalls have occurred with startling frequency in major producing areas, forcing new realism about how vulnerable grain production is to weather.
Those crop-related concerns contrast markedly with the nearly unrestrained optimism that suddenly rules about the ability of the world to maintain energy production equal to the most expansive demand. As the result of shale oil discoveries facilitated by hydraulic fracturing, also known as “fracking,” and horizontal drilling, the U.S. Department of Energy places the new “technically recoverable” oil production at 345 billion barrels in 42 countries. With current oil demand forecast to hold steady at 90 million barrels per day, the conclusion is that shale oil has expanded the supply by at least 10%. While only the United States and Canada are major shale oil producers at present, Russia has the largest amount of this new energy supply. This new technology has led to U.S. oil imports falling to the smallest in nearly two decades.
Along this line is the way this grain-energy reversal affects what was once the main outcome from now terribly wrong calculations that grain production may continue to rise while oil output had peaked. It was the latter hypothesis that encouraged the concept of making ethanol for motor fuel from abundant supplies of U.S. grain, thus helping to relieve America of the need to import oil from the troubled Middle East. In this way, early ethanol advocates easily made their case that depended on mandating processing of grain into fuel. Considering the huge global potential for shale oil and gas production, and even taking account of all the likely technological and political barriers to realizing this, it seems questionable to base the future on alternative fuel sources like grains.
Indeed, the food and, yes, ethanol industries requiring adequate supplies of grains need to look to ways to put crop production on a rising trend like that is now under way in energy. Doing that requires recognition, in the case of wheat, of the huge benefits to be realized by applying genetic engineering. Pressure is building within the wheat and seed industries to move forward to promote bioengineered wheat in order to expand production possibilities. This will obviously require a public relations initiative to capture the favor of consumers who might be won over when they realize how swiftly great forces like energy and grain may change totally and unexpectedly.