Myths and Facts: Food and Fuel
Myth: Demand for corn to produce ethanol is causing a shortage of food.
Mythmaker: "What this is shaping up as at the global level is competition between the 800 million people who own automobiles and the 2 billion low-income people in the world, many of whom are already spending over half their income on food." (Lester Brown, Earth Policy Institute)
Fact: While corn and other crop prices increased from 2006 to 2007, there is no shortage of food crops. The USDA National Agricultural Statistics Service says U.S. farmers planted 92.9 million acres of corn in 2007 (NASS: Acreage), with average yield expected to be 153 bushels per acre (NASS: Crop Production). USDA says 3.4 billion bushels, roughly 26 percent of the expected harvest, will be converted to approximately 9.3 billion gallons of ethanol, leaving more than 9 billion bushels for food, feed and export markets, which would easily meet or exceed 2006 demand from these markets.
More, technological progress - particularly in biotechnology - can help meet the energy and food needs of growing populations throughout the world.
Agricultural productivity has grown steadily at a rate of 1.8 percent over the past 35 years, according to the USDA. Eighty percent of this increase in productivity has come from higher per acre crop yields, thanks in large part to biotechnology.
And biotech enhancements to seeds that allow sustainable production of crops promise continued improvements in crop yields. The record yield for 2006 was 347 bushels per acre, according to the NCGA (NCGA 2006 Corn Yield Contest National Winners). An increase of 1.8 bushels of corn per acre produces an additional 154 million bushels, which can be used to produce 430 million gallons of ethanol.
Myth: Demand for corn by ethanol plants in the United States is driving up the price of food throughout the world.
Mythmaker: "Tortilla prices have tripled or quadrupled in some parts of Mexico since last summer." (Manuel Roig-Franzia, Washington Post, Jan. 27, 2007)
Fact: Current fluctuations in food prices from increased demand for corn for ethanol do not represent a permanent competition between fuel demand and food security.
Food prices increased 4.1 percent in the United States from June 2006 to June 2007 due not only to increased corn prices, but also increased costs of oil, worldwide weather-related disruptions of food (droughts and freezes), and contamination scares. The costs of all goods, excluding energy and food, rose 2.2 percent in the same period, according to the U.S. Department of Labor Bureau of Labor Statistics (BLS), which compiles the Consumer Price Index (CPI, July 2007 CPI Release PDF).
According to BLS, rising energy prices accounted for 48 percent of the overall rise in the CPI, while food prices accounted for 17 percent.
According to Iowa State University's Center for Agricultural and Rural Development (CARD), traders have anticipated higher prices and have built them into futures contracts. Most of the anticipated price changes have already shown up in market prices (CARD Publication: Emerging Biofuels: Outlook of Effects on U.S. Grain, Oilseed, and Livestock Markets).
Further, higher corn and crop prices increase income for farmers throughout the world. According to the UN-Energy report "Sustainable Bioenergy : A Framework for Decision Makers(report in PDF), "As biofuels absorb crop surpluses in industrialized countries, commodity prices will rise, increasing income for farmers in poor countries."
Biotechnology is helping farmers throughout the world to increase productivity. Biotech crops were grown by some 10.3 million farmers in 22 countries in 2006. Ninety percent of these farmers (9.3 million) were resource-poor farmers from 11 developing countries. Planting of biotech crops in developing countries grew by 13 percent between 2005 and 2006.
Myth: Cellulosic ethanol is a decade or more away.
Fact: The world's first cellulosic ethanol production facility -- owned and operated by Iogen in Ottawa, Canada -- has been converting wheat straw into ethanol since 2004. Abengoa Bioenergy is completing construction of a commercial-scale cellulosic ethanol facility, located in Salamanca, Spain, that will by the end of 2007 begin producing 1.2 million gallons of cellulosic ethanol from wheat straw each year.
Companies across the United States are right now beginning construction of modern biorefineries to produce biofuels from cellulose. Within the next few years, ethanol made from a variety of cellulose feedstocks collected in different parts of the United States - from corn stover and wheat straw in the Midwest, to sawdust and wood chips in New York, to sugar cane and bagasse in Louisiana - will enter the marketplace.
