Petroleum, not corn, is the chief cause of food inflation

As a farmer in North Central Illinois, I feel it is imperative that I respond to the most recent deluge of negative media attention, and letters to newspapers, attacking ethanol. We must look past the fear mongering rhetoric that is being distributed by the big oil companies and the multinational food processors.

Just 18 months ago, the price paid to farmers for corn in Bureau County, Ill., was only $1.88 per bushel. At that time it cost me well over $3 to raise corn. Today the price paid for corn in the county is $5.42 per bushel, but because of higher energy related costs such as fuel, fertilizer, chemicals, seed and equipment it costs me close to $4 per bushel to raise it. It is true we corn farmers are finally making a profit, but more importantly, the amount of corn sweetener in a soft drink has gone from one-half cent to just over 1 cent. The corn used to make a pound of tortillas has gone from 4 cents to a dime. As you can see, corn farmers are receiving a very small portion of the increase in the price of groceries.

There are many reasons that food prices are rising according to a recent Texas A&M report titled, "The Effects of Ethanol on Texas Food and Fuel Prices," as well as several other analyses by other land grant universities across the nation, including:

--Extremely high oil prices,

--Speculative trading in the commodities futures markets driven by the financial meltdown in other financial markets such as mortgage lending,

--Fewer corn acres expected to be planted in 2008 due to much high production costs for corn when compared to other crops,

--Changing dietary choices in the developing world where countries like China and India are consuming more animal protein (It takes 8 to 10 pounds of corn to make one pound of meat),

--A very weak U.S dollar,

--Worldwide climate-related crop disasters, including an eight-year drought in Australia,

--Much higher exports of grain, meat and processed foods,

--The shortest global stocks of wheat in over six decades,

--Failed U.S. farm policy which eliminated grain reserves in the 1996 farm bill,

--And many other factors well beyond the control of this or any other corn farmer, including corporate greed.

There is both a federal tax incentive for and a federal mandate to use ethanol. The federal government gives the oil companies (not farmers) 51 cents per gallon to use the ethanol in gasoline. Current analysis suggests ethanol has reduced the price of gasoline by as much as 50 cents per gallon. The ethanol mandate, which requires us to use a certain quantity of ethanol per year, is not a factor in driving ethanol production since production has been well above the mandate since its enactment by President Bush in August 2005. And a recent analysis by Iowa State University reports that if the mandate was eliminated, the price of corn would only go down 26 cents.

Ethanol production is one of many factors, but certainly not the only factor, in higher food prices. Similarly, ethanol is a partial, but not the total, answer to U.S. energy independence and a cleaner environment.

I am often amused by critics that claim that if we cannot replace all of our fuel needs with just ethanol, then we should not even try. As a corn farmer, I'll be the first to tell you that corn-based ethanol is not the best answer, but it is the best answer we have right now. Ethanol and biodiesel made from other crops, landfill wastes and forest products will be a better answer in the future. Of course we will never make enough ethanol from corn to replace all of the nation's fuel needs. But if we had only one ethanol plant in 1,000 of our farming based counties producing 60 million gallons per year each (considered a small plant by the federal government), we would have 60 billion gallons of alternative fuel--still not enough to alleviate the need to import oil into the U.S., but enough to eliminate the need to import oil from the Middle East. I have children of the age to serve in the military and I would much prefer they spend a few more dollars for their food and have a local job producing ethanol, than defending our oil interests in the Middle East with a gun.

--Keith Bolin, President, American Corn Growers Association

5/12/08
6 Star Midwest Ag\4-B

Date: 5/7/08

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