Dana Joel Gattuso

Thanks to U.S. policies mandating ethanol and biofuel usage, giving thanks for a bountiful meal last week probably cost you.

For the past four decades, food prices have remained fairly stable, lagging far behind inflation. But as the USDA reports, food prices this year are soaring, rising twice the rate of inflation—the highest annual increase in over a decade. Corn prices, which doubled since last year, are close to $4 a bushel. Eggs are up 44 percent from last year, while milk, up 21 percent, has jumped to $3.83 a gallon—the highest retail price since World War Two.

What’s driving record food prices? Federal policies mandating more food for fuel are a big factor. Requirements that we use more ethanol over oil for energy use are causing us to divert larger amounts of farmland from food to corn-based fuel, contributing to record food costs. In 2000, we were using a modest 6 percent of our cropland for ethanol production. Last year, that share increased to 20 percent; this year, one quarter of our corn harvest is diverted from food to fuel.

As the Organisation for Economic Co-operation and Development (OECD) reports, government policies around the world to replace oil with ethanol and biofuels are drawing us into an ugly “food-versus-fuel” battle: “Any diversion of land from food or feed production to production of energy biomass will influence food prices from the start, as both compete for the same inputs.”

For the poor, the situation could grow dire. Already, low-income families in the United States spend 40 percent of their budget on food. Higher food prices could set off hunger and malnutrition for those already struggling.

Enter the U.S. Congress. Driven by powerful agribusiness and ethanol lobby interests, Congress is dead-set on further raising the “renewable fuel standard” for ethanol and biofuels, showing little regard for inflated food prices, its impact on the poor, and the recent stream of scientific studies showing ethanol’s harmful impact on the environment.

If the energy bill currently in negotiations between the House and Senate passes, Americans will be required to increase their portion of ethanol-based fuel to 36 billion gallons by 2022, a monumental increase from the current 7.5 billion gallons mandate by 2012. Twenty-one billion gallons of that must come from the still unproven, land-reliant “cellulosic” technology that turns cornstalks and switchgrass into ethanol. The remaining 15 billion gallons must come from corn.

Dana Joel Gattuso

Dana Joel Gattuso is at the National Center for Public Policy Research as a Senior Fellow.

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