Biofuels Not the Food Price Culprit
There is a misguided public opinion campaign under way to label biofuels as the major or sole cause of recent food spikes worldwide.
Supply and demand of our major stock commodities has always had an impact on global food prices. In regard to the current food cost explosion, however, there are several culprits, with the primary fugitive now speeding down the highway fueled by $143 barrels of oil.
Of every food dollar paid by consumers, at least 8 percent covers transportation or energy costs. Conversely, only one-half of that amount—about 4 cents—becomes food industry profit, according to the latest estimates from American Farm Bureau Federation and U.S. Department of Agriculture economists.
Research from several of the nation’s premier land grant universities is quick to support the fact that the petroleum price explosion, not biofuels production, is primarily responsible for uncontrolled food costs. In fact, research shows that biofuels help keep fuel, and subsequently food prices, lower than they would be without farm-grown gas.
Without ethanol, for example, gasoline would cost an average of 15 percent more.
Petroleum has more than doubled in price over the past 14 months, resulting in the potential for diesel to reach $6 a gallon. In addition, weak U.S. currency, rising world demand for essential crops, particularly in China and India, and years of declining stocks of those commodities have all combined to erode food price stability.
To contain the collateral, federal solutions should be based on science more than government regulation. Rather than mandating the use of biofuels in our national petroleum supplies, for example, it would be better to concentrate on improving conversion yields.
In addition to getting the state and nation on the path to reducing their reliance on foreign sources, biofuels are helping create jobs, stimulate economic growth and develop environmentally friendly ways to fuel our lives.