Food prices have experienced sharp rises partly caused by raw material shortages during 2010. The CPI was 5.1% in November 2010, reaching the record high for the past 28 months. Among the major raw materials of foodstuffs, corn also witnessed a remarkable price rise in 2010, with average price growth rate of 5%-10% in different areas. People has attributed shortage of corn supply to fuel ethanol production since 2006. Fuel ethanol production has been accused of "competing for food with human being" by the public.
Owing to the high price of corn, corn-based fuel ethanol production can be seen as a losing business or a behavior of food wasting. There are now only four producers of fuel ethanol who can gain governmental subsidies to offset their losses from selling fuel ethanol. According to the financial report of Anhui BBCA Biochemical Co., Ltd. (Anhui BBCA, one of the four fuel ethanol producers), its gross profit rate of the fuel ethanol business in the first half of 2010 was -10.75%. To make things worse, the production costs of fuel ethanol is too high, at around USD1,182/t, about USD40/t higher than the current price of conventional gasoline fuel.
Based on these facts, the chairman of PFCGCC once proposed suspending all the current capacities of corn-based fuel ethanol to National Development and Reform Commission in early August 2010, calling for guaranteeing the national food security. There has been no reply yet. And this proposal seems a little extreme to CCM, but it still arouses disputes over fuel ethanol competing food with human being.
However, some oppose this view. The total output of corn in 2010 is reported to be around 172 million tonnes while the total consumption volume of corn for fuel ethanol production is estimated to be only 4 million tonnes based on the current fuel ethanol capacity of 1.13 million t/a from corn (yield rate: 1t ethanol / 3.5t corn), accounting for only 2.3% of the total output of corn. In fact, most corn in China is applied in feed production, with about 70% of corn output consumed in feed production in 2009. Therefore, the view of "fuel ethanol competing food with human being"seems not so convincible.
Aiming to avoid further dispute over this matter, China has decided to stop approving any corn-based fuel ethanol project as early as 2006 and started to promote non-grain fuel ethanol in 2007. Till now, China has approved for at least five fuel ethanol construction projects distributed in five provinces based on tuber materials like potato, cassava. And ZTE Energy Co., Ltd. (or ZTE Energy) built a 30,000t/a fuel ethanol pilot production base with sweet sorghum as raw material in Inner Mongolia in 2010. COFCO Corporation (or COFCO), cooperating with China Petroleum & Chemical Corporation (or Sinopec) and Novozymes, was reported to launch their first domestic pilot sales of cellulose-based fuel ethanol by the end of 2011.
Notes: PFCGCC stands for Petroleum Flow Committee of China General Chamber of Commerce, is a not-for-profit organization launched by domestic producers and distributors of petroleum products.
Source:
Industrial Biotechnologies China News
CCM International, Ltd.