The Ethanol Lobby: Profits vs. Food

If the ethanol lobby really believes in the biofuel, why are there so few E85 pumps in corn-growing states?

If you had two customers for the same product and one paid more than the other, which customer would you choose? That’s the situation in which ethanol producers in the U.S. find themselves. They could grow corn and other crops for food and get one price, or produce the same crops for biofuel and get a higher price and tax credits. The problem is that by focusing on more profitable biofuels, farmers not only deplete the food supply, they are also producing an alternative fuel whose usefulness is still hotly debated.

Last year 17 billion gallons of biofuels were created and used worldwide. The previous year 100 million tons of grain had been turned into biofuels. According to Ronald Bailey at Reason magazine, enough food was turned into fuel for our vehicles in 2007 to feed 450 million people for a year.

On Apr. 10 this year the Congressional Budget Office published a report saying that “Higher use of the corn-based fuel additive accounted for about 10% to 15% of the rise in food prices between April 2007 and April 2008.” That’s just for one year.

Ethanol use has much more impact on prices of foods directly connected to corn, whether it be Kellogg’s Corn Flakes or beef from the butcher’s department at your local grocery store. An especially alarming CBO statistic shows another hidden cost of ethanol: Increased food prices could cost Americans $900 million more for food stamps and nutritional programs for children.

BusinessWeek