Corn ethanol has little effect on food prices

A new report from the Congressional Budget Office confirms what hundreds of economists and industry experts have stated for months: Using corn for ethanol has little impact on the price of food. Rather, the main culprits driving the higher cost of food are energy costs, excessive unregulated speculation in the commodities future market and a weak dollar.

The CBO analysis says ethanol was only responsible for 0.5 percent to 0.8 percent of the rise in food prices.
For far too long, the ethanol industry has been the scapegoat for last year’s dramatic increase in food prices. As former director of the Office of Management and Budget and former chairman of the House Budget Committee, I recognize the unbiased credibility of the recent CBO report and hope that it will serve as the final nail in the coffin of the half-baked theory that ethanol was somehow to blame for high food prices. The evidence is in — ethanol is not to blame.

The average cost of food increased 5.1 percent last year — again, less than 1 percent was attributed to ethanol, according to the CBO. Big food corporations posted big gains in profits during this time, yet tried to blame ethanol for higher food prices while the price of corn was at record highs. Now that prices for both corn and energy have fallen, excessive speculation has been curbed, the dollar strengthened and exports plummeted, why haven’t food prices come down?

Agweek