According to New U.S. Department of Agriculture Study, Corn-Based Ethanol Only Accounts for 3% of Recent Increase in Global Food Prices

GrainNet.com
Date Posted: Jun. 12, 2008

The claims that corn-based ethanol is responsible for increased commodity prices affecting U.S. food companies are biased and ill-informed. In a time when we are all looking for solutions to rising food prices, ethanol has become the easy scapegoat.

The United States Department of Agriculture released data in May showing that ethanol is not a major contributor to rising global food costs. In reality, the total global increase in corn-based ethanol production accounts for only about three percent of the recent increase in global food prices, according to facts from the Council of Economic Advisors.

Many other factors are influencing food prices, including; expected high foreign economic growth, export restrictions, higher food marketing and transportation costs, and drought, to name a few. But the primary driver that has caused a ripple effect throughout the global economy is skyrocketing energy costs.

With record high fuel prices and crude oil trading at more than $135 a barrel, the cost of growing, harvesting and transporting food has increased exponentially. The energy costs faced by U.S. growers and truckers as they fuel machinery, tractors, and semi trucks is directly related to the cost of food at the retail level.

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