The Worldwatch Institute has produced an interesting summary of what’s happening in the world of grain supplies.

They also just published a book called Biofuels for Transport. Along with all of the positive potential for biofuels, I’m sure it also discusses the “potential” problems with “first generation” biofuels.

These are some of the latest buzzwords being used to support industrial agrofuels. The word “potential” suggests that there are not yet any actual problems. The words “first generation” suggest that all of these “potential” problems will fail to materialize thanks to the timely arrival of “second generation” fuels.

The reality, of course, is that these fuels (i.e., industrially grown food monocrops) are already wreaking all kinds of havoc and are likely to remain the only commercially viable biofuels for the foreseeable future (i.e., forever).

Note two of the three high-profile reviewers: Senator Lugar (R-Ind.) and Vinod Khosla (billionaire venture capitalist). Lugar not only grows corn and soybeans, but his entire political career has and still does depend on supporting them. Khosla is gambling that he can increase his already truly perverse personal wealth with diversified investments in these fuels.

Quotes from the report:

People consume a little less than half (48 percent) of the world’s grain directly — as steamed rice, bread, tortillas, or millet cakes, for instance. Roughly one third (35 percent) becomes livestock feed. And a growing share, 17 percent, is used to make ethanol and other fuels.

At 784 million tons, the record harvest of corn was buoyed by the growing use of this grain to produce biofuels, which prompted farmers in the United States (responsible for over 40 percent of the global harvest and half of world exports), Brazil, and Argentina to plant more land to corn.

Despite the record harvest, the low stocks and strong demand combined to push prices of all cereals to new highs. At harvest time, the U.S. corn export price was up about 70 percent from the previous year.

Developing countries are likely to spend a record $52 billion on imports of cereals in 2007, up 10 percent from 2006. This follows a 36-percent hike in the previous season.

Even international food aid programs, which also purchase their supplies on the world market, have been forced to scale back. The volume of aid provided through the largest assistance program in the United States, Food for Peace, dropped by nearly half since 2005, to 2.4 million tons, in response to a 35-percent increase in the cost of agricultural commodities as well as the rising costs of fuel for shipping. The combination of rising food costs and declining aid can be fatal for the estimated 854 million people worldwide who experience hunger on a regular basis.

The appeal of the word “biofuel” to well-intentioned environmental types (of which I am one) is instructive. I suspect that the ranks of the Worldwatch Institute are as split on this issue of industrial agrofuels as most other groups in this circle. Certainly the former head of this organization, Lester Brown, sees biofuels as a major threat to the poor.

Which will be cheaper to produce: cane ethanol, palm oil and other crops grown on dirt-cheap land now occupied by nature (in the Congo, Amazon, Cerrado, etc.), or the cellulosic and algae-based fuels being studied in labs and test facilities? If these “second generation” fuels (to date having no use except as an excuse to support the “first generation” ones) ever get out of the test facilities and labs, they will have to compete economically with billions of dollars invested at the taxpayer’s expense in “first generation fuels.”