Biofuels 'Scapegoat' for High Food Prices
With food prices at or near record highs, agriculture ministers from the
Group of 20 major economies will be meeting for the first time next week
in Paris. Critics say one factor putting pressure on food prices is the
use of food crops to produce biofuels like ethanol. U.S. Agriculture
Secretary Tom Vilsack Monday said the American ethanol industry plays
only a minor role in rising food prices. But he added government support
for the industry may be waning.
Secretary Vilsack told a luncheon gathering in Washington not to believe
everything one hears about ethanol's role in today's high and volatile
food prices. "The truth of the matter is that corn-based ethanol does
not deserve the scapegoat reputation that some folks often attempt to
assign to it," he said.
Critics, however, point to the fact that 40 percent of the U.S. corn -
or maize - crop is now used to produce the biofuel. The industry grew
rapidly in the last decade, and many analysts say that is part of the
reason why maize supplies are tighter than they have been in 15 years.
And those extremely tight supplies push prices up and make them very
sensitive to any bumps in the market like bad weather.
Policy analyst Marie Brill at the advocacy group ActionAid wonders
whether too much is being asked of farmers. "Are we setting our farmers
up to fail by asking them to feed the world and our cars in a changing
climate?" Brill asked.
Vilsack says no. He conceded that biofuels played a role the last time
food prices rose sharply in 2007 and 2008, but he said it was minor --
only 10 percent of the increase.
And, he added, Americans have been benefiting from the biofuel
industry's growth in a number of ways. It is providing jobs and economic
opportunities in rural America, where rates of chronic poverty and
unemployment are highest. Vilsack said blending ethanol into gasoline
has lowered the cost at the pump by about 25 cents a liter. And he said
biofuels hold even more promise for the future.
"If we're to meet the president's challenge of reducing our reliance on
foreign oil by a third, we're going to need to have a robust biofuel
industry,” Vilsack said. “Now, to do that, we're going to have to move
away from corn-based ethanol, which we recognize and which we are
pointed to government-backed research on biofuels from algae, grasses,
and other crops. But critics say none of those crops are viable
alternatives to food-based biofuels yet.
In addition to the competition between food and fuel, many critics
object to the fact that the ethanol industry gets about $ 6 billion in
government subsidies at a time when business is booming and budgets are
ActionAid's Marie Brill says even the industry itself recognizes it can
stand on its own. "There's been this growing consensus even within the
ethanol industry that the subsidy and the tariff at this point could be
removed without having a big impact on the production and use of
biofuels," Brill stated.
Tom Vilsack does not disagree. He wants to see the industry grow. "Does
that mean continuing subsidies forever? No. But I think we have to be
very careful about the way in which we go about reducing those
subsidies," he said.
Vilsack wants to see funds redirected to producing gas pumps and cars
that are better able to handle ethanol.
But critics say the government should not continue to support food-based
biofuels until viable alternatives are developed.