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The Ag Agenda

December 2007

Food and Fuel: Another Case of Myth vs. Reality

Bob Stallman
American Farm Bureau
By Bob Stallman
President, American Farm Bureau

There have been a lot of unsubstantiated myths going around lately about what is being termed “food vs. fuel.” Unfortunately, the news media and anti-ethanol advocates aren’t getting it right.

Many argue that current policy is biased toward corn-based ethanol and has driven a run-up in the prices of staple foods in the United States and around the world. There is absolutely no basis for the allegations. It’s just another case of myth vs. reality.

Tortilla Propaganda

Indeed corn prices have spiked higher in the past year but that is due to supply and demand conditions for corn and nearly all other major crops that have tightened throughout the world, due in large part to inclement weather factors for the past five to six years. Add to that the fact the U.S. dollar has depreciated nearly 25 percent during the past five years. These account for the vast majority of the reasons for the current high prices.

Amongst the many food vs. fuel allegations, a myth that has been covered by news outlets from New York to Chicago to California, is that U.S. corn prices have driven up the price of tortilla flour in Mexico. What these news outlets don’t understand is that tortilla flour is made from white corn, which is completely different and separate from the yellow corn that constitutes over 99 percent of U.S. corn production and is utilized to make ethanol. White corn prices are determined by the supply and demand conditions for white corn, mostly within Mexico.

Further, outside of Mexican white corn, very little corn is consumed directly in the human diet. The majority of yellow corn is feed to the meat sector, for which the demand has increased significantly due to increased world economic growth, particularly in countries like China and India, which also have contributed to higher prices.

Grasping at Straws

Opponents of ethanol try to capitalize on straw horse arguments. For example, someone recently suggested that filling a 25-gallon tank of a sport utility vehicle with pure ethanol would require more than 450 pounds of corn, enough calories to feed one poor person for a year. As we say in Texas, that’s nothing but pure hogwash! The fact is that this year the amount of ethanol used as a component of gasoline is less than 5 percent of the total. In reality, based on the opponents’ line of reasoning, it would take only about 20 pounds of corn to fill that sport utility vehicle with ethanol-blended fuel – a far cry from 450 pounds!

Finally, I will touch upon the energy efficiency argument, which has been dramatically propagated by these same ethanol opponents. According to a study by the Agriculture Department on energy output compared to energy input, ethanol adds 40 percent to the energy balance, a figure that continues to grow each year with improved plant efficiencies. By using natural gas and electricity from coal in the production process, ethanol converts non-transport energy to a higher value product that can be easily utilized by motor vehicles.

The fact is that ethanol-blended fuel is not only good for our environment and national security, it’s good for our economy. In light of record high energy prices, we must seek ways to further diversify our energy supply. Ethanol used as a renewable fuel is one way to accomplish such a goal.

I’m optimistic consumers will be able to see through all the hyperbole of the food vs. fuel debate and grasp what is clearly myth and what is reality.