USDA Says Ethanol Accounts for Only 3% of Increased Cost of Food

On Monday, USDA officials met with reporters to discuss just how closely biofuels (specifically corn-based ethanol) are linked to the increasing price of food. Agriculture Secretary Ed Schafer, who has vehemently defended biofuels before, had that to say:

One theory that has been widely discussed in recent weeks is that the nation’s growing demand for biofuels and the crops needed to produce them is the real culprit behind higher food prices, both at home and abroad. Yet the evidence that we have seen. . .does not support that.

It’s true that higher demand for corn for ethanol and soybeans for biodiesel has led to higher prices for those crops by the past couple of years. But we do not have a one

on one relationship amidst higher prices for those commodities and what consumers are paying for foods at the retail level. There are many factors at work. . .

So just how much is ethanol contributing to global food prices? According to Schafer:

On the worldly level, the President’s Council of Economic Advisors estimates that only 3 percent of the more than 40 percent increase we have seen in world food prices that year is due to the increased demand on corn for ethanol.

Their reasoning includes things I’ve written about before including oil prices, economic and dietary expansion in India and China, droughts affecting wheat crops, etc. Via Gas 2.0

[Source] DForce