Question: Since Corn is Such an Important Food on the Global Market, Wouldn't Ethanol Production Cause Starvation?

Oil companies in 2008 exploited the rise in food commodities at the time, and blamed it on ethanol. It was a clever ruse. Several studies have been done on it, and ethanol production had almost no impact on food prices.

What had the biggest impact? Oil prices! Oil companies spent millions of dollars to scare the public about ethanol. Read more about that here.

But the ethanol program was originally begun because grain producers were trying to find other uses for their crops. American farmers had become so good at growing grain that they flooded the market with too much grain, causing worldwide prices to drop so low that farmers all over the world couldn't make a living.

The U.S. government did two things: It paid farmers not to grow grain (to keep them in business but to prevent another food overabundance) and it encouraged the search for other uses of corn. The development of high fructose corn syrup was one of the new markets developed out of this.

American farmers are incredibly productive. Producing ethanol will not cause food prices to rise. The Open Fuel Standard may even lower food prices because it will force oil companies to have to compete with other fuels at the pump.

And keep in mind, the Open Fuel Standard is technology-neutral. We can make ethanol out of other things besides corn, including waste, and methanol can be made out of almost anything.

In an interview with Ethanol Producer Magazine, Anne Korin and Gal Luft, the authors of Energy Security Challenges for the 21st Century, they talk about issue of food prices:

Besides outlining the need for fuel choice, the authors tackle misconceptions facing corn ethanol — “the fuel the pundits love to hate.” For one thing, everywhere he goes, Luft meets misinformed people who believe that ethanol causes starvation. This myth has its roots in 2008 when ethanol faced its fiercest critics, who gave the industry a black eye by claiming biofuels was at the root of a commodity price boom. The source was an “orchestrated campaign” by Big Oil, food makers and others opposed to ethanol on the grounds that it is a waste of taxpayer money, Luft says. “All of these groups came together and helped each other and funded each other,” he says. “They did huge damage to the industry.”

Food companies perpetuate the myth out of resentment, Korin says. When oil prices pass a certain point, ethanol makes corn economic, she said, which means price supports for corn are no longer necessary. In that scenario the food industry has to pay market prices for corn syrup and animal feed. “Big Food for years has used underpriced corn syrup, enjoying taxpayer dollars paid as price supports to corn farmers, as a replacement for sugar, because the U.S. has a sugar quota and tariff system that keeps sugar prices much higher than elsewhere in the world,” she says. “But instead of taking on the sugar lobby, Big Food has masqueraded itself as a defender of the market and the poor, in the hopes of reverting to a world in which ethanol goes away, corn price supports are required, and it gets all the underpriced corn syrup it wants.”

Even more than Big Food, Big Oil is the real culprit, Luft says. Food prices go up when oil prices go up. “The major factor in the production of food is oil, the shipping the packaging, the fertilizer, and everything, that goes into making food,” he says.

The following is an excerpt from Gal Luft and Anne Korin's article, Fueled Again:

Sugar yields five times more energy than corn and costs half the price to turn into ethanol. Therefore, unlike corn, it does not require a government subsidy (although, in today's climate of high prices, with production costs of corn ethanol well under $1.50 a gallon and selling costs of about $2.30 a gallon, it is questionable whether corn ethanol requires its current subsidies).

Unfortunately, the United States does not have an ideal climate for growing sugar cane — sugar needs a long, frost-free growing season — and is not able to ramp up sugar production to the level needed to even come close to satisfying its energy needs. This is why Latin American and Caribbean countries like Brazil, Guatemala, Honduras, the Dominican Republic, Costa Rica, El Salvador and Jamaica — all low-cost sugar cane producers — could become keys to U.S. energy security.

Brazil, the Saudi Arabia of sugar, already exports half a billion gallons of ethanol a year and could provide the United States with cheap ethanol.

"We don't want to sell liters of ethanol," Brazil’s Agriculture Minister Roberto Rodrigues said in 2004. "We want to sell rivers."

Expanding U.S. fuel choice to include biofuels imported from our neighbors in the Western Hemisphere has significant geopolitical benefits at a time when U.S. standing in the region is challenged. Sugar is now grown in one hundred countries, many of which are poor. Encouraging these countries to increase their output and become fuel suppliers could have far-reaching implications for their economic development.

By creating economic interdependence with sugar-producing countries in Africa and the Western Hemisphere, the United States can strengthen its position in the developing world and provide significant help in reducing poverty.

The World Bank report by John Baffes and Tassos Haniotis entitled, "Placing the 2006/08 Commodity Price Boom into Perspective," argues that high oil prices and speculation were the primary causes of high food prices and biofuels played a very small role. To quote from the report:

"Worldwide, biofuels account for only about 1.5 percent of the area under grains/oilseeds. This raises serious doubts about claims that biofuels account for a big shift in global demand. Even though widespread perceptions about such a shift played a big role during the recent commodity price boom, it is striking that maize prices hardly moved during the first period of increase in US ethanol production, and oilseed prices dropped when the EU increased impressively its use of biodiesel. On the other hand, prices spiked while ethanol use was slowing down in the US and biodiesel use was stabilizing in the EU."

Another important point to keep in mind is that neither coal nor natural gas are edible, and both are economic feedstocks for methanol. Same with cellulosic ethanol.

Read more:

Will Food Prices Go Up When There is a Big Market For Alcohol Fuels?

The Food Industry's Propaganda Campaign Against Ethanol

BBC: Will Biofuel Leave the Poor Hungry?

Ethanol Policy and Meat Prices: Unspinning the Truth

Ethanol and World Hunger

Agriculture is Not a Zero-Sum Game

Refuting the "Corn Con" Myth

High Food Prices Caused by Oil

Oil Price Drives the Rise in Corn Price

Everything is Up, But Corn is Up Because of Ethanol? Get Real.