The Cattle Network summed up the brewing battle between food companies and the National Renewable Fuels Standard in their headline: New Ethanol Studies: Little Effect On Gas Prices, Significant Pressure on Food. The article, one of hundreds making the rounds online and in print, told of two recently released studies that directly contradict what the USDA was telling reporters in May.
The two studies were conducted by former chief economist of the U.S. Department of Agriculture, Dr. Keith Collins (his entire study can be found here in PDF form) and Thomas Elam of FarmEcon LLC. They were released for the end of the EPA public comment period on a request by Governor Rick Perry to roll back the ethanol mandate.
From Dr. Collins' study:
The increase in corn demand due to ethanol is rising faster than growth in corn yields per acre. So long as that situation continues, corn will have to attract acreage from other crops to meet its expanding demand. This shift will mean higher prices for all crops that compete, directly or indirectly, for acreage with corn. The market projects a continually tight corn supply and demand balance for the next several years, evidenced in current high cash prices and futures prices for the next several years.With prices soaring and producers and consumers looking for relief, organizations have started to pull together to battle pro-corn-based ethanol supporters. The Coalition for Balanced Food and Fuel Policy at BalancedFoodandFuel.org describe themselves as "An alliance of agricultural groups concerned about the impact that ethanol policy may have on the competitiveness of animal agriculture, exports, the food industry and ultimately the consumer, who are experiencing higher food prices." Their coalition includes the National Chicken Council and the National Cattleman's Beef Association.
The Food Before Fuel Campaign, found at FoodBeforeFuel.org says they were "Created to urge public officials to revisit and restructure policies that have increased our reliance on food as an energy source, and to carefully address how to develop alternative fuels that do not pit our energy needs against affordable food and environmental sustainability." They are supported by many of the same agricultural organizations as the Balanced Food and Fuel Group, but also include public, private, and retail interests.
While the ethanol backlash is growing, it still has supporters. U.S. Sen. Charles Grassley, R-Iowa said that there are other reasons behind the campaigns against ethanol:
American consumers need to know that a few big food companies are jeopardizing our efforts toward energy independence simply so they can raise the price of food and increase their profits.We will see who wins the first major battle on July 22, when the EPA has to rule on whether to waver Governor Perry's petition.
Further Reading:
- CNN Money on ethanol and the food price spike.
- Market Watch on the joining together of the food industry to lobby for a partial rollback of the Renewable Fuels Standard.
