Report shows ethanol's connection to high food prices is a lie

By Holly Jessen | October 13, 2014

Growth Energy and the Renewable Fuels Association responded to the USDA’s October supply/demand report released Oct. 10, which forecasted a record corn yield. Growth Energy said it definitively ended the food vs. fuel myth and RFA said it underscores the need for market certainty. 

Growth Energy pointed to the WASDE projections and other recent reports from the Food and Agriculture Organization of the United Nations and Bureau of Labor Statistics as confirmation that there's virtually no correlation between U.S. ethanol production and food prices for consumers. “In report after report, we see that the American farmer can produce an abundant amount of food and fuel," said Tom Buis, CEO of Growth Energy. "It is clear that the food and fuel myth is completely unfounded and does a great disservice to the hardworking men and women that help feed the world and fuel our nation.

Growth Energy further pointed out that the FAO international food price index has declined 2.6 percent since August and is down 6 percent in the last year. In contrast, looking at the past year, grain prices are down nearly 9 percent, FAO said, but meat prices are nearly 22 percent higher. Domestically, food prices for August are up 2.5 percent compared to December. Corn and grain prices are rapidly going down while meat prices for consumers are up 11.6 percent for the same time period.

Even as livestock and poultry companies represented by the Turkey Federation, the National Chicken Council and the National Council of Chain Restaurants brag about record profits and margins they are continuing a campaign to mislead consumers about the real cause of rising U.S. food prices. “Corn prices are below the cost of production for most farmers, and ethanol is selling approximately $1 per gallon less than the gasoline on the wholesale marketplace,” Buis said. “The unrelenting deception coming from these trade associations to continue to perpetuate this lie to mask their growing profits at the expense of the American consumer is deplorable. Their greed and deception knows no boundaries. It’s time for Big Oil and its Big Food allies to begin telling the truth.”

RFA came out with a statement that the crop report underscores the need for demand certainty and market expansion. “The American Petroleum Institute has spent millions upon millions of dollars on ad campaigns trying to sell people on the canard that ethanol drives up food prices in a misguided attempt to garner opposition to the renewable fuel standard,” said RFA President and CEO Bob Dinneen. “But their argument is bankrupt. Because of the RFS, farmers have invested in technology and increased yields to assure ample supply for all users. Today’s report demonstrates the API campaign is intellectually dishonest.”

In fact, Dinneen feels the report should close the debate over the 2014 RFS final rule. Farmers making their planting decisions for this year anticipated that the biofuels volumes in the RFS would be enforced. “But in one fell swoop, the EPA’s proposed rule wiped away demand for 500 million bushels of corn and grain sorghum,” he said. “Now, farmers are faced with corn prices below the cost of production and the risk of returning to an era of increased reliance on federal farm program payments. The White House has an opportunity to help alleviate this situation simply by fixing the badly misguided 2014 RFS proposal and getting the program back on track.”