More evidence that ethanol has nothing to do with high food prices

[HoosierRon]

Big business concocts link of biofuels, food costs

While the Grocery Manufacturers point the finger at biofuels for food prices, Kraft Foods, which is on the Grocery Manufacturers' board of directors, boasts in a press release that company profits grew 9 percent in part because of its own "recent price increases." Kellogg's and General Mills are catching on quickly, crying publicly for the consumer while reaching deeper into their pockets in the grocery aisle.
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When the Texas governor petitioned the Environmental Protection Agency to suspend federal biofuels policy, he referenced a biofuels study by Texas A&M. Except he forgot to mention the study's primary findings: The underlying force driving change in the agricultural industry is the price of oil, and that corn prices have "little to do" with food costs.

A simple analysis of farm costs tells the story. Of the major U.S. farm inputs, the prices of fuel and fertilizer have increased by the largest margin. Fuel costs are up by 100 percent in the past 12 months, as oil companies gorge on record profits. But fertilizer, also made from oil, is up 45 percent, the largest price increase of any farm input over the past 10 years.
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And this is where the Grocery Manufacturers' consumer concern becomes truly insincere. While using less biofuel might save the average family $15 per year for groceries from slightly lower corn prices – assuming Kraft passes along the savings – using less biofuel will increase gas prices by 15 percent to 25 percent, according to Merrill Lynch. That's about $500 per year at the pump per person.

[psece]

Just sent the link to someone I was having an arguement about higher food prices related to ethanol. Thanks for the info.

Are you in my neck of the woods(Sacramento, CA area) or are you using the power of the internet?

[HoosierRon]

Originally Posted by psece

Just sent the link to someone I was having an arguement about higher food prices related to ethanol. Thanks for the info.

Are you in my neck of the woods(Sacramento, CA area) or are you using the power of the internet?

I am in Wisconsin. Here are some more stories from the GMi archive for your debate:

$100,000 gift led the attack on ethanol

AUSTIN — Gov. Rick Perry's request for a waiver of federal corn-based ethanol production mandates was prompted by a March meeting he had with East Texas poultry producer Lonnie "Bo" Pilgrim, who six days later gave $100,000 to the Republican Governors Association chaired by Perry.

In the three weeks following that donation, Perry's staff began preparing to submit the renewable fuel standards waiver request to the federal Environmental Protection Agency, according to 596 pages of records obtained from the governor's office by the Houston Chronicle under the Texas Public Information Act.
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Perry pressed for the waiver despite an April 10 Texas A&M study that showed a waiver of federal mandates on ethanol production would have little or no effect in driving down the price of feed corn for poultry and livestock. The A&M study blamed rising corn prices on the cost of oil, global demands for corn and commodities speculation.

At Perry's request, A&M did a second study that was released in June. It found that if corn crops were short because of Midwestern flooding, a waiver would significantly lower corn prices.

The U.S. Department of Agriculture earlier this week reported that the corn harvest would be smaller than last year but only because fewer acres were planted.
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Perry's staff coordinated preparation of the waiver request with Pilgrim's Pride lobbyist Gaylor Hughey of Tyler and Cliff Angelo with Public Strategies, the firm handling a public relations campaign against ethanol for Pilgrim's Pride and a coalition of meat producers.

Talking points prepared for Pilgrim's appearance before the Republican governors were almost identical to ones Public Strategies gave reporters in advance of a June 24 news conference the firm organized for Perry at the National Press Club in Washington, D.C.

Meat vs Fuel: grain trends in China 1995-2008

A change in Chinese meat consumption habits since 1995 is diverting eight billion bushels of grain per year to livestock feed and could empty global grain stocks by September 2010, according to a new study from Biofuels Digest, now available for download here in an expanded version.

The Study, "Meat vs Fuel: Grain use in the U.S. and China, 1995-2008" concluded that, even if the U.S. ethanol industry were shut down tomorrow, rising Chinese demand for meat, and the ensuing livestock feed demand, will empty global grain stocks as soon as 2013. The report offers gloomy news for policymakers who have hoped to address global food vs. fuel concerns by restraining U.S. ethanol demand.

The study found that the US produced 349 million tones of corn last year, up from 192 million tones in 1995, but the 157 million tonne increase has not kept pace with rising demand. The US ethanol industry, which has been criticized as the primary cause of grain shortages and rising prices, increased its grain usage by 31 million tonnes during the 12 year period. By contrast, livestock grain demand to supply Chinese meat consumption increased by 199 million tonnes.

"Given that the US population has grown 15 percent in the past 13 years, the 82 percent increase in US corn production left plenty for people, plenty for livestock, and plenty for ethanol."� said Lane. "The bad news is that the grain was Shanghaied, leaving us with a fuel crisis and a food crisis. The good news is that it's easier to find a steak in Beijing."

The study resolves several questions that had been unanswered in the fuel vs. fuel debate by focusing on rising demand from China as well as the U.S. The report identified that rice, rather than corn or wheat, suffered the largest price increases over the 12-year period, despite the fact that rice is not used for biofuel production. The study also ties falling global grain stocks to corresponding increases in Chinese consumption.

[psece]

Thanks HoosierRon. Gave him the link to the Forum so that he will see it all. Thanks again.