Don't pin rising food prices on ethanol

In reality, U.S. corn growers are meeting all diversified needs of their product: food, exports, and energy. In 2007, growers planted over 90 million corn acres. That hardly sounds like a "boondoggle."

The truth is this: Food prices both within the United States and around the world are on the rise. We can look to increased labor, packaging and fuel costs, rising wealth and grain demand in China and India, and drought in Australia as role-players in increased food prices.

The impact of ethanol upon food prices is minimal. A study commissioned by the National Association of Corn Growers found that if corn prices are sustained in the $3.50 to $4 per bushel range, prices for cereal and bakery items would cost 1 percent more annually through 2009 than they would have without the corn increase.

The fact is that very little U.S. corn (about 10 percent) is fed directly to people; most of it is fed to animals. About one third of the corn converted to ethanol remains behind as a high-protein animal feed called distillers grains.

Moreover, suggesting the ethanol industry is responsible for starvation in the Third World is insulting and patently untrue. The USDA estimates exports of U.S. corn during the current market year at 2.25 billion bushels, 130 million larger than exports during the 2006-07 market year and the largest in 18 years.

The expectation of large U.S. corn exports is driven by prospects for tightening world grain supplies and robust world feed grain consumption. The largest increase in sales is to Mexico, one of the very nations that we are supposedly starving to death.

It's remiss not to set the record straight regarding subsidies. Admittedly, federal and state government incentives have provided a tremendous boost in helping grow the ethanol industry, which is not a unique phenomenon. Government has played a role throughout history in the business sector. Government-sponsored research and development benefits consumers in the development of new drugs and medical technology.

The ethanol blenders credit of $0.51 per gallon cost taxpayers about $3 billion last year, but it reduced crop price supports by about $6 billion and our oil import bill by another $15 billion. This adjustment in corn subsidies has acted as a cost-savings, rather than an additional expenditure by our federal government.

The facts here speak for themselves. Ethanol is a homegrown way for the U.S. to reduce its dependence on foreign oil, and create American jobs. The ethanol industry, as with many businesses, is evolving and the focus is on increased efficiency and environmental improvements. Using it as a scapegoat for the world's food supply troubles is simply reckless and erroneous.

Joanna Schroeder is director of communications of the Ethanol Promotion and Information Council.

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Date published: 3/27/2008

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