Ethanol is NOT the cause.
I never understood the reasoning behind the idea that more ethanol production directly correlates to higher
food prices. People don’t eat field corn. It is mostly used in livestock feed but so are
soy beans and oats. But no one is pointing fingers at them. So it has to be because it is an easy target for the public to grasp and make quick sound bites for media purposes. Ethanol gets a subsidy which is a tax break for fuel production. But so does the oil industry to the tune of $70 billion which is more than 5 times that of ethanol. Now don’t get me wrong I am not in favor of subsidies BUT: I have 3 caveats
#1. You can’t subsidize one industry and expect a competing industry to survive.
#2. Everything is taxed way too much. A subsidy is a tax break. Government isn’t giving them money. The industries just aren’t forking it over for the government to waste it as it sees fit.
#3. In the production of ethanol, the by-product is used for livestock feed. Not all of that grain is taken out of the food production chain.
Who’s To Blame?
Farmers can’t set their own prices. They have to accept what the markets give them. So it is not the self-serving farmer. An article I just read puts it fairly straight.
“only trailing labor costs – is the combination of food processing, packaging, transportation, all of which are highly energy-intensive activities. And, as labor costs tend to be more stable and predictable, the volatility in energy prices is driving the sticker shock Americans may be feeling now at the checkout counter. Totaling up the percentages for food processing, packaging, transportation – all energy intensive activities – and actual energy costs, nearly 33 percent of each food dollar is spent in these energy intensive areas.”
Why Not Blame Ethanol?
To put it simply, “corn value of each food dollar spent is negligible”. How negligible? “corn has typically represented about 15 percent of the total farm value of all U.S. agricultural food and feed products. Thus, it could be argued that corn’s share of the food dollar is just 1.7 percent (15 percent of 11.6 percent).”
The next time you hear another talking head bashing ethanol for your food costing so much, “Are they giving the real facts?” and “What is their own agenda?”