By Steve Grasz
Special to the Arizona Daily Star
Published: 06.02.2008

If truth is the first casualty of war, it appears the “food fight” being waged by anti-ethanol interests has nearly achieved its first casualty. The false idea that ethanol production is causing high food prices, and even food shortages around the world, has been so frequently asserted that Americans have begun to blindly accept the premise. However, when the facts are examined it is clear the accusations are untrue. Let’s examine several of the myths about ethanol:

Myth 1: Ethanol is made from “food grains.”
Fact: Ethanol is made from “feed grains” such as corn and sorghum. “Food grains” usually refers to wheat and rice. Blaming ethanol for wheat and rice shortages is unfounded. The type of corn used to produce ethanol is otherwise used primarily for livestock feed (about 90 percent); not for human consumption.

Myth 2: Ethanol “consumes” a huge share of U.S. corn production.
Fact: In 2006, U.S. farmers produced 10.74 billion bushels of corn and 1.8 billion bushels went to produce ethanol. The share going to ethanol is increasing.
However, making ethanol does not “consume” the corn. Ethanol production separates the starch from the other components. The protein and other nutrients remain, but in a less bulky form. One-third of the corn is converted to a high value livestock feed called distillers grain (by dry milling) or corn gluten feed (by wet milling).

Myth 3: Use of corn for ethanol production is creating food shortages and causing starvation around the world.
Fact: The U.S. is exporting more corn today than at any time in history. Exports in 2007-08 were 2.25 billion bushels, 6 percent more than in 2006-07. The U.S. Department of Agriculture recently raised its corn export estimates to 2.5 billion bushels. This puts corn exports at 63 million metric tons, a new record.

Myth 4: Ethanol is responsible for high food prices.
Fact: The price of corn is a very small factor in overall food prices. Only about 10 percent of U.S. corn is processed directly into human food products (such as corn syrup, starch and cereals). In contrast, the price of oil has a significant impact on food prices, as does the value of the dollar. Some analysts have estimated that oil prices would be 15 percent higher but for ethanol production and its replacement of large quantities of petroleum.

Ethanol currently supplies the same amount of fuel to Americans as our fifth-largest foreign supplier. Without it, gas prices (and food prices) would be even higher.

Less than 20 cents of each food dollar goes toward on-farm costs like grain. The value of the corn in an 18-ounce box of corn flakes cereal was 4.9 cents in 2007 (with corn at $3.40 a bushel). Today, with corn at nearly $6 a bushel, the value of the corn in a box of corn flakes is about 8.75 cents. So, even in a pure corn product, the impact on consumers is modest.

America needs ethanol now, more than ever. The U.S. imports 62 percent of its petroleum supply and this is projected to increase to 77 percent by 2025. The last time a new oil refinery was built in the United States was more than 30 years ago.

Taxpayers spend billions each year on military expenditures to protect our foreign oil supply while Congress refuses to expand domestic drilling for environmental reasons. In contrast, ethanol is made from renewable resources we grow right here in the United States. Its use reduces our dependence on imported oil. The U.S. ethanol industry will have the capacity to produce 10 billion gallons in 2008.
The idea that people must choose between food and ethanol is a false and dangerous premise. The next time you hear or read that ethanol production is starving children overseas or causing food prices to soar, consider the all-time record amounts of corn being exported from the United States — and think again.
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The Washington Times

By David R. Sands and Stephen Dinan

Agriculture Secretary Ed Schafer yesterday said U.N. and other international aid officials are “flat-out wrong” to call U.S. ethanol production from corn a major factor in world food shortages and riots.

Mr. Schafer, a longtime proponent of biofuels, vehemently disputed efforts by the leaders of the World Bank and the U.N. World Food Program to blame ethanol for rising world food prices. He said his department calculates that competition between food and biofuels accounts only for up to 3 percent of food price increases.

“Only a very small portion of this problem is ethanol driven,” Mr. Schafer said in an interview with The Washington Times. Global food prices have risen 45 percent since mid-2007.

Mr. Schafer also said the administration will have an “uphill climb” to sustain President Bush’s promised veto of the farm bill compromise that Republicans and Democrats on Capitol Hill reached this week.

“Many Republican legislators in both houses … have indicated they’re going to vote to override the president,” he said, noting the lure of “money in their district.”

Mr. Schafer has become the administration’s point man for opposing the farm bill, arguing it does not sufficiently cut subsidies to high-income farmers.

“They’ve made it look good; they’ve said, ‘Oh, we put some limits on folks here,’ but the reality is they haven’t,” he said.

Mr. Schafer, a former governor of North Dakota who was sworn in as agriculture secretary in January, in the middle of the farm bill discussions, said farm income is projected to reach a record $92 billion this year, which is 50 percent higher than the average over the past 10 years.

He said continuing subsidies and adding new ones make no sense when farm incomes rise.

Congressional negotiators announced the outline of a compromise this week but the bill hasn’t been finalized.

Alise Kowalski, spokeswoman for Rep. Robert W. Goodlatte of Virginia, the top Republican on the House Agriculture Committee, said people should wait to see the measure before judging it.

“Without being able to read the text and without being able to see it, you can jump to a lot of conclusions,” she said.

Several lawmakers on Capitol Hill, including Mr. Goodlatte, have said they are waiting to hear Mr. Bush say he will veto the bill, rather than Mr. Schafer. But White House spokesman Scott Stanzell said the president stands by Mr. Schafer’s statement, and that Mr. Bush hasn’t spoken because he is in Texas for his daughter Jenna’s wedding.

Capitol Hill negotiators did try to move toward the Bush administration, cutting aid to higher-income farmers and landowners, but at hundreds of thousands of dollars higher than Mr. Bush’s target of $200,000 in annual gross income.

The bill would increase spending for food stamps and other emergency nutritional programs, boost funding for protecting farmland for conservation, and establish new disaster assistance for farmers. It would also slightly reduce the subsidy for corn-based ethanol for fuel while doubling the subsidy for production of cellulosic ethanol.

Mr. Schafer said the president will have a better chance of having his veto upheld by the House than by the Senate.

“That House, I think, is closer to the street, closer to the people in the grocery stores having tough times and wondering why we would do this,” he said.

Mr. Schafer has led the defense of the U.S. biofuels program, which has come under fire most notably from former top Bush administration officials.

World Bank President Robert B. Zoellick and U.N. World Food Program head Josette Sheeran, both of whom served as top officials at the State Department and U.S. Trade Representative’s Office, have said the switch to ethanol, which is made from grains, is raising the demand for staples such as wheat, rice and corn to record levels.

“I’m concerned about the fusing of food and fuel markets,” which pits moneyed energy interests against the world’s poor, Ms. Sheeran told the Peterson Institute for International Economics this week. “Energy bidders can outbid food buyers and, in a year of tight supplies, that’s having a bigger impact than it would ordinarily.”

And Jeffrey Sachs, a top adviser to U.N. Secretary-General Ban Ki-moon, said this week that the U.S. biofuels program, the world’s largest, represents a “huge blow to the world food supply.”

President Bush has ordered the Agriculture Department to release $200 million in emergency food aid to low-income countries struggling with higher food costs. The administration has also asked for $350 million in new food aid funding in the supplemental war-spending bill, and lawmakers may tack on even more.

But Mr. Schafer said that rising energy prices, drought in key producing regions, and rising demand from developing countries such as China and India have played a far more significant role than ethanol, adding that those strains on the world’s food networks can’t be solved overnight.

“Under our current models, we’re showing that we will see these levels of [food] prices for the next three years,” he said.

And the USDA had more bad news yesterday, releasing a report predicting that 2008 U.S. corn production could fall as much as 7 percent over last year. The report said wet weather in the corn belt delayed planting.

“What’s it mean ultimately? High food prices, for sure,” Don Roose, president of the Iowa trading firm U.S. Commodities, told the Associated Press, adding that the USDA projections were “actually kind of a bullish report” and the likeliest change is for production to fall even more.

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The Washington Times

By Tim Johnson

Record energy costs and rising food prices are taking a painful toll on consumers’ pocketbooks. Fuel and food are basic necessities, and there is a limit to how much Americans can tighten up their family budgets. As Congress considers how to turn the U.S. economy around, some suggest the choice we must make is to surrender our commitment to renewable fuels such as ethanol. That would be a mistake, costing Americans dearly by squandering our long-term economic and national security, while doing little to affect the food supply or prices.

Those calling for biofuels to take a back seat in our energy plan have waged a relentless campaign of misinformation, blaming U.S. policies in support of ethanol and biodiesel for inflation in the grocery aisle. Frightening Americans by arguing that ethanol made from corn is somehow taking food from the world’s hungry might be sensational, but it is not supported by the facts.

Ed Lazear, chairman of President Bush’s council of economic advisers, estimates that ethanol has accounted for just 2 percent or 3 percent of the overall increase in global food prices. The reason, he recently explained, is that while ethanol has increased corn prices about 33 percent, corn accounts for only 30 percent of all grain, and grain is only 20 percent of all food.

Lazear noted that there has been 4.5 percent food price inflation in the United States this year. Without ethanol, he said food prices still would have gone up 4.25 percent.

The primary factors contributing to food price increases today are triple-digit oil prices, burgeoning demand for richer diets in China and India, and weather-related disasters. Consider these examples of how petroleum prices impact the production, processing, distribution, marketing, and price of food items.

According to the United States Department of Agriculture, the price of nitrogen fertilizer (which is made with natural gas) is up a record 168 percent since 2000, making it considerably more expensive for farmers to grow crops. Additionally, the American Trucking Association says record diesel prices have multiplied the costs to plant and harvest crops, and ship food products to the retail level — dramatically increasing the price of food. It now costs $560 in fuel just to deliver grapefruit from Florida to Washington, D.C., up $158 in the last twelve months.

The Federal Reserve Bank of Kansas City reports that food prices have historically surged during times of high crude oil prices, and high energy prices tend to quickly transfer to higher retail food prices. In fact, retail prices rise 0.52 percent for every 1 percent rise in energy prices. As a result, a 10 percent gain in energy prices could contribute 5.2 percent to retail food prices.

Further, as oil prices hit new record highs — far in excess of $100 per barrel — the United States transfers more than $1 billion per day to foreign oil suppliers, effectively paying a tax that hurts every sector of the American economy.

There is little doubt that the economy is slowing, and the effects of high food and fuel prices are forcing many to rebalance their family budgets. We have choices to make to get our economy back on track and tackle runaway energy prices. We can continue our status-quo dependence on expensive fossil fuel, or seek cost-effective, clean burning, homegrown alternatives. There is broad, bipartisan consensus in Congress that the cost of the status-quo far exceeds the price of developing alternatives to wean the United States of its risky addiction to foreign oil.

And despite the attack campaign against ethanol in the media, my colleagues and I in Congress are dedicated to pursuing a balanced energy security policy that continues to support ethanol and biodiesel, because the United States cannot import its way out of our energy security problem.

Unlike some alternative energy options, ethanol is readily available now — and it is already making a difference for consumers. Researchers at Iowa State University estimate that gas prices in the United States would be $0.29 to $0.40 higher per gallon if we were not extending the fuel supply with ethanol.

As far as food prices are concerned, calls to abandon corn-based ethanol are misguided exploitations that do not provide any meaningful relief in the grocery aisle. Our nation would be much better served by adopting a new farm bill, ensuring a safe and stable supply of domestic food and international food aid for years to come, and by taking further steps to reduce the use of petroleum, increase our support for renewable fuels and ensure energy conservation.

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Chicago Tribune

By Robert Zubrin and Gal Luft

In recent weeks, a flood of reports and statements has claimed that the world’s biofuel programs—in particular the U.S. corn ethanol effort—is starving poor people around the globe. Even the UN’s special rapporteur for the Right to Food decried biofuel production as “a crime against humanity.”

It seems so obvious: With so much corn being turned into fuel, food shortages must inevitably result, and biofuel programs must be the cause. However, that’s completely untrue.

Here are the facts. In the last five years, despite the nearly threefold growth of the corn ethanol industry (or actually because of it), the U.S. corn crop grew by 35 percent, the production of distillers grain (a high-value animal feed made from the protein saved from the corn used for ethanol) quadrupled and the net corn food and feed product of the U.S. increased 26 percent.

Contrary to claims that farmers have cut other crops to grow more corn, U.S. soybean plantings this year are expected to be up 18 percent and wheat plantings up 6 percent. U.S. farm exports are up 23 percent.

America is clearly doing its share in feeding the world.

Agriculture is not a zero-sum game. There are 800 million acres of farmland in the U.S., and only about 30 percent of it is actually being used to grow anything. As a result of the ethanol program, the corn price received by farmers doubled over the last five years, causing a huge increase in the amount grown in terms of acreage and yield.

The increased demand for food from the hundreds of millions of people in China and India rising out of poverty and moving to a more calorie-rich diet affects the price of food the most. Second is the price of fuel.

Higher fuel prices increase the cost of production, transport, wages and packaging, the main cost of retail food. For example, a $3 box of cornflakes contains 15 ounces of corn that cost 8 cents when bought from the farmer. So, farm commodity prices have almost no effect on retail prices. But the effect of oil price increases can be huge.

Which brings us to the real culprit: the Organization of the Petroleum Exporting Countries. This year, with OPEC-rigged oil prices exceeding $100 a barrel, the U.S. will pay $800 billion for its oil supply, and the world as a whole will pay $3.2 trillion. These figures are both up a factor of 10 from what they were in 1999 and represent a huge regressive tax on the world economy.

In this, biofuels have done more good than damage to the poor.

According to Merrill Lynch analysts, without biofuel programs, the price of oil would be about $13 a barrel higher than it now is. A $13 savings for each barrel could save the U.S. $65 billion in foreign oil payments.

So, rather than shut down biofuel programs, we need to radically augment them, to the point where we can take down the oil cartel. Congress can make this happen by passing a law requiring that all new cars sold in the U.S. be flex-fuel vehicles that can run on any combination of gasoline, ethanol or methanol. The technology costs only about $100 per vehicle.

By making America a flex-fuel vehicle market, we will effectively make flex-fuel the international standard. Around the world, gasoline would be forced to compete against alcohol fuels made from a number of sources, including not only commercial crops such as corn and sugar, but cellulosic ethanol made from crop residues and weeds, as well as methanol made from any kind of biomass, coal, natural gas and recycled urban trash. By creating such a fuel market, we can enormously expand and diversify humanity’s fuel resource base, protecting all nations from continued economic bleeding and, indeed, in some cases, starvation. That, and not blindly accepting the naysayers’ propaganda demanding the preservation of the oil monopoly, should be our course.

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