Ethanol and biodiesel appear to play only a minor role in recent global food-price increases

The Grocery Manufacturers Association and ethanol producers are in a public-relations and lobbying battle over the role of ethanol in rising food prices. The best available evidence -- and we remain open to other evidence -- is that ethanol has had a very minor role.

Agriculture Secretary Ed Schafer said at a May 19 press conference that the administration estimates that corn based ethanol accounts for only about 3 percent of the recent increases in global food prices. "Schafer, a longtime proponent of biofuels, vehemently disputed efforts by the leaders of the World Bank and the U.N. World Food Program to blame ethanol for rising world food prices," David Sands and Stephen Dinan write in The Washington Times.

Schafer didn't give the source of his 3 percent figure, but USDA told us that it came from the President's Council of Economic Advisers. Jane Ihrig, a Federal Reserve Board economist on leave to the council, told us that it's important to consider the time period covered by statistics. In this case, the 3 percent figure is for the past 12 months. "Most of the quotes out there, when we look at them, we believe are very similar to what estimates we're giving," she said.

In a recent report, USDA did not use the 3 percent figure but explained the other factors at work in increasing food prices. "Some factors reflect trends of slower growth in production and more rapid demand that have contributed to a tightening of world balances of grains and oilseeds over the last decade," the report says. "Recent factors that have further tightened world markets include increased global demand for biofuel feedstocks and adverse weather conditions in 2006 and 2007 in some major grain- and oilseed-producing areas. Other factors ... include the declining value of the U.S. dollar, rising energy prices, increasing agricultural costs of production, growing foreign exchange holdings by major food-importing countries, and policies adopted recently by some exporting and importing countries to mitigate their own food price inflation."

According to the White House, "U.S. food prices have increased far less than global food prices and a similarly small percent of the increase is attributed to biofuels production. Without increased ethanol production, food price inflation in the United States would have been 4.25 percent over the past 12 months rather than 4.5 percent. One of the reasons U.S. food prices have increased less than global food prices is because Americans consume more processed and restaurant foods, while developing countries consume more basic commodities. The spike in commodity prices directly impacts the global food price." But it should be added, we think, that prices for U.S. pork and chicken have been driven up by the increased cost of corn, a major feed for those industries.

Robert Zubrin and Gal Luft write in the Chicago Tribune that "A flood of reports and statements has claimed that the world's biofuel programs — in particular the U.S. corn ethanol effort—is starving poor people around the globe. Even the UN's special rapporteur for the Right to Food decried biofuel production as 'a crime against humanity.' It seems so obvious: With so much corn being turned into fuel, food shortages must inevitably result, and biofuel programs must be the cause. However, that's completely untrue. Here are the facts. In the last five years, despite the nearly threefold growth of the corn ethanol industry (or actually because of it), the U.S. corn crop grew by 35 percent, the production of distillers grain (a high-value animal feed made from the protein saved from the corn used for ethanol) quadrupled and the net corn food and feed product of the U.S. increased 26 percent. "Contrary to claims that farmers have cut other crops to grow more corn, U.S. soybean plantings this year are expected to be up 18 percent and wheat plantings up 6 percent. U.S. farm exports are up 23 percent. America is clearly doing its share in feeding the world." Zubrin is the author of Energy Victory: Winning the War on Terror by Breaking Free of Oil; Luft is executive director of the Institute for the Analysis of Global Security. They are members of the Set America Free Coalition, an energy-independence group that former CIA Director James Woolsey calls "a coalition of tree huggers, do-gooders, sodbusters, cheap hawks and evangelicals."

These are international issues that stem from rural areas and also affect them. Food prices are often higher in some rural areas because they lack large supermarkets. How are these issues affecting your rural communities?