Food Vs. Fuel Debate Dispelled

The most recent USDA crop production report illustrates that the United States will have enough corn to support the country’s food supply, ethanol, and export uses.

For the marketing year ending in August 2008, the corn supply is projected to reach nearly 14.5 billion bushels, while demand is expected to hit 12.6 billion bushels. USDA estimates the 2007 corn crop will reach 13.2 billion bushels, the largest crop in U.S. history and 25% larger than the 2006 crop.

"The USDA World Supply and Demand figures unmistakably dispel the food vs. fuel debate," says Ron Litterer, president of the National Corn Growers Association (NCGA). "Clearly, the corn industry is poised to meet the demands for biofuels and will finish the marketing year with one of the highest levels of surplus in the last 20 years."

"U.S. corn growers will continue to be reliable suppliers of both food and fuel," he adds. "Farmers respond to signals from the marketplace. If the market calls for more corn, that’s what farmers will grow."

Litterer points out some common misperceptions about ethanol. "Ethanol production uses field corn — not sweet corn," he says. "I continue to be amazed by media reports that suggest ethanol is driving up the cost of sweet corn in grocery stores. The majority of feed corn is fed to livestock, not humans. Roughly percent of field corn is processed directly into human food, like corn flakes."

Data from USDA’s Economic Research Service (ERS) finds that the Consumer Price Index (CPI) for all food is forecast to increase 3.5% to 4.5% in 2007. ERS attributes this increase to retailers who pass on higher commodity and energy costs to consumers in the form of moderately higher retail prices.

Moreover, the CPI for food increased 2.4% in 2006 and, over the past 10 years, has increased at an average annual rate of 2.5% (1997-2006).

VIDEO: Relationship Of Ethanol Production To The Price Of Food

 

 
Are rising food prices directly related to the increase in ethanol production? Watch this video…

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