There is plenty of evidence to suggest that ethanol production impacts food prices. It is not a myth. Both sides of this issue have made arguments for their side. I am persuaded that ethanol production can have a substantial impact on food prices depending on the economic situation. I agree that there are other reasons to oppose the biofuel subsidies and mandates that are at least as compelling.
Farm states (including farmers) have pushed very hard for ethanol mandates and subsidies. Iowa voted for Obama largely on his support of ethanol mandates and subsidies. The corn farming states obtained enormous leverage when Republicans had control of the Senate. Republican control of the Senate was conditioned on placating the farm states with bloated farm bills. Farm bill subsidies increased substantially starting in 2002. It has been downhill since them with enormous ethanol and biofuel subsidies. Support for these subsidies and mandates was one of the biggest mistakes of Bush's presidency.
I agree that the entire farm subsidy program is badly broken. I only expect the subsidy program to become even worse with the rats in power. Republicans need to attack these subsidies and mandates. It is a good opportunity to turn the table on the farm state lobbying and bad energy and food policy.
American farmers have produced all the market can bear of food commodities, including corn for fuel and for food. There is no shortage, we even have vast capacity to produce more.
Price increases in food are attributable to the recent high cost bubble of petroleum products. see http://www.lecg.com/etea08 for more financial info.
“Farm states (including farmers) have pushed very hard for ethanol”
I happen to live in a farm state. Back in the 1980’s when interest rates were 16%, and crop prices were low I saw many farmers go out of business. they were the most productive domestic producers at that time, yet they were rewarded with bankruptcy. Nobody bailed them out.
Ethanol became a source of income that raised prices above the break even point for the first time since the 1960’s. It seems that even when we fed the World there were surpluses which kept prices low. For a farm to be profitable, It has to utilize every inch of tillable ground.
Property taxes are based upon overall productivity. so are the bank loans required to buy the expensive fertilizers, and diesel fuel, and expensive specialized machinery.
I fail to see how a surplus of corn production causes anyone to go hungry. We can continue to ship free, and taxpayer subsidized grain to Africa till hell freezes over, and people will still go hungry. If they want to burn their farms and run off or kill the workers they are not entitled to be given anything by America. Yet taxpayers subsidize free food to those places and nobody complains. But if the farmer makes any evil profits from the food he produces it is inhumane.
Ethanol is taking a surplus product, and converting it into two products. first we have the ethanol. Second we have distillers grains that is fed to livestock. I guess we could just feed the corn to the livestock and forget the other benefit of a value added product.
since the great floods of 93 and 95 I have seen tens of thousands of high grade acres of river bottom farm ground essentially confiscated by the Army Corps of enviroengineers. Wetlands are better than croplands they say. Swamps and mosquitoes are natures best. Those lands are no longer producing any crops. Yet the American farmer still produces surplus grains.
All food is costing more. not just grain based food. Why do we single out the higher cost of corn flakes and tortillas when fruits have increased in price too. When a farmer gets $1.00 a lb for his finished steer at the sale barn, who is making the big markup on the value added cuts of meat? The corn in the cow was already paid for by the farmer feeding the cow. That corn didn’t make the burger $2.50 a lb or the Tbone steaks $7.99 a lb or the roasts $5.99 a lb. So how can one justify the higher cost of beef when the corn was fed at the farm level?
Unfortunately the farm system has been under socialized management by government bureaucrats for years. The Chicago Board of Trade essentially is the commodity stock market for farm products. They dictate the price farmers get. They base those prices on speculation about crop plantings, droughts, floods etc. The price for those commodities is never peaking at the time of harvest. We hear about the record prices of grain. Farmers rarely get top price. Top price is earned by speculators who buy and trade large amounts of grain. Those are the people who drive up the cost of food. They also drive up the price of oil, copper, aluminum, sugar beets, potatoes etc.
All farmers are doing is trying to make a living. if they were in charge of trade policy and imports and exports of their products instead of the government, the prices would better reflect the actual cost of the food. for years government bought up milk and cheese surplus and gave it away in food stamps, and school lunches, and all the other things administered in the farm bill. the farm bill isn’t about farmers. it is about how the government can manage the food supply and keep food artificially cheap.
Government knows that when people are hungry, they complain more. So let the farm bill be the free lunch bill. Give the farmers a stipend token so they can keep in business. Then pass out the goods to food stamps. Pass out the goods to Africa. Give away our hard work. There are no big pensions in farm land. Do you think farmers enjoy subsidizing big pension plans when they buy that Chevy Truck or that John Deere Tractor? Do they have a choice? And those people have the gall to complain because food cost go up 5% over 5 years while the price of that truck went up over 10%.
Simply amazing.