Ethanol boosting food costs
Congress' Joint Economic Committee met to discuss the causes behind surging food prices that have set off riots abroad and grocery-store sticker shock in America.
Joseph Glauber, chief economist for the Department of Agriculture, said that if biofuels like ethanol continue absorbing more U.S. crops, prices for soybeans and other staples will rise, including the grains used to feed livestock. Droughts, increased demand for food in developing countries and higher fuel costs have greatly contributed to current food prices, he said.
Eventually, food-price inflation will slow, Glauber said, assuming weather patterns return to normal, agriculture stockpiles are replenished and foreign countries increase plantings.
But lawmakers are worried about the short-term impact on consumers and the economy.
"The anxiety over higher food prices is going to be just as widespread and will equal or surpass the anger and frustrations so many Americans have about higher gas prices," said Sen. Charles Schumer, D-N.Y., who chairs the committee.
But the president of the National Farmers Union, whose members have been enticed to grow more corn, argued that biofuel production has had little impact on rising food prices. Instead, he pointed at $120-per-barrel oil, which has made it more expensive to cultivate land and ship crops to market.
"While ethanol production is being characterized as the root of all evil, the oil and gas industry continue to receive billions of dollars from the federal government, while major oil companies make record profits," said Tom Buis, the president of the farmers union. He urged lawmakers to cut government subsidies to oil and gas providers and place a tax on oil profits to help offset consumer expenses.
Still, some lawmakers are reconsidering the heavy promotion of ethanol as an alternative to gasoline. Four months ago, ethanol's promise to slow climate change and reduce dependence on foreign oil persuaded Congress to mandate a five-fold increase in its production by 2022.
Farmers responded to government incentives by planting 93.6 million acres of corn last year, the largest planting in more than 60 years. But nearly a quarter of that crop will be set aside for ethanol production, up from less than 15 percent in 2005.
Recent comments
As corn prices go higher, they will move above the break-even cost...
KornyKollins | May 2, 2008 at 9:33 a.m.
So 7:41 is right. Ethanol is truly a lose/lose/lose situation -...
Ethanol is dumb | May 2, 2008 at 9:08 a.m.
So it takes a gallon and a half of oil to produce a gallon of ethanol...
So | May 2, 2008 at 7:41 a.m.
