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CBO report determines ethanol's affect on food prices

Is the glass half-empty or half full? It all depends upon how you lookat it. The same could be said for a report from the Congressional Budget Office on the impact ethanol is having on food prices. The study was conducted at the request of U.S. Representatives Ron Kind of Wisconsin, Rosa DeLauro of Connecticut and James McGovern of Massachusetts. It examined therelationship between ethanol production and food prices between April 2007 and April 2008. It also looked at how any increase in food prices would affect spending on federal food assistance programs.

The report estimates the increase in corn usage due to ethanol isresponsible for 10 to 15 percent of the increase in food prices. In other words, of the 5.1 percent increase in food prices during the sample period, ethanol production was responsible for a .5 to .8 percent increase. The CBO estimates the increase in ethanol use will cost the federal governmentan additional $900 million for food stamps and child nutrition programs in 2009.

The Wisconsin Bio Industry Alliance says the report clearly shows that increased energy prices had more of an impact on food prices than ethanol did. WBIA Executive Director Josh Morby sayswhile big oil is trying to spin this thing, “The report is absolutely consistent with what we’ve been saying all along: energy costs, not ethanol production, have been the major factors behind rising food prices, and any attempts to further demonize ethanol on this issue should be exposed asthe outright lies they are.”

National Corn Growers Association President, Bob Dickey applauded the report, “It shows ethanol is not principally responsible for higher food prices despite what food companies have tried to make consumers believe during the past 12 to18 months.”