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Food vs. Fuel

  • Biofuels protect the family budget. If biofuels production were rolled back, higher gasoline prices would rob the typical family of four of roughly $1,000 in purchasing power – for groceries, gasoline, etc.
  • In the last 12 months, food prices have gone up 5 percent while gasoline prices have gone up 100 percent. Further, higher energy costs are a bigger factor than commodity costs for increasing food prices.
  • The U.S. Council of Economic Advisors stated that food price inflation for 2008 would be roughly 4.5 percent. Without biofuels production, it would still be 4.25 percent.
  • Two-thirds of a bushel of corn is used to process ethanol. The remaining one-third goes into high-protein livestock feed.  The amount of livestock feed produced actually replaces corn that would typically go into livestock feed, freeing up corn for other uses such as food and export markets. Biodiesel production encourages a larger soybean crush, resulting in a larger supply of soybean meal for animal feed.
  • About 80 cents of every retail dollar spent on food goes to cover processing, packaging, distribution and marketing costs. These factors (which include energy costs) drive increases in the cost of food more than biofuels.
  • Food prices are largely determined by costs and profits after commodities leave the farm. On average, only about 19 percent of the price of food can be attributed to ingredients.
  • ISU found the growth in ethanol production has caused retail gasoline prices to be $0.29 to $0.40 per gallon lower than would otherwise have been the case.
  • Texas A&M University found that relaxing the federal Renewable Fuels Standard (RFS) does not result in significantly lower corn prices and that corn prices have had little impact on rising food costs.
  • According to U.S. Council of Economic Advisors, increased biofuel production accounted for only 3 percent of the 43 percent increase in global food prices.
  • In 2007-2008, the United States exported record amounts of corn and soybeans to feed the world.  Corn for ethanol accounts for only 2 percent of the worldwide corn market – hardly enough to be the driver in world commodity prices.
  • World demand, drought, and export restrictions are driving world food prices. Wars and violence that destroy agricultural production and restrict aid are also factors increasing world hunger.
  • The U.S. ethanol industry is one of the largest feed processing segments in the country. In 2007-08, the industry processed approximately 23 million tons of distillers grains, a high-protein livestock feed.. This amount of feed is equal to the total amount of feed consumed by all the cattle in Texas, Kansas, Nebraska, and Colorado, which represents about 80% of the cattle grown in the U.S.
  • In 2007-08 distillers grains exports equaled approximately 100 million bushels of corn and this amount is expected to reach approximately 160 million bushels, which makes more corn available for other uses.
  • USDA predicts that 4.1 billion bushels of corn will be used for ethanol production in 2008-09.  However, when the production of livestock co-products are considered, the “net” usage of corn will be closer to 2.9 billion bushels. 

 

 

 

 

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