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USDA briefing on food and fuel defends ethanolAt a May 19 press conference, the U.S. Department of Agriculture joined in the public conversation about the relationship between food prices and biofuels, declaring the debate should be about the fact that we can have food and fuel, rather than food "versus" fuel. Secretary of Agriculture Ed Schafer said higher oil prices affect much more than just the cost of driving, and are actually one of the major factors behind higher food costs. "For food products, higher oil prices mean higher costs of transportation, processing, packaging and distribution, and all the other intermediary steps that bring commodities from the farm gate to the retail store," Schafer said. "Those steps account for approximately 80 cents of every retail dollar that is spent on food here in the United States. Schafer reiterated that developing diversity in this country's portfolio of fuels is an urgent matter and one that remains central to the country's energy and food security. USDA's data revealed that higher food marketing and transportation costs, along with export restrictions have impacted food prices. USDA Chief Economist Dr. Joe Glauber stated that biofuels--such as ethanol--contribute to higher prices, but acknowledged that higher corn prices pass through to retail prices at a small rate. Glauber referenced a study by the Council of Economic Advisers showing the total global increase in corn ethanol production accounts for about 3 percent of the recent increases in global prices. Glauber noted the farm value of food costs is approximately 19 percent and farm input costs have been rising. "While corn is the feedstock for over 90 percent of the biofuels that we produce, it is actually an ingredient in less than one-third of the everyday food items whose retail prices we track," Schafer noted. Schafer added that the growing middle class abroad, prosperity in developing markets, and drought have impacted global food prices. And he also responded to a reporter who asked about the Grocery Manufacturers Association's "undercover campaign" against ethanol. Schafer acknowledged that the association was behind the campaign and said that USDA's data didn't reflect the organization's claims. 6/2/08 Date: 5/29/08
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