Ethanol craze boosts food prices, world hunger

Pittsburgh Tribune-Review (PA), February 15, 2008
Press Dakotan, February 15, 2008
Billings Gazette (MT), February 12, 2008
Investor’s Business Daily, February 11, 2008

WASHINGTON – The red-hot congressional love affair with the alternative fuel ethanol is starting to leave many supermarket customers feeling mighty blue these days as they pay inflated prices for grocery staples.
Even worse, it’s likely to dramatically increase the cases of chronic hunger, malnutrition and starvation in the poverty-stricken nations of Africa and Southeast Asia in the months ahead.

With the prices of some food staples soaring upwards of 40 percent as more farmers plant corn for ethanol rather than human food and animal feed, many environmental groups are raising the specter of global food shortages of apocalyptic proportions.

‘Great tragedies of history’

“We are witnessing the beginning of one of the great tragedies of history,” said Lester R. Brown, president of the Earth Policy Institute and author of a new report on ethanol and its effect on food prices.

The increased amount of acreage devoted to growing corn for ethanol, he observed, means the U.S. will ultimately export less grain – further harming poor nations that rely heavily on food imports for their basic sustenance.

Brown projected that the 800 million human beings current living in hunger will rise to 1.2 billion by 2025.

“The United States, in a misguided effort to reduce its oil insecurity by converting grain into fuel for cars, is generating global food insecurity on a scale never seen before,” he said.

“As a result, the world is facing the most severe food price inflation in history as grain and soybean prices climb to all-time highs,” Brown said, noting that wheat trading on the Chicago Board of Trade on Dec. 17 pushed past the $10 per bushel for the first time ever, while a bushel of soybeans traded at a historic high of $13.42 on Jan. 11.

The rising commodity prices are driven by hefty federal subsidies for U.S.-produced ethanol and huge tariffs of some $1.50 per gallon on cheaper ethanol imports from Brazil.

The subsidies and tariffs have triggered a rush to invest in America’s new biofuel industry. Dozens of new ethanol plants are popping up across the agricultural states of the Midwest like mushrooms after a spring rain.

Subsidies of $93 billion
A region that once produced much of American’s food and sent its surpluses to feed the world’s hungry now is producing grain for automotive fuel – the beneficiary of earmarks from the Capitol Hill friends of prairie farmers.

“Nearly $93 billion in subsidies will flow to ethanol and biodiesel producers by 2012,” says Tom Tanton, a fellow in environment studies at San Francisco’s Pacific Research Institute. The subsidies will cover about 50 to 65 percent of ethanol’s market value alone – sticking taxpayers for a tab they will have to pay again at the gas station pump.

Ironically, ethanol delivers an energy punch about 30 percent lower than standard gasoline, so motorists will find their overall gas mileage plummeting even as they shell out more money.

Politicians are misguided when they paint biofuels as “the fuels of the future,” said Rainforest Action Network Executive Director Michael Brune. Such fuels, he said, shouldn’t emit more greenhouse gases than gasoline, degrade priceless ecosystems and force poor people off their land. He noted that giant agribusinesses like ADM and Cargill are clearing tropical rain forests in Indonesia and New Guinea to grow biofuels for export to advanced countries.

Given the huge campaign contributions to federal lawmakers from biofuel companies, his words almost surely will fall on deaf ears when they reach Capitol Hill.

David A. Ridenour is vice president of The National Center for Public Policy Research

* This article was reprinted in the following publications. Article titles may vary.

Amy Ridenour’s blog, February 13, 2008
Axis of Logic, February 11, 2008
World News, February 11, 2008
Raleigh News & Observer (NC), February 11, 2008
Sacramento Bee (CA), February 11, 2008
Fresno Bee (CA), February 11, 2008
Washington Tri-City Herald , February 11, 2008
Press of Atlantic City (NJ), February 11, 2008
Bellingham Herald (WA), February 11, 2008
Anchorage Daily News (AK), February 11, 2008
Hilton Head Island Packet (SC), February 11, 2008
Oakland Tribune (CA), February 11, 2008
Alameda Times-Star (CA), February 11, 2008

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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