NEWSMAX

Ethanol Production Fueling ‘Food Inflation’


While rising food prices have been a factor in recent riots in Egypt, Tunisia and elsewhere, the United States is continuing to increase its use of corn to make ethanol, pushing up grain and meat prices worldwide.

“The global economy is getting back on its feet, but so too is an old enemy: food inflation,” The Wall Street Journal states in an editorial, noting that the United Nations benchmark index for food reached a record high in December, “raising fears of shortages and higher prices.”

In 2001, only 7 percent of America’s corn crop, about 707 million bushels, was used to make ethanol fuel for vehicles. By 2010, nearly 40 percent of American corn went for ethanol — almost 5 billion bushels out of total U.S. production of 12.4 billion bushels.

American farmers account for about 39 percent of global corn production, and about 16 percent of the crop is exported, so America’s ethanol production can influence world prices.

March futures for corn recently hit a 30-month high of $6.67 a bushel, up from $4 a bushel a year ago.

Also, since 40 percent of U.S. corn production is used as animal feed, rising corn prices push up the cost of beef, poultry and other items as well.

“This trend is the deliberate result of policies designed to subsidize ethanol,” and it “coincides with a growing consensus that ethanol achieves none of its alleged policy goals,” The Journal observes.

Ethanol supporters claim it reduces American dependence on foreign oil, but a Cornell University scientist calculated that even if the entire American crop was used for ethanol, it would satisfy just 4 percent of our oil consumption.

And the Environmental Protection Agency has downplayed assertions that ethanol provides a cleaner source of energy than gasoline, saying it “has a minimal to negative impact on the environment,” according to The Journal.

The American Thinker on Monday observed: “Today there is a global food shortage and sky-rocketing prices. This has become the underlying factor in the riots in Tunisia, Algeria and Egypt, where up to 56 percent of a person's income is dedicated to the acquisition of food. These riots are now leading to the upheaval of governments and the very real possibility of the ascendancy of the radical elements into control.”

A significant factor “in the overall global food situation is the American decision to, in essence, burn food in its cars, a policy championed by the environmentalists since the 1990s,” American Thinker also noted.

“There is no quicker way to foment riots and revolution than to deprive the populace of food, particularly when so much daily income goes into feeding oneself and one's family. The pictures we have seen in North Africa may well be repeated elsewhere throughout the world.”

Noting that Congress recently voted to extend the $5 billion tax credit for blending ethanol into gasoline, The Journal concludes: “At a time when the world will need more corn and grains, it makes no sense to devote scarce farmland to make a fuel that exists only because of taxpayer subsidies and mandates.

“If food supplies tighten and prices keep rising, such a policy will soon become immoral.”

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