Food Prices could increase by 35% due to Corn Ethanol
Corn ethanol is once again being linked to as a contributor of rising food prices and it seems that things will only get worse. This year, because of flooding and other factors, the corn harvest expected to be drastically smaller than last year. When you add this to the fact that the government has mandated a 9 billion gallon corn-based Renewable Fuel Standard (RFS), the demand for corn is going to far outstrip the supply. This will end up contributing to the increase of prices of all corn-based products, including food.
“A lot depends on how badly this weather has devastated the corn crop,” said Thomas Elam, an agricultural economist at Indiana University who was commissioned by the Balanced Food and Fuel Coalition to release a study on the matter. “A smaller crop will be devastating to meat, dairy, and poultry producers if the Renewable Fuels Standard is maintained, and consumers will suffer as food and fuel costs rise.”
About 5% of the world’s corn supply goes to producing bio fuels - representing a whopping three years of growth in typical crop production, according to Elam.
“Corn will have to go to at least $8 a bushel to squeeze out enough food use to keep up with corn for ethanol,” he said. “Food prices will be significantly impacted by corn if RFS goes to 10.5 billion gallons for 2009.”
How significantly? Collins said food costs could rise 23% to 35% above the normal annual inflation rate of 2.5% over the next two to three years if the RFS mandates are not reduced. Elam said food price inflation rate could go as high as 7% without a mandate reduction.
“Collins” is the US Department of Agriculture chief economist just to let you know. How should we fix this? Well the article states that just a simple 50% reduction in the RFS would bring the bushel price of corn to $2. Sadly, this probably won’t happen.
I sure hope everyone is beginning to see that using a food crop for fuel is never a good idea, no matter how well intentioned or fool-proof it looks on paper.
For more of my thoughts on Corn Ethanol, check out this article I wrote on the subject a couple weeks back.
June 27th, 2008 at 6:30 pm
IMO, there’s nothing good about corn ethanol. It really only amounts to political pandering. What needs to be done, is more research on cellulose ethanol.
June 27th, 2008 at 7:47 pm
E85 ethanol ready cars have been produced in the US for years now but we still have no E85 pumps at our services stations. Where they do have the E85 pumps ethanol runs about $2.35 per gallon. http://www.e85fuel.com/e85101/flexfuelvehicles.php
Ethanol made from sugar cane and sugar beets is 7 times more efficient than ethanol made from corn and won’t affect the food supply. Sugar beets can be grown damn near everywhere while sugar cane can be grown in the southern states.
You have got to stop listening to the oil companies as they have screwed everything up for years now…… The oil companies own the White House and Congress. Who in the hell do you think choose ‘CORN’ to make ethanol out of which was doomed to failure even before they began. Who do you think put a tariff on imported ethanol?
Oil companies have no solutions but to drill more, true energy independence will not involve oil companies. You have got to stop listening to the oil companies as they have screwed everything up……
The solution to energy independence is ethanol and E85 fuel which our cars can burn right now! It is renewable, Right Now!!!! If something comes up later fine but right now the answer is E85 ethanol.
Removing the tariff from imported ethanol would give us access to cheap ethanol.
You have got to stop listening to the oil companies as they have screwed everything up……
The truth is available in Brazil; they have been using E85. Check it out for yourself….
Don’t you find it ironic that the White House and Congress along with the oil companies still want to send more and more of our cash over to the Middle East to support our sworn enemies, the terrorists? What the hell is that all about?
Ford and Chevy are taking a beating so why don’t they use their heads and put E85 fuel pumps at their dealerships and push that their cars will run on 85% ethanol.
June 30th, 2008 at 11:59 am
I know this post is older, so you probably won’t be able to respond to this, but do you have any statistics on how much farmland would need to be used in order to produce enough sugar beets to meet our energy needs? You claimed that it wouldn’t affect food supply, and I’ve no doubt that it’s better than corn, but I’m sure that quite a bit of farmland that formerly made food would need to be replaced with sugar beets.
July 1st, 2008 at 12:40 pm
If Ford or Chevy wants to survive, and I hope you do, why don’t you put E85 pumps in all your dealerships and advertise your flex-fueled cars which you have been making for years now?
Start pushing sugar cane and sugar beet ethanol which is 7 times more efficient than ‘corn’ ethanol and it doesn’t rob our food supplies.
It is time for you to face up to the truth; oil companies have screwed you worse than they have screwed us. You owe them nothing so start doing something to save your company. I’ll bet all those little FORDS that are all over Europe would sell like hot cakes right about now.
July 1st, 2008 at 12:47 pm
How much land is being used to raise tobacco? If we paid farmers to plant sugar beets instead they would make much more money. Sugar beets are eaiser to grow and process. The entire operation could be mechanized. Converting sugar to ethanol is 7 times more efficient.
July 6th, 2008 at 10:25 am
[…] from the comments posted on two of my posts about ethanol (seen here and here), I need to go a little more in depth about why I do not like the idea of growing our next […]