USDA Says Ethanol Accounts for Only 3% of Increased Cost of Food

  • Published on May 22nd, 2008 by
 

USDA biofuels briefing, Ed SchaferOn Monday, USDA officials met with reporters to discuss just how closely biofuels (specifically corn-based ethanol) are linked to the increasing price of food. Agriculture Secretary Ed Schafer, who has vehemently defended biofuels before, had this to say:

One theory that has been widely discussed in recent weeks is that the nation’s growing demand for biofuels and the crops needed to produce them is the real culprit behind higher food prices, both at home and abroad. Yet the evidence that we have seen. . .does not support this.





It’s true that higher demand for corn for ethanol and soybeans for biodiesel has led to higher prices for those crops over the past couple of years. But we do not have a one on one relationship between higher prices for those commodities and what consumers are paying for foods at the retail level. There are many factors at work. . .

So just how much is ethanol contributing to global food prices? According to Schafer:

On the international level, the President’s Council of Economic Advisors estimates that only 3 percent of the more than 40 percent increase we have seen in world food prices this year is due to the increased demand on corn for ethanol.

Their reasoning includes things I’ve written about before including oil prices, economic and dietary expansion in India and China, droughts affecting wheat crops, etc.

For more, read the USDA’s biofuel briefing in its entirety or watch the video:

USDA video.






About the Author

In a past life, Clayton was a professional blogger and editor of Gas 2.0, Important Media’s blog covering the future of sustainable transportation. He was also the Managing Editor for GO Media, the predecessor to Important Media.

  • Samurai Fox

    So, what about Algae? There’s more to benefit from that than ethanol, right?

  • Samurai Fox

    So, what about Algae? There’s more to benefit from that than ethanol, right?

  • Samurai Fox: There’s definitely more benefit to algae if we can produce it economically. As far as I know, right now, biodiesel produced from algae is about $20 / gallon.

    I’ve written several posts on the topic (see Algae category to right):

    http://gas2.org/2008/03/29/first-algae-biodiesel-plant-goes-online-april-1-2008/

    http://gas2.org/2008/04/25/could-we-grow-100000-gallons-of-oil-per-acre-yes-says-vertigro-algae-biofuel-video/

  • Samurai Fox: There’s definitely more benefit to algae if we can produce it economically. As far as I know, right now, biodiesel produced from algae is about $20 / gallon.

    I’ve written several posts on the topic (see Algae category to right):

    http://gas2.org/2008/03/29/first-algae-biodiesel-plant-goes-online-april-1-2008/

    http://gas2.org/2008/04/25/could-we-grow-100000-gallons-of-oil-per-acre-yes-says-vertigro-algae-biofuel-video/

  • Ethyl Unleaded

    Can we hire foreign algae from china to make ethanol for less money. 20$ a gallon seems a bit steep to me.

  • Ethyl Unleaded

    Can we hire foreign algae from china to make ethanol for less money. 20$ a gallon seems a bit steep to me.

  • Do you believe what the USDA said about the minimum bost in food prices caused by ethanol? With the knee jerk reaction to subsidies for ethanol, I cannot trust anything the U.S. government says. What about transportation costs for hauling the ethanol to the east?

    As John Stossel would say: “Give Me a Break”

  • Do you believe what the USDA said about the minimum bost in food prices caused by ethanol? With the knee jerk reaction to subsidies for ethanol, I cannot trust anything the U.S. government says. What about transportation costs for hauling the ethanol to the east?

    As John Stossel would say: “Give Me a Break”

  • I feel like one step that is being overlooked in the US is the need to transfer agriculture vehicles like tractors and harvesters into E85. Which in the long term will be important to reduce our use of oil in the production of E85.

    Northgaredeck although that is a valid concern wouldn’t you imagine it is cheaper to haul from the Midwest to the east than from current oil exporters like the Middle East, South America and Alaska?

  • I feel like one step that is being overlooked in the US is the need to transfer agriculture vehicles like tractors and harvesters into E85. Which in the long term will be important to reduce our use of oil in the production of E85.

    Northgaredeck although that is a valid concern wouldn’t you imagine it is cheaper to haul from the Midwest to the east than from current oil exporters like the Middle East, South America and Alaska?

  • Great post, I agree. Ethanol isn’t even an issue when it comes to food usage. People talk about it as if it were by making ridiculous claims, but the fact is that Ethanol production is only using up a small bit of our agricultural output.

  • Great post, I agree. Ethanol isn’t even an issue when it comes to food usage. People talk about it as if it were by making ridiculous claims, but the fact is that Ethanol production is only using up a small bit of our agricultural output.

  • Rob

    I’ve read that something like 80% of US corn goes to feed livestock! And it’s not even good for them. If the alcohol were removed before feeding it to the poor cows they would be much much healthier. And we’d have the alcohol.

  • Rob

    I’ve read that something like 80% of US corn goes to feed livestock! And it’s not even good for them. If the alcohol were removed before feeding it to the poor cows they would be much much healthier. And we’d have the alcohol.

  • Norm

    The only reason big oil is behind Ethanol gas additives is the 10% Ethanol mix drastically reduces gas mileage.

    We pay more for gas, because the 10% Ethanol mix makes you burn more gas/Ethanol.

    It’s a win, win for big oil.

  • Norm

    The only reason big oil is behind Ethanol gas additives is the 10% Ethanol mix drastically reduces gas mileage.

    We pay more for gas, because the 10% Ethanol mix makes you burn more gas/Ethanol.

    It’s a win, win for big oil.

  • >>If the alcohol were removed before feeding it to the poor cows they would be much much healthier. And we’d have the alcohol.<<

    LMFAO, I heard the swoosh break the sound barrier as it flew over your head.

  • >>If the alcohol were removed before feeding it to the poor cows they would be much much healthier. And we’d have the alcohol.<<

    LMFAO, I heard the swoosh break the sound barrier as it flew over your head.

  • Jeffy

    Why not just put the cars on electricity? It works, there’s actually no gas involved (E85 has 15% gas mixed in, electric cars can get their juice from solar or nuclear power plants) and its just gonna get easier, and more inexpensive to use.

  • Jeffy

    Why not just put the cars on electricity? It works, there’s actually no gas involved (E85 has 15% gas mixed in, electric cars can get their juice from solar or nuclear power plants) and its just gonna get easier, and more inexpensive to use.

  • Concerned Citizen

    What about the carbon footprint of ethanol production vs.using gasoline?

    http://www.iol.co.za/index.php?set_id=1&click_id=143&art_id=vn20080210085730876C308900

  • Concerned Citizen

    What about the carbon footprint of ethanol production vs.using gasoline?

    http://www.iol.co.za/index.php?set_id=1&click_id=143&art_id=vn20080210085730876C308900

  • I don’t necessarily trust the USDA either, but their statement is consistent with a series of reports I’ve seen lately. I think it’s important to keep in mind how many factors go into determining the price of food.

  • I don’t necessarily trust the USDA either, but their statement is consistent with a series of reports I’ve seen lately. I think it’s important to keep in mind how many factors go into determining the price of food.

  • And do not forget to factor in that it takes 8 gallons of fresh water to make 1 gallon of Ethanol.

    Water is by far our most precious resource.

  • And do not forget to factor in that it takes 8 gallons of fresh water to make 1 gallon of Ethanol.

    Water is by far our most precious resource.

  • Check out this US Carbon Footprint data, an interactive United States Carbon Footprint Map, illustrating Greenest States to Cities. This site has all sorts of stats on individual State & City energy consumptions, demographics and much more down to your local US City level…

    http://www.eredux.com/states/

  • Check out this US Carbon Footprint data, an interactive United States Carbon Footprint Map, illustrating Greenest States to Cities. This site has all sorts of stats on individual State & City energy consumptions, demographics and much more down to your local US City level…

    http://www.eredux.com/states/

  • The real issue here is the fact that more carbon and energy is expended to produce ethanol than if we used just gasoline. In addition, it really IS more expensive to produce ethanol than use gasoline, even at the high prices, it is just that corn is so heavily subsidized in the US.

    What we need to do is eliminate oil and corn subsidies, significantly decrease the $$ spent on defense and instead invest in education, and renewables. Nuclear is only part of the puzzle due to never-ending concerns about how to store waste that will be around for 1 million years.

  • The real issue here is the fact that more carbon and energy is expended to produce ethanol than if we used just gasoline. In addition, it really IS more expensive to produce ethanol than use gasoline, even at the high prices, it is just that corn is so heavily subsidized in the US.

    What we need to do is eliminate oil and corn subsidies, significantly decrease the $$ spent on defense and instead invest in education, and renewables. Nuclear is only part of the puzzle due to never-ending concerns about how to store waste that will be around for 1 million years.

  • jeffrey

    Using electricity for cars is a great idea that has taken (and according to the US car manufacturers will take a while still) but a fast, simple, short term fix is to boost production of electricity with solar/wind sources and offset the use of fossil fuels for that electricity production. That will cause a reduction in oil consumption and the increased supply will help stabilize the cost of fuels.

  • jeffrey

    Using electricity for cars is a great idea that has taken (and according to the US car manufacturers will take a while still) but a fast, simple, short term fix is to boost production of electricity with solar/wind sources and offset the use of fossil fuels for that electricity production. That will cause a reduction in oil consumption and the increased supply will help stabilize the cost of fuels.

  • Johnny TwoTone

    What the heck does the USDA know? Its run by a bunch of overpaid, corrupt politicians.

    JT

    http://www.FireMe.To/udi

  • Johnny TwoTone

    What the heck does the USDA know? Its run by a bunch of overpaid, corrupt politicians.

    JT

    http://www.FireMe.To/udi

  • James

    Corn and soy are terrible for ethanol production.

    500 gals per acre per year using prime farmland.

    Industrial Hemp= 2500 gals per year on 5% of unusable farmland = all our transportation needs.

    http://peswiki.com/index.php/Review:Alcohol_can_be_a_Gas

    Cheers!

  • James

    Corn and soy are terrible for ethanol production.

    500 gals per acre per year using prime farmland.

    Industrial Hemp= 2500 gals per year on 5% of unusable farmland = all our transportation needs.

    http://peswiki.com/index.php/Review:Alcohol_can_be_a_Gas

    Cheers!

  • Hayden

    Ethanol still doesn’t provide a huge increase in mileage and takes up a lot of space to grow. The fact is that Shell, Chevron, Exxon and BP ALL have ethanol interests which are increasingly expanding. The corn used for ethanol production is not grown by independent farmers and families – all we’re going to see is more corporatization, and we all know how much the oil corps are working for the global best interest. Even a 3% change means more than 50 million people go starving.

    Electric is obviously the way to go since we will always use it, and we will always find new ways of gathering it and improving efficiency.

    This ethanol push is absolutely ridiculous. I hope private investors have the balls to invest in completely harmless renewable energy and Shell/Chevron/Exxon/BP are the ones left in the dust.

  • Hayden

    Ethanol still doesn’t provide a huge increase in mileage and takes up a lot of space to grow. The fact is that Shell, Chevron, Exxon and BP ALL have ethanol interests which are increasingly expanding. The corn used for ethanol production is not grown by independent farmers and families – all we’re going to see is more corporatization, and we all know how much the oil corps are working for the global best interest. Even a 3% change means more than 50 million people go starving.

    Electric is obviously the way to go since we will always use it, and we will always find new ways of gathering it and improving efficiency.

    This ethanol push is absolutely ridiculous. I hope private investors have the balls to invest in completely harmless renewable energy and Shell/Chevron/Exxon/BP are the ones left in the dust.

  • Jeremiah Johnson

    “…only 3 percent of the more than 40 percent increase we have seen in world food prices this year is due to the increased demand on corn for ethanol.”

    That’s still a lot for a single commodity to be affecting the entire food supply. What I’d like to know is, how much has the demand on corn for ethanol increased the price of corn?

    I was shocked when I bought corn oil the other day for more than double what I paid last year. Corn oil used to be one of the cheapest cooking oils, now it’s the most expensive after olive oil.

    You have to read these statistics with a very skeptical eye on the details, because the government is constantly trying to put the best spin on everything they tell you. EVERYTHING.

  • Jeremiah Johnson

    “…only 3 percent of the more than 40 percent increase we have seen in world food prices this year is due to the increased demand on corn for ethanol.”

    That’s still a lot for a single commodity to be affecting the entire food supply. What I’d like to know is, how much has the demand on corn for ethanol increased the price of corn?

    I was shocked when I bought corn oil the other day for more than double what I paid last year. Corn oil used to be one of the cheapest cooking oils, now it’s the most expensive after olive oil.

    You have to read these statistics with a very skeptical eye on the details, because the government is constantly trying to put the best spin on everything they tell you. EVERYTHING.

  • @Norm: Adding 10% ethanol to regular gasoline only decreases gas mileage by 3%.

  • @Norm: Adding 10% ethanol to regular gasoline only decreases gas mileage by 3%.

  • Bullshit that oil is the only cause of food prices going up. Some of it is the dollar falling, AND OIL. Whats causing oil to go up? Part of it is the dollar losing value.

  • Bullshit that oil is the only cause of food prices going up. Some of it is the dollar falling, AND OIL. Whats causing oil to go up? Part of it is the dollar losing value.

  • Lloyd Kilcrease

    Apart from trusting the same folks that brought us the Iraq war and massive national deficits, there aren’t many in the know that buy the 3% number. Today, we use about 15% of US corn production for ethanol but the number is increasing even as we bring more land into production. Some of that land was used to grow wheat, creating wheat shortages and driving the up the price of wheat and by extension all products that use wheat.

    At time the US is redirecting corn production away food products, the demand for food is increasing dramatically. The net result is higher food prices and worldwide, more starving people, but of course that isn’t a concern to the pseudo-enviromentalists.

  • Lloyd Kilcrease

    Apart from trusting the same folks that brought us the Iraq war and massive national deficits, there aren’t many in the know that buy the 3% number. Today, we use about 15% of US corn production for ethanol but the number is increasing even as we bring more land into production. Some of that land was used to grow wheat, creating wheat shortages and driving the up the price of wheat and by extension all products that use wheat.

    At time the US is redirecting corn production away food products, the demand for food is increasing dramatically. The net result is higher food prices and worldwide, more starving people, but of course that isn’t a concern to the pseudo-enviromentalists.

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  • Tommy

    Why all the fuss about corn production. There are many other natural resources that are possibilities for harvesting necessary materials for production of biofuels. There is talk about using jetropha, which will be 10 times more efficient in producing ethanol and bio diesel. There are plans to begin planting in the very near future. There are already several million acre plots of land being prepared for this new plant. And plenty of other new innovations that will make this easier for us on the roads and in the check out line, all without using all of our countries corn. Yes, we can increase production of corn and still use it, but there is also relief available for that, just not quite yet.

  • Tommy

    Why all the fuss about corn production. There are many other natural resources that are possibilities for harvesting necessary materials for production of biofuels. There is talk about using jetropha, which will be 10 times more efficient in producing ethanol and bio diesel. There are plans to begin planting in the very near future. There are already several million acre plots of land being prepared for this new plant. And plenty of other new innovations that will make this easier for us on the roads and in the check out line, all without using all of our countries corn. Yes, we can increase production of corn and still use it, but there is also relief available for that, just not quite yet.

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