Ethanol as Scapegoat

By John Cullen

The anti-ethanol crowd is now blaming the corn-based fuel for the rising cost of food around the world.

While the need for corn in ethanol no doubt has played a role in the price of corn doubling over the past few years, ethanol can hardly be held solely responsible for the rise in food prices and subsequent inability of hungry people to buy food.

First of all, the value of the corn in a $4 box of corn flakes is probably less than 25 cents. Most of the price is eaten up by transportation, processing, marketing and profit.

What the rising corn price has done is make the farmer more self-sufficient and less reliant on government subsidies. If corn had sold a decent price in the 1970s, we wouldn’t have had the big washout in agriculture that devastated the Midwest as farmers went broke because of low crop prices. A healthy farm economy would have helped attract young folks to stay on the family farm. Instead, we have witnessed the depopulation of rural Iowa.

When it comes to feeding the world, rice and wheat are much more important than corn. Rice is the staple for half of the world. The price of rice—which is not used in ethanol—is rising more than corn. US rice futures rose to an all-time high recently. In fact, Sam’s Club, which supplies many small restaurants, announced limits on the amount of rice customers can buy.

The prices of wheat and soybeans—neither of which is used in ethanol—also are rising rapidly. Wheat is the basis for that most basic of food, bread.

Corn’s value in the food chain is as much for livestock feed as it is for humans. China’s surging demand for meat is driving the price of corn as much or more than ethanol. Sen. Chuck Grassley, R-Iowa, noted this in comments about food prices.

We have an obligation to feed starving people, and the United States typically has been generous in meeting this need. There has never been a lack of food. The problem has been dealing with corrupt governments that stole the food, or in primitive infrastructures that caused the grain to rot on the docks because the roads were impassable or because there weren’t trucks available to haul the food inland.

Not that I’m cynical, but blaming ethanol for the rising cost of food sounds like something out of Big Oil’s playbook. If anything, the rising cost of fuel may be the biggest obstacle to feeding the world’s hungry.

John Cullen is publisher of The Storm Lake (Iowa) Times and The Progressive Populist. Email

From The Progressive Populist, June 1, 2008

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