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Food vs. fuel vs. common senseBy Seymour Klierly In the waning days of the farm bill brouhaha between the sub-par leadership of the Senate and the House and the administration, another scuffle has broken out between ag interests. Congressmen and governors, corn growers and grocery store owners stood toe to toe over the price of food this week. Competing letters were sent to the Environmental Protection Agency regarding that agency's implementation of the Renewable Fuels Standard or "ethanol mandate" as it's most commonly referred. In 2005, Congress passed an energy bill that included the first national ethanol mandate, set at 12.5 billion gallons by 2012. A short two years later, reports surfaced that the 12.5 billion gallon mandate would be surpassed by 2009. Congress took action again, this time raising the mandate to 36 billion gallons by 2022. EPA is just now beginning to implement regulations to meet this new mandate and that's why the fight has begun. Some claim the heart of the issue is rising food prices, and that the rapid increase in the federal ethanol mandate is largely to blame for that increase. Texas Governor Rick Perry recently sent a letter to EPA requesting they waive the higher mandate level. Not long afterward, Texas Senator Kay Bailey Hutchison and 23 of her colleagues sent a similar letter to EPA citing growing environmental concerns surrounding corn ethanol production and competition between food and fuel. The other side of the coin argues that increased ethanol use actually lowers fuel prices by displacing costly crude oil. Renewable Fuels Association head Bob Dinneen told a congressional committee this week that dropping the mandate would increase gasoline prices from $3.65 per gallon to $4.79 per gallon. In response to the earlier Hutchison letter, long time ethanol supporter Senator Chuck Grassley gathered a group of his colleagues to send EPA a letter urging them to resist calls for the waiver. Interest groups helping drum up support for the letter were hoping to match the number of senators who signed Hutchison's letter. This is shaping up to be a real "anything you can do, I can do better" contest. Like the farm bill debate, the food versus fuel ethanol debate quickly became highly politicized and exaggerated, even by Washington, D.C. standards. Maybe, just maybe, the truth lies somewhere in the middle. If we're going to have an honest debate about ethanol, all must realize that livestock producers are significantly impacted by the growing demand for corn and that for the large part of this debate, those concerns have not been recognized. Furthermore, anyone who goes to the grocery store knows that food prices are increasing, but the vast majority of those cost increases are caused by increased energy prices. Manufacturing, packaging, and transportation expenses have risen for the food companies. While increased corn ethanol production likely does have an effect on food prices, it is not that much. Long time readers of this column know I'm not the biggest fan of the ethanol mandate, but exaggerated, politicized debates don't help folks in D.C. make sound decisions. An objective look at the impacts of the mandate is certainly needed and called for but, unfortunately, such objectivity isn't likely to be found inside the Beltway. 5/12/08 Date: 5/7/08
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