Amid a surge in food prices blamed in part on US expansion of corn-based ethanol production, lawmakers, experts and industry officials are urging the government to rethink a new law mandating alternative fuels.
The US is the world’s top producer of corn-based ethanol, which the administration of President George W. Bush sees as a way of reducing dependence on foreign oil and curb fossil-fuel emissions, the main source of man-made global warming.
Politicians are under mounting pressure to look again at the effects of a landmark energy law enacted in December that raised vehicle fuel-efficiency standards for the first time in three decades and offered broad support for ethanol production.
The public outcry over using food for fuel has spurred interest in so-called “second-generation” alternative fuels, such as cellulosic-based ethanol, but they are still in an early stage of development.
“The solution to the issue of corn-fed ethanol is cellulosic ethanol, which is a fancy word for saying we’re going to make ethanol out of switchgrasses, or woodchips,” Bush said last month.
This week the US Department of Agriculture argued ethanol production does not pit food and energy interests against each other.
Agriculture Secretary Ed Schafer said the effects of skyrocketing oil prices are an “often overlooked” major factor on food prices.
Oil costs for processing, packaging, transportation and other steps that bring food from farms to the marketplace account for about 80 cents of each retail food dollar, with the actual commodity only accounting for 20 percent.
With crude oil crashing through a series of price ceilings this year, Schafer said, “developing diversity in our portfolio of fuels is, if anything, an even more urgent matter than it has been in the past, and it is one that remains central to both our energy security and our national security.”
While corn is the feedstock for over 90 percent of ethanol produced in the US, foods using corn as an ingredient make up less than a third of retail food spending, he said.
And because processed foods represent such a large part of the diet in the US, a single ingredient typically has only a small impact on the retail food price, he said.
Schafer said that consumers in the US are fortunate to be dealing with moderate food price increases. US food prices increased about 4.0 percent higher last year, up from an average annual rate of 2.5 percent since 1990 and are expected to rise 5 percent this year.
By contrast, in low-income developing countries basic foodstuffs represent the bulk of the diet and consume the lion’s share of household income.
On the international level, Bush’s Council of Economic Advisors estimates that three percent of the more than 40 percent increase in global food prices this year is due to the increased demand on corn for ethanol.
Other factors sending food prices higher include weather problems, trade restrictions and heavy demand in developing countries, such as China and India.
Congress has held several hearings in recent weeks to explore calls for a change in the energy law that mandates a six-fold increase in the use of ethanol, to 136 billion liters a year by 2022.