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 There has been a fervent public debate raging since late 2006 concerning the impact of ethanol on the food industry. Corn-based ethanol is often at the center of the debate and has been the target of several campaigns directly blaming higher food prices on the increased demand and production of the alternative fuel source. The facts: a recent study published by Texas A&M confirmed that rising food prices have very little to do with the price of corn and ethanol production.
Fact: Studies show that only 4 percent of the change in the Consumer Price Index (CPI) is directly related to corn prices. The balance of the cost of rising food prices is due to marketing, advertising and transportation. Source: Consumer Federation of America (CFA)
DOMESTIC PRICE INCREASES
- Skyrocketing fuel costs are the biggest reason for food price increases as the cost of transporting the food we eat across the country (approximately 1,500 miles from field to table) is passed on to the consumer. We see the effects at the grocery store and every time we buy gasoline; You can help reduce your grocery bills by buying local produce and thereby significantly lowering transportation costs.
Source: Consumer Federation of America (CPA)
- On every acre a farmer plants, escalating oil prices are in turn increasing production costs and lowering return on investment. The price of diesel fuel, for example, has increased by 35 to 40 percent over the last year, and this significantly affected crop input costs.
Source: Toni Nuernberg, executive director, EPIC
- According to a recent study by Texas A&M University, the true underlying culprit of changes in the agriculture industry, and the economy as a whole, is the sharp rise in the cost of energy. Oil prices of more than $120 a barrel directly affect food prices. Consumers, however, can play a role in addressing this problem: To help reduce energy costs (both at home and in transportation) consider raising the temperature of your air conditioner by 3 degrees and using alternative fuels such as ethanol, which help to extend our fuel supply.
Source: “The Effects of Ethanol on Texas Food and Feed,” Agricultural and Food Policy Center, Texas A&M University
FUEL PRICES WITHOUT ETHANOL
- Without an alternative fuel source such as ethanol, the price of gasoline would spike at least another 14.6 percent. As an example: If gasoline is $4 a gallon at the pump with the current availability of ethanol, it would jump to $4.58 a gallon without the use of ethanol as an alternative fuel.
Source: Merrill Lynch
- The addition of ethanol to U.S. gasoline supplies helps keep gasoline prices down, and also helps keep the price of crude oil lower than it otherwise would be by reducing overall demand. This prevents the cost of food from increasing even more.
Source: Renewable Fuels Association
ETHANOL EFFICIENCY IMPROVEMENTS
- Ethanol is made from field corn, which is not the same as the sweet corn we find in find in our grocery aisle. Field corn is used in some food products but only makes up 5 to 8 percent of total corn usage, so it stands to reason that ethanol production weighs lightly in the spiking food prices being experienced.
- Ethanol production uses only the starch portion of the corn kernel. The remaining protein, fat, fiber and minerals are still used as high-value livestock feed (Dried Distiller’s Grain). The U.S. corn surplus for 2007 was approximately 1.8 billion bushels, which was significantly higher than the average over the past 20 years. The 2008 corn surplus is projected to be even larger than 2007, so there is more than enough corn to meet all the various kinds of demand.
Source: National Corn Growers Association
- Cellulosic ethanol is made from cellulosic biomass materials such as corn stover, cereal straws, sugarcane, bagasse (a sugar cane byproduct), sawdust, paper pulp, small-diameter trees, and dedicated energy crops such as switchgrass. Cellulosic biomass is the most abundant organic material on earth and the perfect foundation for alternative fuel.
Source: ScienceDirect.com
- Improved production practices along with new developments in biotechnology are driving the enhanced efficiency of the individual corn plant. The result: A demonstrated trend of higher corn yields every year. Average yields per acre of corn are expected to hit an all-time high of 173 bushels per acre by 2015. This means that we don’t have to make a choice between food and fuel – American farmers can grow enough to meet ALL our needs, as well as the needs for growing worldwide populations.
Source: Farm Business Management- University of Illinois
- Argonne National Laboratory recently published an extensive research document detailing improvements in the ethanol industry since 2001. It concluded that the progress was due to the industry’s solid commitment to the advancement of domestic energy production and its dedication to cellulosic ethanol research. As explained in the research document:
- Water consumption is down by 26.6%
- Grid electricity usage is down 15.7%
- Total energy expenditures are down 21.8%
Source: “Analysis of the Efficiency of the U.S. Ethanol Industry 2007," by May Wu, Center for Transportation Research, Argonne National Laboratory, March 27, 2008
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