Food vs. Fuel
Food vs. fuel is a popular topic of conversation among anti-ethanol advocates. The argument is basically that the production of fuel from corn diverts corn from food production and lowers the availability of food, thus increasing the price.
This argument doesn't hold water.
First, corn used to produce ethanol is field corn, used for livestock feed and not sweet corn used for our dinner tables. There are two types of corn and some folks get that confused.
Second, yes, ethanol diverts corn away from livestock feed to an extent, but even this argument isn't completely true. A by-product of ethanol production is dried distillers grains with solubles (DDGS) which is a high-quality livestock feed. So even the corn used for ethanol production is used a second time to feed livestock.
Third, farmers are producing an ever increasing amount of corn as they become more efficient and seed technologies improve. Due to the fact that we always have more corn available next year than we do this year, there is plenty of corn left to become renewable fuel for our vehicles without diverting corn that is previously used somewhere else.
3 Graphs That End The ‘Food vs. Fuel’ Debate
published October 22, 2013
- Critics of renewable fuel (chiefly the oil industry) love to claim that growing our own fuel means higher food prices for American consumers. They’re dead wrong, and there’s still a lot of misinformation out there regarding the relationship between corn and the price of food in the grocery store. Let’s take a look:
- The price of corn is the lowest it’s been in three years, yet food prices have not come down. This year USDA is forecasting a record-breaking corn crop in the US - just this week they updated their inventory estimate by an increase of 25%! Accordingly, we have reached a three-year low drop in corn prices- corn traded this month at$4.41 a bushel compared to the 2012 peak of $8.49.
- Source: NASDAQ.com
- Only 16% of grocery costs can be traced back to farm inputs, like corn or wheat. The rest goes to costs like energy, transportation, packaging, marketing, and labor.
- Source: USDA.com, foodpolitics.com
- Oil, not corn, has been driving up global food prices. While the price of corn is one of many,
- complicated factors that go into grocery costs, researchers at the World Bank identified crude oil as the number one determinant of global food prices. The cost of energy from oil is integral to so much of the 84% we discussed in #2 (above) that when the price of oil goes up, food prices follow closely behind.
The facts could not be more clear: the agricultural inputs that become renewable fuel simply do not have enough influence on food prices to make a meaningful difference. The only way to spare consumers pain at the grocery store is to end our oil dependence and protect policies that promote alternatives, like the Renewable Fuels Standard.