Categorized | Agriculture, Energy

Ethanol and food prices

Iowa State University has a new study out this week on what their economists say are relatively modest links between ethanol production, ethanol subsidies and food prices.  For example, the report notes that soybeans had only a 2.8 percent price increase and corn and wheat less than a 1 percent price increase because of ethanol subsidies and chicken and beef were only 3 cents per pound and 2 cents per pound more expensive to consumers in 2009 because of the expansion of ethanol as fuel.

Well 3 cents may not sound like a lot to an economist, but Americans ate 42.4 billion pounds of chicken and 26.4 billion pounds of beef last year so that 3 and 2 cents adds up to more than $1.7 billion in higher food costs that we all paid.  Iowa State also reports that corn was 76 cents per bushel more expensive in 2009-2010 than it would have been if not for expansion of ethanol –  consumers paid that 76 cents on the 60 percent of 13 billion bushels of corn that went into food (not ethanol).  Thus consumers in the U.S. and abroad paid at least $2-$4 billion in higher corn ingredient prices.

Add those food price increases on top of the $6 billion federal handout that refineries received for adding ethanol to gasoline and you begin to get a measure of the real dollar price that Americans pay to prop up an industry whose product lowers car fuel economy, increases lifecycle greenhouse gas emissions and contributes to tropical deforestation and destruction of U.S. prairies .

Now you know why Defenders of Wildlife and many other groups encouraged the Senate to vote to eliminate the $6 billion ethanol subsidy.  The Senate voted 73-27 in favor of doing so last week.

This post was written by:

- who has written 17 posts on dotWild.

Tim Male is Vice President for Conservation at Defenders of Wildlife. Tim directs a number of Defenders’ conservation policy programs, including Habitat and Highways, Conservation Planning, Federal Lands, Oregon Biodiversity Partnership, and Economics.

Contact the author

Leave a Reply

dotWild is the blog of scientists and policy experts at Defenders of Wildlife, a national, nonprofit membership organization dedicated to the protection of all native animals and plants in their natural communities.