RFA counters misinformation on food price hikes

By Susanne Retka Schill | April 08, 2008
Web exclusive posted April 30, 2008 at 4:58 p.m. CST

The role of oil prices in increasing food prices has been woefully underreported, said Bob Dinneen, president of the Renewable Fuels Association, during a Washington, D.C., press conference April 30, called by the RFA to present facts on rising food prices.

The RFA news conference panel included Dinneen, Tom Buis, president of the National Farmers Union, Rick Tolman, chief executive of the National Corn Growers Association and John Block, former Secretary of Agriculture under Pres. Richard Nixon.

"There's a list of factors causing the rise in food prices," Dinneen said, citing increased oil prices, surging food demand particularly in India and China, the weak U.S. dollar, drought in wheat-producing areas of Australia and Europe, speculators in the commodity markets, as well as policies around the world preventing yield increases from biotechnology advances. "On the list of factors [influencing food prices] ethanol is nowhere near the top," Dinneen said.

Record increases in corn prices do have an influence on food prices, he said, citing studies indicating only 4 percent of the increase in food prices can be attributed to corn. He added that a recent analysis done by Merrill Lynch & Co. Inc. suggests that if biofuels were removed from the fuel mix, gas prices would be 15 percent higher. Biofuels are saving the American consumer more in reduced oil prices than they are contributing to increased food prices.

Tolman pointed out that many of the articles bashing biofuels rely upon slanted misinformation. The United States raised 13 billion bushels of corn last year, which comprised 65 percent to 75 percent of the world corn market, he said. Ethanol isn't causing a world shortage of corn, Tolman added, "we'll have record exports of corn this year."

Tolman said many articles confuse field corn with sweet corn - the corn on the cob eaten by humans and which was grown on 631,000 acres last year compared with 85 million acres of field corn. Forty-two percent, of the U.S. field corn crop is used for livestock feed, 22 percent was used in ethanol, 17 percent exported, 10 percent carried over, and only 9 percent was used for food consumption (primarily as corn sweetener and starch).

Many articles overstate the use of corn for ethanol, Tolman said, adding that even in 2015 when corn ethanol reaches its maximum level in the renewable fuels standard (RFS), no more than 27 percent of the crop will be used for ethanol production.

Corn ethanol was unjustly blamed in a number of situations, Buis said in his remarks during the press conference. Last year the brewing industry blamed increased beer prices on corn ethanol - yet beer is made from rice and barley, and not corn. Stories reported on the rise in pasta prices in Italy, blaming the increase on the U.S. corn price increase. However, pasta is made out of durum wheat, a specialty wheat grown in North Dakota, Montana and Canada, far from the Corn Belt. Similarly, tortillas are made from white corn, and not the yellow field corn used for ethanol, Buis explained, and the increases in Mexican tortilla prices were caused more by weather problems.

Buis said a bigger factor for America's increased food prices is the 1,000 mile average that food travels in the United States. "1,000 miles at $4.50 per gallon diesel fuel - you do the math," he said. "You'll find out where the culprit lies for high food prices."