Note: This article is from The BBC (British Broadcasting Corporation).

Corn is unloaded into a grain trailer during harvest; nearly 40% of U.S. production goes towards ethanol production for fuel.

(by James Melik, BBC World News) – The head of the world’s largest food producer believes high prices are due to the growing of crops for biofuels.

“The time of cheap food prices is over,” says Nestle chairman Peter Brabeck-Letmathe.

He is highly critical of the rise in the production of bio-diesel, saying this puts pressure on food supplies by using land and water that would otherwise be used to grow crops for human or animal consumption.

“If no food was used for fuel, the prices would come down again – that is very clear,” he says.

“We are now in a new world with a completely different level of food prices because of the direct link with fuel,” he says.

He says biofuels are only affordable because of the high subsidies they receive, particularly in the U.S.  “It is absolutely unacceptable and cannot be justified,” he says.  “There is one demand that I have, and that is not to use food for fuel.”

Water crisis

Mr. Brabeck-Letmathe says politicians have not understood that the food market and the oil market are the same – they are both calorific markets.

“The only difference is that with the food market you need 2,500 calories per person per day, whereas in the energy market you need 50,000 calories per person,” he says.

When politicians said they wanted to replace 20% of fossil fuels with biofuels, it meant increasing the production of crops threefold, according to Mr Brabeck-Letmathe.  Most of the world’s sugar production now goes into making biofuels, he says.

Agriculture uses 70% of world’s water consumption and the public must be made aware of the inefficient usage of this precious resource, Mr Brabeck-Letmathe adds.  “It takes about 4,600 litres of water to produce one litre of pure ethanol if it comes from sugar, and it takes 1,900 litres of water if it comes from palm oil,” he says.

“This is not a crisis which might arise in 100 years, it is something which is already here today.”


Reprinted here for educational purposes only. Originally published on July 17, 2012.  May not be reproduced on other websites without permission from the BBC.


1.  What are biofuels?
2.  How does the increased production of biofuels negatively impact food prices?
3.  a) Define subsidies.
b)  Should the U.S. government subsidize the production of biofuels?  Explain your answer.
4.  What solution does Nestle Corporation Chairman Peter Letmathe propose for what he says is a crisis?  
5.  Who does Mr. Lemathe imply is to blame for the increase in food prices due to the production of biofuels?
6.  Read the “Background” below.  With the exception of the actual farmers who are receiving subsidies and have a market for all of the corn they are able to grow, it appears that mandated and subsidized biofuel production negatively impacts the average American.  Do you think the U.S. government should continue its mandate for the production of biofuels?  (Does the good outweigh the bad?)  Explain your answer.


Nestlé :  Nestle is a Swiss multinational company headquartered in Switzerland.

  • It is the largest food company in the world measured by revenues. It was listed as the world’s most profitable corporation in 2011.
  • Nestlé’s products include baby food, bottled water, breakfast cereals, coffee, confectionery, dairy products, ice cream, pet foods and snacks.
  • Nestlé has around 450 factories, operates in 86 countries, and employs around 328,000 people.  (from wikipedia)
  • The following information is from The Institute for Energy Research report “Hard Facts: An Energy Primer” PDF document, pages 49-51 (, or visit the website and scroll down for link to PDF:

     Biofuels consist of a wide range of fuels derived from biomass. The most widely used biofuel is ethanol (another name for alcohol) made from corn. Besides corn, biofuels are made from fermenting sugar-rich crops such as sugar cane and sugar beets.
    Just a few years ago, ethanol was hailed by some as a savior. Allegedly, ethanol production would reduce the carbon dioxide emissions from transportation fuels and reduce dependence on imported oil. As Democratic Congresswoman Nancy Pelosi put it, “Our plan will send our energy dollars to the Midwest, not the Middle East.” In 2007, at the behest of Republican President George W. Bush, Congress passed the Energy Independence and Security Act which included a renewable fuels mandate [order/command]. The mandate required the production of 20.5 billion gallons of renewable fuel in 2015 increasing to 36 billion gallons in 2022. The mandate also required 16 billion gallons of cellulosic biofuel to be produced by 2022.
    Ethanol is not as energy dense as gasoline. A gallon of ethanol contains about 34 percent less energy than a gallon of gasoline, which means that cars get fewer miles per gallon with ethanol than with gasoline.
    The creation of ethanol also turns corn, a vital food stock, into motor fuel. This increases the price of a staple food and disproportionately affects the global poor. Because of this detrimental effect on the poor, Jean Zieglier, the former United Nations special rapporteur on the right to food, described ethanol as a “crime against humanity.”
    Even though ethanol can be used as a motor fuel, it cannot be transported in the same pipelines as petroleum products. Instead, ethanol must be transported in specially-designed trucks or trains and mixed with gasoline at the distribution center. This increases the cost of using ethanol over petroleum-based fuel and contributes to the argument that ethanol actually increases, not decreases, greenhouse gas emissions.
    Biomass is a broad renewable energy category encompassing energy derived from a variety of biological materials, such as wood and corn (made into ethanol), as well as energy derived from such waste sources as municipal solid waste, manufacturing waste, and landfill gas.
    • Biomass, including ethanol, produces 4.5 percent of the total energy consumed in the United States.
    • Replacing U.S. gasoline consumption with corn ethanol would require planting 500 million acres with only corn—more than the current total U.S. cropland.
    • Biomass represents 1.4 percent of U.S. electricity generation.
    • Congress mandated the production of 100 million gallons of cellulosic ethanol in 2010, but not a drop of cellulosic ethanol was commercially blended with gasoline in 2010.
     Biomass, especially wood, was the world’s primary energy source until the widespread use of coal during the latter part of the Industrial Revolution. In fact, in many poorer countries, biomass remains the most important source of heat. Biomass provides 80 percent of the energy in about 20 of the world’s poorest countries.
    In the United States, biomass accounts for 1.4 percent of the nation’s electricity. In 2011, 65 percent of biomass-generated electricity was derived from wood and wood-derived fuels. All told, biomass produced 4.5 percent of energy in the United States in 2011. This is about 50 percent of the total renewable energy consumed across the country.
    Even solar, hydro, and wind power produce ten times the amount of energy per acre than biomass can produce from the world’s most productive ecosystems. And solar, hydro, and wind power take much more land to produce the same amount of energy as oil, coal, or natural gas.
    Consider that for biomass to replace the amount of energy produced by the use of coal in the year 2000 it would take cultivating the total forested land area of both the United States (including Alaska) and the European Union. But even this would not be enough land today as global coal use has increased by 50 percent since 2000. Replacing U.S. gasoline consumption with ethanol would require cultivating corn on all of the cropland in the United States, plus an additional 20 percent. In 2002, the U.S. Department of Agriculture reported that U.S. cropland totaled 442 million acres. This means that replacing U.S. gasoline consumption with corn ethanol would require growing corn on more than 500 million acres.
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