Food Versus Fuel Debunked

By Tom Buis | October 14, 2010
America's farmers are the most productive in the world. The only evidence you need for that is this year's spectacular corn harvest, realized despite some terrible weather conditions. This year's harvest is proof that the productive capacity of American farmers is unmatched, with the ability to coax more bushels out of fewer acres.

The bottom line is that America's farmers produce all the grain we need for food, for livestock feed and for fuel. While those of us in farming and the ethanol industry know this, there are many who don't know what capabilities we have as a nation when our farmers cultivate the soil. In fact, there are those who are still actively trying to stoke illegitimate fears that demand for corn ethanol will somehow drive up food prices—despite the facts, proven over and over again, that there is no substantial link between ethanol production and grocery prices.

Let's review the history. Two years ago this month, the Grocery Manufacturers of America—representing the world's largest grocery makers—launched a smear campaign against the ethanol industry in an attempt to blame the rising cost of food on American ethanol producers. In response, a small group of ethanol producers founded Growth Energy with a mission: educate consumers, the press and policymakers about ethanol and dispel the myths and lies perpetuated by those who tried to say there was a "food versus fuel" issue.

Growth Energy launched an aggressive campaign to counter the invalid claims, erroneous news reports and false statements. We aggressively promoted the facts so that consumers across America would know the real reasons behind the hike in their grocery bill: high oil prices and Wall Street speculators. Other factors influencing high food prices included costs for labor, transportation, advertising and packaging—not ethanol.

Corn can't be blamed either.

Grains are only a small portion of the cost of food. For every one dollar spent in a grocery store, approximately three cents goes to corn-related costs at the farm. Even General Mills—one of the world's top consumers of grains—admitted as much when it's chief financial officer, Don Mulligan, was quoted in the St. Paul Pioneer Press saying that grain was only 5 to 10 percent of the company's total costs.
And the World Bank—which early on took the position that biofuels were to blame for high crop prices—reversed itself this year after conducting a more thorough study and is arguing that the effect of biofuels on food prices has not been as large as originally thought.

The very reason that food prices have increased while corn prices have steadily decreased by 35 percent since their peak in 2008 is because there is no link between food and fuel.

There's a mountain of grain out there. And as demand for clean, renewable ethanol continues to grow, our farmers will be able to meet all the demand for food, fuel and feed in this country without driving up prices at the grocery store. We just need to keep telling the public, the press and the policymakers the truth.

This is why Growth Energy was formed. And since our inception, the debate on food versus fuel has been weakened.

Oh, and by the way, we are still waiting for an apology from GMA.

Tom Buis is CEO of Growth Energy. He can be reached at tbuis@growthenergy.org or (202) 545-4000.