Print this pageThe Food vs. Fuel Debate
With the continued growth of the ethanol industry, the demand for corn has increased. This heightened need has resulted in the question of whether corn growers can meet the needs for both ethanol production and its traditional food uses. Recently, the ethanol industry has been charged as the reason for a rise in consumer food prices.
In a study by LECG, LLC it was found that escalating energy costs had a more significant impact on consumer food prices, in fact having twice the impact on the Consumer Price Index (CPI) than the price of corn. It was shown that a 33 percent increase in crude oil prices, raising gasoline prices by $1.00, would increase retail food costs by .6 to .9 percent. If corn prices were to rise by the same amount an increase of only .3 percent would occur.
Much of the debate has centered around the notion that the increased demand for corn for ethanol production will reduce the amount of food that is available for human consumption. However, ethanol is produced from field corn which humans cannot digest in its raw form. Ethanol production utilizes only the starch portion of the kernel. Therefore, the kernel is broke down with the starch being converted to ethanol and the protein, vitamins, minerals and fiber being sold as high-value livestock feed.
It has also been argued that the U.S. ethanol industry is reducing the amount of food that the U.S. exports to malnourished countries. Despite arguments, the majority of the corn exported is used for livestock feed in developed countries.
Despite what critics say it has been shown that:
- Corn demand for increased ethanol production does not have a noticeable impact on retail food prices.
- Ethanol production does not reduce the amount of food that is available for human consumption.
- The majority of U.S. corn, including exports, is used to feed livestock, rather than humans.
- Corn growers are responding to the increased demand for corn.